Stop loss insurance is purchased to protect health plans against adverse claims experience.  Competitive hospital and physician contracts makes the use of stop loss protection infrequent; however, the plan must be protected from large individual claims, and protect the self-funded health 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) choosing not to bid. Companion Life Insurance Company was chosen because they provided the most competitive renewal quote.

Companion Life Insurance provided a renewal quote with an 8.28% increase if we select a higher specific stop loss level.  By choosing this renewal option, we will be under the anticipated 20% the City budgeted for this renewal.  This will however, increase our level of liability by $50,000.

If the City experiences one stop loss claim during the next claim period, the group health care fund will still save $32,495 overall by selecting a higher stop loss deductible.  Therefore the recommendation is to increase our stop loss level from $225,000 to $275,000.  The City has had two (2) catastrophic claims over the last three (3) years.

1.  Council could direct staff not to purchase specific stop loss insurance from Companion Life Insurance Company.

2.  Council could direct staff to find other solutions to address the issue of large claims exposures.

I move to approve the purchase of stop loss insurance with Companion Life Insurance Company for the City’s self-funded group medical benefits program for 2016/17 in the amount of $383,627 and authorize the Contracts and Risk Manager to execute agreements for the policy.