Sun Life’s 2025 High-Cost Claims report, published in March 2026 and drawn from roughly 3,000 self-funded employers, contains a figure that most trade coverage passed over: claims at or above $3 million per million covered employees rose 47% from 2023 to 2024, nearly triple the 29% growth rate for all $1 million-plus claims over the same period. That differential is the reserve problem. When the top tier of a self-insured plan’s claims distribution grows at 47% annually while average plan medical trend runs at 8% to 10%, aggregate stop-loss attachment points calibrated on overall plan trend are no longer adequate.
Who It Affects
Self-insured employers carrying aggregate stop-loss are the primary exposure, particularly mid-size plans in the 300 to 1,500 covered-lives range. For these plans, the aggregate attachment, typically set at 110% to 125% of expected annual claims, was priced on the assumption that the upper tail and the center of the claims distribution grow at roughly the same rate. They do not. A single $4 million gene and cell therapy claim on a plan with $10 million in expected annual losses consumes 40% of a 120% aggregate corridor before the plan has processed any other claim. Add one $1.5 million cancer case and the aggregate protection is nearly exhausted before mid-year.
Plans with aggregate stop-loss only, rather than a combination of specific and aggregate coverage, face the sharpest exposure. Unlike a specific deductible that catches individual large claims, aggregate protection triggers only when the plan’s total losses exceed the corridor ceiling. Every dollar of every large claim counts toward that total. A plan that expects five $200,000 claims in a year does not pierce the aggregate. A plan that gets one $3 million claim and two $800,000 claims might, even though no individual claim is catastrophic by historical standards.
Stop-loss carriers have already repriced for this environment. Voya Financial raised employer renewal premiums an average of 24% for January 2026 renewals. Sun Life increased renewal pricing by 14% after a Q4 2024 claims spike. Global stop-loss reinsurance pricing is up 15% or more for 2026 treaties, per Benefits Blake’s reinsurance transmission analysis. Carriers set their renewal rates using their own view of the upper-tail distribution. Plans that have not recalibrated their aggregate IBNR estimate to match the market’s repricing are carrying a gap between what their reserve assumes and what the market believes the risk costs.
The Reserve Mechanism
The aggregate stop-loss IBNR estimate rests on an expected claim ratio: project total plan claims as a percentage of expected annual losses, apply the corridor multiplier, and reserve for the probability that actual claims pierce the ceiling. The structural flaw is that this estimate typically trends all plan claims using a single aggregate medical trend factor. When one tier of the distribution grows at 47% annually, trending it with the overall factor understates the expected claim total and, more importantly, understates the upper-tail penetration probability.
Gene and cell therapies are the clearest driver of the $3 million-plus tier. Elevidys, the gene therapy for Duchenne muscular dystrophy, averaged $3.6 million per treatment in Sun Life’s 2026 report. Casgevy (sickle cell disease) runs $3.1 million. A single treatment can pierce most aggregate corridors for mid-size plans before any other claim reaches the actuary’s model. The mechanics of how a gene therapy claim interacts with specific and aggregate stop-loss layers are detailed in our piece on gene therapy stop-loss attachment points.
But gene therapy is not the only contributor. Cancer and musculoskeletal conditions are filling in the $1 million to $3 million band just below the top tier, compressing the gap between the attachment point and the aggregate ceiling from the lower end as well. Sun Life’s comorbidity data shows that secondary health conditions, not primary diagnoses, are often what pushes a cancer or cardiovascular claim from $1.2 million to $3.5 million. That layering effect is documented in our piece on comorbidity-driven $3 million claims. An actuary building the aggregate IBNR on primary-diagnosis trend factors, without a separate loading for the compounding severity visible in Sun Life’s data, will understate the reserve.
The IBNR calculation for self-funded health plans works through how expected claim ratio, aggregate attachment, and tail loading interact in practice.
What This Means for Your Next Review
At the next stop-loss renewal or actuarial reserve study, two questions should go directly to the actuary or TPA:
- When our aggregate attachment point was set, what annual growth rate was assumed for the $3 million-plus tier specifically? If the answer is overall plan trend, the estimate needs a separate tail loading for the upper tier.
- If the $3 million-plus tier continues at the rate Sun Life is reporting for 2024, what is the implied probability that our plan pierces the aggregate attachment this year, and how does that compare to the penetration probability embedded in the current IBNR estimate?
The next data point to watch is the following Sun Life or Segal high-cost claim report, expected in late 2026 or early 2027 with 2025 data. A second consecutive year at 47% growth in the $3 million-plus tier would make aggregate corridors set in 2023 or 2024 a near-certain reserve shortfall for many mid-size self-insured plans, because those corridors were priced before either the current frequency of gene therapy claims or the comorbidity-driven severity compounding was visible in the historical data that actuaries used to set them.
Sources
- Sun Life 2025 High-Cost Claims Report (March 2026)
- Sun Life newsroom: Cancer Still Tops High-Cost Health Claims
- Benefits Blake: Stop-Loss Rate Increases 2026 (Reinsurance, GLP-1, Gene Therapy)
- BenefitsPro: Sun Life Sees Stop-Loss Problems Spiking
- Wisterm: Gene Therapy Impact on Self-Funded Plans and Medical Stop-Loss Captives