Medical stop loss insurance can be purchased on either an aggregate or specific basis to protect health plans against adverse claims experience – on either a group (aggregate) or individual (specific) basis. Specific stop loss is more appropriate for plans like the City’s, protecting it from large individual claims that can create significant funding and rate spikes. With a current per claim deductible of $225,000 and the PPO hospital contracts that the City has established, the use of stop loss protection is infrequent; however, the plan must be protected from large individual claims, and protect the self-funded medical plan from significant losses. Renewal of this insurance was accomplished with the assistance and advice of the City’s health insurance broker/consultant – L/P Insurance Services. Fourteen (14) companies were sent offers to bid, with eleven (11) opting out and/or not providing competitive rates. Companion Life Insurance Company was chosen because as our current stop/loss provider, they provided the most competitive quote at a renewal of 9.01% over our current rate.

Companion Life Insurance Company will protect the plan against multiple large claims in a single year, which could be disastrous to the finances of the City. Protecting the plan from catastrophic losses is especially pertinent in years where city revenues are tighter than ever and there are no excess reserves. As seen in the stop loss renewal options attached, Companion Life Insurance provided a renewal quote with a 9.01% increase to the City’s premium to continue at current plan levels.

Council could direct staff not to purchase specific stop loss insurance from Companion Life Insurance Company or to find other solutions to address the issue of large claims exposures.

I move to approve to purchase stop loss insurance with Companion Life Insurance Company for the City’s self-funded group medical benefits program for 2015/16 and authorize the Contracts and Risk Manager to execute agreements for the policy.