Stop-loss insurance carrier premiums reached $39 billion in 2024, growing 11.2 percent since 2019, according to Oliver Wyman. Mid-sized employers are leaving fully insured plans behind in favor of self-funded coverage that cuts costs and restores transparency. Arleigh Kennedy, chief underwriting officer, accident & health at Skyward Insurance, spoke with Insurance Business about AI-assisted underwriting and consultative plan design. She explains how these tools are reshaping what brokers and employers should expect from stop-loss coverage.
Stop-loss insurance market growth reflects mid-sized employers hitting the ceiling of what fully insured plans can deliver. Arleigh Kennedy, chief underwriting officer, accident & health at Skyward Insurance, spoke with Insurance Business about the financial logic driving the shift. "The biggest driver of this shift, especially considering the escalation of costs, is that a lot of these mid-sized companies are already at their maximum [budget]," Kennedy said. "In a fully insured model, you're leaving money on the table there." Pharmacy benefit managers represent a major hidden cost bundled inside fully insured structures. Kennedy noted that groups "could save hundreds of thousands of dollars by making that change, but they simply can't do it in a fully insured environment."
Level-funded plans have served as a stepping stone toward self-funding, but they fall short of delivering the full financial benefit employers can achieve. Kennedy said the structure holds employers back: "Even though those level-funded products are a gateway, they're not really getting you to the full value you'd save if you moved to self-funding." She was direct about broker responsibility. "There needs to be an awakening with the brokers here. They have to realize that they need to start recommending that their groups look at this [seriously]," Kennedy said. Mark Cuban has also weighed in publicly, posting on X a proposal for a bank account model incorporating stop-loss coverage at a $30,000 trigger for roughly $300 per month.
Sky Vantage is Skyward Insurance's AI underwriting platform, built to surface hidden risks in groups with limited claims data. It is especially useful for smaller employers coming off fully insured plans, where carriers often withhold historical data. "We use AI to dig [deeper] to look and see if we can find potential ongoing claims that could be an issue," Kennedy said. The technology does not replace human judgment, however. "After AI, a human underwriter will look at the [suggestion] and evaluate the risk," she said. "AI may help us find the risk faster, but there still has to be a person involved." Sky Vantage will sometimes recommend that a group stay fully insured if self-funding carries too much risk.
Million-dollar-plus claims rose 46 percent in frequency between 2022 and 2026, putting direct pressure on stop-loss insurance pricing across the United States. Blood cancers were the costliest driver, averaging $5.45 million per claim in 2025, with one leukemia claim reaching nearly $8 million, according to SunLife data. Segal recorded a 9.4 percent average stop-loss premium increase in 2024. Fewer than 0.2 percent of claimants had claims over $250,000, yet those claims made up 14 percent of all medical plan expenses. Eligibility errors compound the cost. "On one claim we saved almost $6 million because the person was not even eligible," Kennedy said. "It never should have hit the plan, it was a simple eligibility mess."
Medical stop-loss captives are drawing serious attention in 2026, with Kennedy predicting significant growth among mid-sized groups over the next three to five years. She cautions against assuming the structure alone delivers savings. "A captive isn't a dishwasher," Kennedy said. "You still have to work with the right captive partners to make sure they're putting in all the [correct elements], the right vendor stacks, the right networks." Like-minded employers pooling risk through a captive can achieve real savings, but only when each participant maintains rigorous vendor selection and network discipline. Without that foundation, the captive structure produces little financial benefit, regardless of how the arrangement is marketed to mid-sized self-funded employers.
Building a customized stop-loss insurance plan starts with selecting the right third-party administrator, according to Kennedy. "When a broker is bringing in a new client for the customization process, the first thing they need to look at is picking the right third-party administrator (TPA) partner," she said. "There has to be a [strong] partnership between the broker, the TPA, and the stop-loss carrier to build out these plans." Kennedy also warned that brokers aligned with carriers that pay claims without scrutiny are not serving their clients well. Stop-loss carriers unwilling to challenge claims, flag eligibility issues, or audit coordination of benefits are failing in their core function and ultimately costing employers money.
Skyward Insurance reviews vendor partnerships directly and uses internal pricing models to evaluate each solution's real-world performance, rather than pricing off a manual. Kennedy said this process drives measurable results. "That's been huge for us. That's where we see the savings, and we price to those partnerships," she said. "I've worked for different carriers, and I've run the gamut in this space, and more than anywhere else I've worked, at Skyward we really take the time to understand these vendor partnerships." The firm also integrates a clinical team of nurses into the underwriting process, evaluating reference-based pricing and direct contracting through its own pricing models rather than accepting vendor claims at face value.
Arleigh Kennedy: chief underwriting officer, accident & health, Skyward Insurance; career experience across multiple stop-loss carriers; leads underwriting and clinical team at Skyward, specializing in self-funded plan design, vendor partnership evaluation, and AI-assisted underwriting.