The employer stop-loss market seems to be stabilizing and the reinsurance market may well reflect that in 2006, according to Alden Skar, a vice president and senior actuary with ING Re, Minneapolis.

Skar says carrier clients are not changing reinsurers with as much frequency, which suggests that reinsurers in this market are more likely to keep current business but may be less likely to get new business.

He says Jan. 1 renewals from managing general underwriters still are being evaluated, so that more information on the trend that reinsurers such as ING Re are seeing probably will be available in a few weeks.

In 2006 and beyond, the impact of mergers and acquisitions on employer stop-loss reinsurance could reduce the need for reinsurance if new, larger companies retain more risk.

Skar explains that for excess stop-loss business, ING Re sets its own rates rather than using quota share arrangements where rates are negotiated.

Skar says there is a big demand for stop-loss business because many smaller plans either do not have the expertise to handle large incidents or are focused on smaller claims.

While unusual claims such as injuries from automobile accidents cannot be controlled, there are health care measures that can be taken to reduce the chance of other expensive treatments, he continues.

For instance, premature births and low birth weight babies need to spend more time in intensive care facilities, which is a high cost for health plans, Skar says. If a baby is born at six months, then the baby often has to stay in the hospital for up to three more months when normal birth would have occurred in order to achieve normal birth weight, he adds. This comes at a great cost, according to Skar.

To address this issue, Skar says, ING Re continues to provide education through its Rose and Rosebud programs in which nurses educate women on ways to make sure that pregnancies are on course.

The Rose program looks at how care can be provided and yet managed for claims such as organ transplants or other high-cost care. Rosebud is a part of that program that focuses on care for pregnant women and new mothers.

The focus is on whether a carrier can manage a problem before there is one, Skar says.

One other trend that may be developing with the advent of health savings accounts, Skar notes, is the creation of a two-tiered system in which the healthier population will opt for HSAs, while the less healthy will stick with traditional health insurance options.

Consequently, he says, there may be a need to look at reinsurance differently when reinsuring the systems, Skar says.

One would expect that there would be better experience for such HSA clients and that rate manuals and risk retention would reflect that, he adds.