Captive insurers are well-positioned to help employers keep rising group health plan costs in check, Business Insurance reported.
A captive insurer typically covers a specific line of business against risk. In the case of group health plans, this can include large individual claims, such as premature birth or expensive surgery, as well as higher-than-expected overall claims costs, according to the article.
With medical claims costs expected to jump more than 30 percent by 2017, self-insured employers would be wise to protect against such a risk.
Stop-loss coverage purchased directly from a health insurer could help, but this can get expensive, said Debbie Liebeskind, a senior actuarial consultant at Towers Watson, who spoke at the recent World Captive Forum. A captive insurer, on the other hand, passes some of the risk onto reinsurers. This keeps costs down both initially and at plan renewal time, Liebeskind said.
The challenge, of course, is determining how much of that risk should remain with a captive and how much should be shifted to a reinsurer. One option for employers is to look for reinsurers who contract with insurance provider networks. Another is to consider using insurance brokers, which are stepping up their game in light of the Affordable Care Act's employer mandate.
- here's the Business Insurance article
Brokers up their duties as employer mandate takes effect
Self-insurance popularity sends full-risk enrollment falling
3 ways to cut claims-related costs
Study: Medical claims costs to jump 32% by 2017