Unum Enters Health Stop-Loss Market

A disability leader continues to diversify

Traditionally, the main users of medical stop-loss insurance have been large employers. (Photo: Thinkstock) Traditionally, the main users of medical stop-loss insurance have been large employers. (Photo: Thinkstock)

Unum is expanding its reach by entering the medical stop-loss insurance market.

The Chattanooga, Tennessee-based insurer said today that it will begin selling stop-loss to employers with self-insured health plans late in the summer, with the first coverage sold taking effect Jan. 1, 2018.

--- (Related on ThinkAdvisor: House Passes Stop-Loss Definition Bill by Huge Margin)

Unum will offer stop-loss insurance nationwide, the company said.

Stop-loss insurance is an arrangement that protects a coverage provider against large claims.

Unum is best known as a seller of group disability insurance plans, and as the parent of Colonial Life. Colonial Life sells voluntary group benefits products, and it sells individual products at the worksite.

Unum recently entered the dental and vision benefits markets by acquiring Starmount Life.

Some insurers participate in the stop-loss market mainly by investing capital in the market. Other insurers provide plan administration services along with stop-loss insurance. Unum did not say whether it will provide plan administration services.

Some employers self-insure to get more control over their health benefits. Many employers self-insure to avoid the costs related to the state and federal requirements imposed on fully insured health plans.

In the past, most employers that sponsored self-insured health plans had 100 or more employees. In recent years, smaller employers have tried to cut their benefits costs by self-insuring.

Unum is not saying what it expects its minimum stop-loss client size to be.

"Unum provides coverage for all its product lines to customers of all sizes," Kelly Spencer, a Unum spokeswoman, said in an email. "We have a view of what might be attractive initially, but we'll have a better insight into the size that has the greatest need once we start providing the coverage."

Stop-loss providers without major medical insurance operations might have an easier time doing business in the commercial group market in 2018 than major medical insurance providers.

Many major medical insurance providers have been focusing on the Medicare and Medicaid markets in recent years.

The major medical providers that still have large commercial coverage operations are dealing with the effects of uncertainty about the future of state and federal health insurance rules.

Many insurers that sold individual major medical coverage in 2014, 2015 and 2016 are still wrestling with reimbursement and billing problems related to two Affordable Care Act risk management programs, the ACA risk corridors program and the ACA risk-adjustment program.

The publicly traded major medical insurers have de-emphasized active efforts to sell individual major medical coverage through agents and brokers. The companies' executives rarely mention agents and brokers in their quarterly financial reports, or during conference calls with securities analysts.

Executives at Unum, in contrast, have made a point of talking about agents and brokers. Unum executives said they made the Starmount deal partly because Unum's agents and brokers wanted a chance to sell Unum dental and vision products.

Unum regularly discloses what it pays agents and brokers in its financial reports. In the fourth quarter of 2016, for example, Unum said it spent 9% of its revenue on sales compensation.

--- Read Kabat to become Unum chairman on ThinkAdvisor.

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