Medical stop-loss buyers should brace for higher renewals through at least 2027, as catastrophic claims, rising hospital costs and increasingly expensive cancer treatments reshape the market's pricing, according to Tokio Marine HCC Accident & Health Group president and CEO Jay Ritchie (pictured).
Ritchie described an industry emerging from a pandemic-era lull in severe claims into a sustained period of cost pressure as hospitals rebuild margins and high-dollar claims grow more frequent. It also pinpoints an unexpected driver of the biggest claims: children under age 10, who now generate a larger share of million-dollar cases than any other age group.
"I think the market is going to continue tightening," he said. "I don't really like the term 'hard market' because coverage is still available. I prefer 'tightening market.'" This pressure, he added, will "continue through 2027."
The current surge is partly a rebound. During the pandemic, catastrophic claims fell as utilization dropped and hospitals struggled financially – a dynamic Ritchie calls the "hush period." It has since reversed sharply.
"We think there were three years of hush, and we expect three years of crush, from 2024 through 2027," he said. "Then we'll probably see some moderation."
Many brokers entered 2025 expecting a continuation of the preceding soft market and were caught off guard by rate increases, Ritchie said. Employers, meanwhile, are beginning to raise retentions after leaving deductibles largely flat through the softer years.
"The ... question should be: Is my retention level appropriate for my size and risk tolerance?” he said.
TMHCC – A&H's 2026 Annual Market Report shows claims exceeding $2 million have risen 213% since policy year 2020, and frequency is climbing across every claim threshold. January 2024 and January 2025 trends ran 5 and 9.2 percentage points, respectively, above the prior five-year average.
The report's most striking finding concerns who is generating the largest claims. Children under age 10 account for 39% of stop-loss spending above $1 million – more than three times the share of any other age group – and their dominance grows at higher thresholds, accounting for the bulk of claims above $4 million.
Most of these claimants fall into perinatal, neonatal and congenital-abnormality categories. For cases exceeding $500,000, infants under one year old average $1.37 million in claim severity, showing that while medical advances have transformed survival rates, they've also extended the duration and cost of care.
"Babies born at 21 or 22 weeks, literally measured in grams rather than ounces, are viable now," Ritchie said. "Some of these cases involve children who remain hospitalized for over a year, and when that happens, the bills become enormous."
Cancer still represents the single biggest share of stop-loss exposure, at just over 35% of total paid claims. Cardiovascular disease ranks second at nearly 13%, and nervous-system disorders have moved into third, reflecting rising prescription-drug costs.
The industry initially expected gene therapies to drive claim inflation, Ritchie said, but uptake has lagged. Instead, the bigger story has been cellular therapy.
"Cellular therapy costs are increasing and we now have million-dollar cell therapies. That's really driving cancer costs," Ritchie said. He expects the category to keep growing as the industry diagnoses "more cancers, ... earlier, and [treats] them more aggressively."
Mental and behavioral health costs are also rising, though for a different reason: more people seeking care rather than higher per-claim severity.
With claim drivers concentrated in complex, high-cost conditions, Ritchie argued that network discounts alone can no longer contain spending. Instead, active claims management seems to generate the most savings. Payment-integrity and specialty-claims programs generated more than $30 million in savings during 2025, TMHCC – A&H's report found.
"We're seeing highly specialized vendors entering the market with disease-specific cost containment solutions," he said. "The old strategy of simply using a network and relying on discounts doesn't work anymore. We still think large claim clinical management programs are the strongest solution, especially when the broker, employer and stop-loss carrier work together."
Looking ahead, Ritchie expects claims to plateau over the next 12 to 18 months, but cautions that pricing has not caught up to the new cost environment.
"The conditions driving the largest claims aren't new, but their cost trajectory is," he said.
"The market is still catching up to price this risk adequately, and employers are actively seeking to improve cost management and mitigation. The brokers and plan sponsors that bring more solutions sooner will be in a very different position than those who don't."
