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Study Shows Rise In Catastrophic Stop-Loss Claims Of $1M Or More

WELLESLEY, MA (June 5, 2014) – The U.S. business group of Sun Life Financial, Inc. (NYSE: SLF, TSX: SLF) today reported a tenfold rise in the number of individual $1 million or more catastrophic claims paid by the company over the past four years. These findings are based on a study released today by Sun Life Financial U.S., the largest independent writer of stop-loss insurance in the U.S., with $915 million of in-force premium as of December 31, 2013.


The most significant rise related to complications surrounding dependent infants, including premature births, failure to thrive newborns and congenital anomalies, according to Sun Life. While there was no single explicit driver for the increase in these particular complications, Sun Life continues to monitor the underlying business, specific claims, and potential trends related to health care costs and demographics. The Company also notes that these diagnoses often stemmed from normal pregnancies that unexpectedly turned into catastrophic claims, reinforcing the need for protection against "unpredictable" catastrophic claims.

“Sun Life is seeing more catastrophic stop-loss claims with higher price tags,” said Karin James, Assistant Vice President of Strategic Operations for Sun Life’s Stop-Loss business. “In 2013 alone, we paid more than double the number of individual $1 million or more catastrophic claims compared to the prior year, by far the biggest annual jump in the study. We anticipate costs will only continue to rise as new technologies are adopted, advanced drug therapies are introduced, and the Affordable Care Act increases access for participants.”

The study ranks the top ten mostly costly stop-loss catastrophic claims filed between 2010 and year-end 2013 by Sun Life Stop-Loss insurance policyholders with up to 100,000 employees. In the four-year period, Sun Life Financial processed over 100,000 claims and reimbursed over $1.9 billion in catastrophic claims to self-funded employers. The report shows the aggregate cost for each claim condition reimbursed by Sun Life. The cost reflects two factors: (1) severity, or the underlying cost of the claim and, (2) frequency, or the number of times the claim occurs.

“We believe sharing insights on the scale and trend of catastrophic claims can help self-insured employers, brokers, and TPAs devise better strategies to manage the costs of catastrophic illness,” added James. “Without stop-loss insurance, the self-insured employers in our study would have paid an additional $2 billion in catastrophic medical costs from 2010 to 2013. The findings of this year’s study also reveal the need to protect against claims from routine health events that are not expected to be catastrophic.”

The report’s top ten claims conditions remain mostly the same as last year’s rankings, with cancer remaining the costliest, followed by chronic renal disease. Below are the key findings on the costliest claims:

·        The ten costliest claims conditions comprise over half (53%) of the $2 billion in claims that Sun Life reimbursed to its Stop-Loss policyholders between 2010 and 2013.

·        The three most costly conditions -- malignant neoplasm (cancer), chronic/end state renal disease (kidneys), and leukemia/lymphoma/multiple myeloma (cancer) -- represent over a third (34%) of all stop-loss claims payments that Sun Life made to policyholders from 2010 to 2013.

·        Cancer continues to be the most costly stop-loss catastrophic illness by a significant margin, comprising one quarter (25%) of all stop-loss payments during the four-year period.

·        Malignant neoplasm (cancer) was the costliest single condition, representing just over 17% of all stop-loss claims reimbursements.


The ten catastrophic medical conditions from 2010 to 2013, ranked by aggregate cost:


Medical condition

Percentage of paid stop-loss claims

Value of paid top-loss claims


Malignant neoplasm (cancer)




Chronic/end stage renal disease (kidneys)




Leukemia, lymphoma, and/or multiple myeloma (cancer)




Congenital anomalies (conditions present at birth)




Disorders relating to short gestation and low birth weight (premature births)




Cerebrovascular disease (brain blood vessels)




Congestive heart failure




Complications of surgical and medical care




Pulmonary collapse/respiratory failure (lungs)




Septicemia (infection)




To help employers devise a set of cost-containment best practices, the Sun Life report also provides important questions for the employer to consider, such as whether the following approaches are in use:

·        Workplace wellness and early detection programs;

·        A benefit program that offers protection against cancer at both the employer and employee level;

·        An administrator with a direct focus on active claim management, including early detection through the use of predictive modeling and data analysis;

·        A partnership with an administrator and stop-loss carrier that provides access to nationwide cost-containment vendors;

·        A “no new lasers at renewal” option with a renewal rate cap included in the stop-loss policy.


“Self-insured employers, brokers, and third party administrators have the chance to implement cost containment strategies that protect both their employee’s quality of care as well as the company’s bottom line,” said Sun Life Financial Stop-Loss Claims Director Laura Rollinson, R.N., who led the claims study. “We believe a best-in-class stop-loss program can be a win for all parties.”

To request the full research report, please visit: Sun Life Financial - Leading Catastrophic Claims Conditions.



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