Why Stop-Loss Insurance Matters More Than Ever in 2026

# Why Stop-Loss Insurance Matters More Than Ever in 2026

Self-funding continues to dominate among large employers and is gaining traction with smaller firms. The numbers tell a compelling story about why stop-loss expertise has never been more critical.

## The Self-Funding Surge

According to the [KFF Employer Health Benefits Survey](https://www.kff.org/health-costs/report/2024-employer-health-benefits-survey/):

- **63%** of covered workers are now enrolled in self-funded plans
- **79%** of workers at large firms are in self-funded arrangements
- **20%** of workers at small firms have moved to self-funding

This shift reflects employers' desire for greater cost control, flexibility, and transparency—but it also introduces exposure to catastrophic claims that can devastate a company's finances without proper protection.

## Rising Healthcare Costs Amplify Risk

The cost environment makes stop-loss coverage essential:

- Premiums for employer-sponsored coverage increased **6–7% year-over-year** ([KFF](https://www.kff.org/health-costs/report/2024-employer-health-benefits-survey/))
- The frequency and severity of million-dollar claims are climbing
- High-cost conditions like cancer, NICU stays, and specialty drugs drive catastrophic claims
- Gene therapies and advanced biologics add volatility, with single treatments exceeding **$2 million**

## A Strategic Necessity

Against this backdrop, stop-loss insurance is not just a financial safeguard—it's a strategic necessity. For brokers and employers, understanding how carriers price this protection is critical for:

- Securing competitive rates in a hardening market
- Building sustainable renewal strategies
- Protecting against the unpredictable nature of catastrophic claims
- Managing cash flow and budget certainty

## The Bottom Line

The convergence of increased self-funding adoption, rising healthcare costs, and emerging high-cost therapies has elevated stop-loss from a back-office coverage to a front-line strategic decision. Brokers who understand these market dynamics can better serve their clients and differentiate their practice.

*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).*