When selecting Stop Loss coverage, experience can be a critical factor, significantly affecting the quality, reliability, and value of your coverage. Here is why working with an experienced insurance carrier is a smart decision for policyholders:

1. Greater Accuracy in Risk Assessment and Pricing

Experienced insurers have tried-and-true methodologies for underwriting with limited data. In the Stop Loss market, when an employer switches to a self-funded health plan, it typically does not have access to its past claims data. When the Stop Loss carrier cannot use this data for experience-based underwriting, it will use a manual rate, or a rate benchmarked on factors such as a company’s demographics, location, and industry. This rate is then adjusted using a rate-to-manual (RTM) multiplier, which reflects the underwriter’s judgment of the specific risk.

An experienced underwriter knows how to apply these tools judiciously, ensuring that premiums are fair and rational, given the actual risk. This helps protect both the insurer’s solvency and ability to pay future claims to its policyholders.

2. Refined Underwriting Practices

Underwriting is the backbone of any insurance company. It involves evaluating risk and determining appropriate premiums. An experienced insurer brings:

• Historical data to inform decisions
• Time-tested processes that inform accurate quoting and timely claim processing
• Underwriting helps maintain pricing integrity and balance

This last point is crucial. Overpricing can make an insurer uncompetitive. Underpricing can threaten the insurer’s ability to pay claims. A seasoned insurer has the track record and institutional knowledge to strike the right balance.

3. Financial Strength and Stability

A carrier’s ability to meet its obligations depends heavily on its financial health. Insurers who have been around a long time typically have:

• Robust capital reserves
• Diversified investment portfolios
• Strong ratings from independent agencies like A.M. Best or Moody’s

These factors are essential for long-term reliability. For health plans, choosing an insurer that cannot meet its obligations could have implications for the plan’s fiduciaries.

4. Sophisticated Risk Management

Beyond underwriting, seasoned carriers excel in enterprise risk management: the ability to anticipate, measure, and mitigate risks across their operations. This includes:

• Mitigating claim costs with point solutions and repricing negotiations
• Managing investment portfolios to ensure liquidity
• Preparing for shifts in the market

These capabilities are developed over time and are critical to ensuring that the insurer can weather economic downturns or unexpected surges in claims.

5. Regulatory Compliance and Reputation

Insurers with a long time in the market are more likely to:

• Be familiar with insurance regulations and rating agency requirements, helping to ensure greater oversight and adherence to consumer protections
• Have well-established customer service track records and established channels of communication
• Be known by brokers and agents, who are familiar with their processes

The National Association of Insurance Commissioners (NAIC) and the Consumer Financial Protection Bureau recommend checking an insurer’s licensing, complaint history, and financial ratings before making a decision.¹

Choosing an experienced insurance carrier means choosing stability, fairness, and peace of mind. Their deep understanding of risk, strong financial footing, and commitment to sound business practices can make them a reliable partner in protecting what matters most.

Berkley Accident and Health is a member of W. R. Berkley Corporation. Founded in 1967, W. R. Berkley Corporation is comprised of 55+ operating units that each focus on a niche market, requiring specialized knowledge of a particular territory or product. It has the expertise and resources to utilize its strength in the present environment and the flexibility to anticipate, innovate, and respond to whatever opportunities and challenges the future may hold. This strategy has served the company well over the course of more than 55 years.

¹ Consumer Financial Protection Bureau, Consumer Complaint Database, Company Licensing Best Practices Handbook, 2023 https://content.naic.org/sites/default/files/publication-clh-op-licensing-practices-handbook.pdf

Coverage is underwritten by Berkley Life and Health Insurance Company and/or StarNet Insurance Company, both member companies of W. R. Berkley Corporation and both rated A+ (Superior) by A.M. Best. Not all products and services may be available in all jurisdictions, and the coverage provided is subject to the actual terms and conditions of the policies issued. Payment of claims under any insurance policy issued shall only be made in full compliance with all United States economic or trade and sanction laws or regulation, including, but not limited to, sanctions, laws and regulations administered and enforced by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”).

BAH AD 2025-171       © Berkley Accident and Health     9/25