Lasers and Aggregating Specific Deductibles: Risk Management Tools Explained

# Lasers and Aggregating Specific Deductibles: Risk Management Tools Explained

Beyond manual and experience-based pricing, carriers use additional underwriting tools to manage risk exposure. Two of the most common—and often misunderstood—are **lasers** and **aggregating specific deductibles (ASDs)**.

## Understanding Lasers

A laser is an underwriting technique where the carrier assigns a **higher individual specific deductible** to one or more high-risk members identified during the underwriting process.

### Who Gets Lasered?

Individuals with known conditions or ongoing treatments that could result in catastrophic claims:

- Organ transplant recipients or candidates
- Advanced cancer patients on expensive therapies
- Gene therapy candidates
- Dialysis patients
- Patients on high-cost specialty medications

### How Lasers Work

**Standard group ISL**: $100,000
**Lasered individual ISL**: $350,000 (or excluded entirely)

The carrier limits its exposure on these members while providing standard deductibles for everyone else.

### Laser Trade-offs

| Pros | Cons |
|------|------|
| Reduces overall premium | Shifts risk to employer |
| Makes coverage affordable | Creates budgeting challenges |
| Allows placement of difficult groups | Complicates renewals |

**Important**: Lasers can make coverage affordable for groups with known high-risk individuals, but they often complicate renewals if those risks persist or worsen.

## Aggregating Specific Deductibles (ASDs)

An ASD is an additional layer of risk assumed by the employer before stop-loss reimbursements begin—applied across **all members**, not targeting specific individuals.

### How ASDs Work

- Group ISL deductible: **$100,000**
- Aggregating Specific: **$50,000**

The employer pays the first $50,000 of claims above the ISL deductible across all members before the carrier begins reimbursing.

### ASD Benefits

ASDs are often used to lower premiums without increasing volatility as much as raising the ISL deductible for every member:

- **Premium reduction** without targeting individuals
- **Predictable risk sharing** across the group
- **Effective for stable groups** wanting to reduce fixed costs
- **No individual targeting** that complicates renewals

### When ASDs Make Sense

ASDs are particularly effective for:
- Groups with stable, predictable claims patterns
- Employers comfortable with moderate additional risk
- Groups seeking premium relief without lasers
- Multi-year strategies to offset trend increases

## Lasers vs. ASDs: Strategic Comparison

| Factor | Lasers | ASDs |
|--------|--------|------|
| Target | Specific individuals | Entire group |
| Premium Impact | Can be significant | Moderate reduction |
| Risk Predictability | Less predictable | More predictable |
| Renewal Impact | May complicate | Generally neutral |
| Best For | Known high-cost individuals | Stable groups wanting savings |

## Key Takeaways

- Lasers target specific high-risk individuals with elevated deductibles
- ASDs spread additional risk across the entire group
- Both reduce premium but with different risk profiles
- ASDs often preferred for groups seeking premium relief without volatility
- Understanding these tools helps brokers structure optimal coverage

*This article is part of our series on stop-loss underwriting. For a comprehensive overview, see our whitepaper: [Stop Loss Underwriting: A Deep Dive](/resources/whitepapers/stop-loss-underwriting-deep-dive).*