Sun Life released its annual High-Cost Claims and Injectable Drug Trends Report on May 21, 2026, drawing on more than 70,000 high-dollar claims from over 3,300 self-funded employers. The headline number for anyone funding a retained health layer: million-dollar-plus claims rose 46% in frequency from 2022 to 2026, and on a claims-per-million-covered-employees basis they climbed 29% in the past year and 61% over four years. Blood cancers averaged $5.45 million per claim in 2025, one leukemia claim reached nearly $8 million, and Elevidys, the Duchenne muscular dystrophy gene therapy, averaged $3.6 million a course.
That severity is landing in a hardening stop-loss market. Segal’s 2026 dataset puts the average stop-loss premium increase at 12.7%, up from 9.7% a year earlier, while Mercer’s January 2026 placements averaged a 23% renewal increase, up from 18%. Benefits Blake pegs the reinsurance pricing behind those quotes up roughly 15%. Carriers are also lasering: singling out known high-cost claimants for a higher individual attachment, or offering “no new laser” protection only with rate-cap loads that can run to 40% to 100% of premium.
Who it affects
The squeeze is concentrated among mid-market self-funded employers, roughly 50 to 1,500 lives, too large to stay fully insured comfortably but too small to absorb a $5 million claim alone. As specific deductibles rise and lasers push named claimants back onto the plan, catastrophic frequency times severity moves from the carrier’s book into the employer’s retained layer. More of these employers are responding by joining a group medical stop-loss captive, pooling specific and aggregate risk with peer members behind a fronting carrier that cedes the top of the tower to reinsurance.
The reserve mechanism
Pooling changes the reserving problem in a way that surprises boards. When a captive retains a middle layer, say $500,000 to $2 million per claimant, and cedes the excess, the retained catastrophic layer is low-frequency and high-severity by construction. Its expected claim ratio is volatile, and its net incurred-but-not-reported (IBNR) reserve, after fronting fees and ceded reinsurance recoveries, can exceed the gross IBNR any single member would book on its own plan. The pooled layer captures the tail that individual plans used to hand to the carrier; the captive now owns it. That is the counterintuitive result covered in our explainer on why captive net IBNR can exceed gross: concentration of the volatile layer, not premium, drives the number.
Gene and cell therapies complicate the estimate further. A CAR-T or gene-therapy claim is not smoothly distributed trend; it is a discrete $2 million to $4 million event that either happens in the year or does not. Modeling those as a separate catastrophic frequency, rather than burying them in an overall trend factor, is what keeps the retained-layer estimate honest. Our piece on gene therapy and aggregate stop-loss risk walks through why a single approval can reset the layer, and the Sun Life comorbidity data on $3 million claims shows how secondary conditions stack severity on top of the index diagnosis.
Where this shows up in your reserves
Look at the captive’s retained-layer development triangle, not the member plans’ gross paid-claims runs. The diagnostic is the net IBNR line for the pooled specific layer on the captive’s balance sheet, and the confidence level behind it. Funding a volatile catastrophic layer at the 70th percentile versus the 85th can swing the capital requirement materially, and that percentile selection, covered in captive funding at a confidence level, is the real capital driver once the pool retains the tail. Members expecting their share to track their own historical claims will underfund it.
Decision-maker checklist
- Confirm what confidence level the captive funds the retained catastrophic layer to, and run the capital number at one percentile higher.
- Ask whether gene and cell therapy claims are modeled as a separate catastrophic frequency or folded into overall trend.
- Reconcile how a higher specific deductible and any lasers change the retained expected claim ratio for the coming year.
- Check that the fronting and reinsurance structure is reflected in the net IBNR, not just the gross, per IBNR for group captives and RRGs.
Watch the 2027 renewal quotes for wider lasering and the pace of new group medical stop-loss captive formations that domiciles report. The premium increases will make headlines; the pooled catastrophic layer is where the reserving work actually is.
Sources
- Sun Life, “What drives multimillion-dollar medical claims?” High-Cost Claims and Injectable Drug Trends Report, May 21, 2026: https://sunlifeus.mediaroom.com/2026-05-21-What-drives-multimillion-dollar-medical-claims-Sun-Life-report-shows-secondary-health-conditions,-hospital-stays-and-specialty-drugs-among-key-factors
- Segal, “Stop-Loss Trends Shaping Health Plan Costs 2026”: https://www.segalco.com/consulting-insights/q3-2026-trends-focus-stop-loss-insurance/
- Mercer, “As the stop-loss market hardens, renewal protections matter more than ever”: https://www.mercer.com/en-us/insights/us-health-news/as-the-stop-loss-market-hardens-renewal-protections-matter-more-than-ever/
- Benefits Blake, “Reinsurance Pricing Is Up 15%. Here’s What’s Driving Stop-Loss Rate Increases in 2026”: https://www.benefitsblake.com/articles/stop-loss-rate-increases-2026-reinsurance-glp1-gene-therapy
- HUB International, “Understanding Medical Stop-Loss Captives”: https://www.hubinternational.com/blog/2026/06/medical-stop-loss-captives-for-mid-sized-employers/
- IFEBP, “2025 Medical Stop-Loss Premium Survey for Self-Funded Plans”: https://blog.ifebp.org/2025-medical-stop-loss-premium-survey-for-self-funded-plans/
- NAIC, “Stop Loss Insurance, Self-Funding and the ACA” white paper: https://content.naic.org/sites/default/files/inline-files/SLI_SF.pdf