Tokio Marine Report Highlights Rising Medical Stop-Loss Claim Costs

Tokio Marine HCC—A&H Group's 2026 Annual Market Report examines trends affecting the medical stop-loss market, including large claim frequency, diagnostic cost drivers, transplant activity, deductible strategies, and emerging healthcare cost pressures. According to Tokio Marine, the medical stop-loss environment remains under significant pressure due to rising claim frequency, higher-cost catastrophic conditions, specialty pharmacy inflation, and continued growth in transplants, neonatal care, and cellular and gene therapies.

The report found a steady increase in the frequency of large claims since 2020. Claims exceeding specific deductibles by at least $2 million rose 213 percent between 2020 and 2025, while claims exceeding deductibles by at least $500,000 increased 114 percent over the same period. Per the report, accelerating medical and prescription drug costs are contributing to more claims breaching stop-loss deductibles.

Neoplasms and cancers remained the largest diagnostic category by total cost in 2025, accounting for 35.2 percent of paid claims, followed by cardiovascular diseases at 12.7 percent. According to the report, these two categories together represented nearly 48 percent of total claim costs, while nervous system diseases moved into the third position due in part to gene therapies and specialty drug treatments.

Among the largest individual claims reported in 2025, the highest paid claim was a perinatal/neonatal case involving respiratory distress in a newborn, with total paid costs of approximately $8.9 million. Tokio Marine said that perinatal and neonatal conditions continue to generate some of the highest-severity claims in the stop-loss market, despite ranking lower among overall diagnostic categories by total cost.

The report also highlighted the importance of claim maturity when evaluating renewal pricing. Tokio Marine noted that quotes based on fewer than nine months of current-year claims data produce more volatile experience projections and generally require more conservative pricing assumptions. As additional months of claims experience become available, final loss ratio estimates become more credible.

Transplant activity continued to reach record levels in 2025. According to Tokio Marine, a total of 49,065 transplants were performed during the year, including record numbers of liver and lung transplants. Liver transplants increased by 886 procedures from 2024 to 2025, representing the largest growth among major transplant categories, while kidney transplants remained relatively stable.

Deductible management emerged as another key theme in the report. Per the report, half of employer groups did not increase their specific deductible during any of their four renewal opportunities between 2022 and 2025. Tokio Marine's analysis showed that groups that increased deductibles more frequently generally experienced lower average annual rate increases than groups that maintained flat deductibles.

The report also examined cost containment efforts. Tokio Marine reported approximately $2.7 million in Preliminary Claims Unit savings and more than $27.5 million in Specialty Claims Unit savings during 2025. Examples included neonatal claims reviews that generated nearly $2 million in additional savings and a double-lung transplant case where contractual arrangements reduced costs by more than $2.2 million.

Claim severity remained disproportionately concentrated among the youngest claimants. According to the report, 39 percent of stop-loss claims exceeding $1 million involved children younger than age 10, with most of those claims occurring among infants under age one. Tokio Marine attributed much of this severity to perinatal, neonatal, congenital, and chromosomal conditions.

The report also explored how stop-loss coverage absorbs a significant portion of medical and prescription drug inflation. Per Tokio Marine, when employers do not increase specific deductibles at renewal, a disproportionate share of medical cost trend shifts into the stop-loss layer, resulting in higher costs for carriers and potentially greater renewal rate pressure.

Mental and behavioral health claims showed substantial growth during the study period. According to the report, total costs associated with these claims increased 123 percent between 2020 and 2024, compared with a 55 percent increase for all other claims. Tokio Marine noted that increased claim frequency, rather than claim severity, was the primary driver of this trend.

Looking at overall stop-loss trends, Tokio Marine reported that January 2024 and January 2025 policy-year trends exceeded historical averages by 5.0 and 9.2 percentage points, respectively. The report concluded that the market has begun responding to these higher cost trends but will likely require continued rate discipline to reach adequate pricing levels across the stop-loss sector.