By Mia MacGregor

July 7 - (The Insurer) - Rising claim frequency and cost are just two of the challenges facing U.S. businesses when it comes to managing healthcare benefits, newly published reports from both Tokio Marine HCC and QBE North America have highlighted.

The threshold for what now constitutes a "large claim" in the specialist medical stop loss sector has evolved, Tokio Marine HCC A&H Group’s 2025 Annual Market report noted. And the carrier stated that such claims are now commonplace.

Specifically, the frequency of stop loss claims exceeding $2 million has soared by 1,251% since the Affordable Care Act's removal of health benefit payment caps in January 2014. Stop loss claims over $2 million have increased an average of 26.7% per year since 2013, the Tokio Marine HCC said.

Tokio Marine HCC noted exponential growth across various large claim thresholds, with the frequency of claims rising significantly in the past year at the $200,000 (46 points), $500,000 (75 points), $1 million (112 points) and $2 million (247 points) reimbursement levels.

Consistent since 2021, the most frequent stop loss claims are for neoplasms/cancers, cardiovascular diseases, musculoskeletal/connective tissue and digestive diseases.

Neoplasms/cancers and cardiovascular diseases alone accounted for over 48% of total costs in 2024, up from 44% in 2021. Emerging diagnoses include nervous system, endocrine/metabolic and infectious/parasitic diseases.

“The rising frequency of claims, particularly as hospitals seek to recover financially from the pandemic, have been contributing to a hardening market. Insurers are responding with higher rates and stricter terms all while the industry adapts to new AI capabilities,” said Jay Ritchie, president and CEO of Tokio Marine HCC A&H Group.

QBE North America's 2025 Accident & Health Market report identified key cost drivers in self-funded healthcare plans, with cancer, circulatory disease and premature births as significant contributors.

The report highlighted a 60% rise in the frequency of circulatory claims post-COVID, with neoplasms continuing to be the predominant excess loss claim across all deductible levels, increasing by 15% in 2024.

The report noted that projected healthcare costs related to circulatory disease are expected to triple from 2020 to 2050.

QBE said the projection "underscores the need for effective prevention and management strategies."

“This information highlights the urgent need for targeted interventions to address the rising prevalence of circulatory disease and the associated healthcare costs. Efforts should focus on prevention, early detection, and fair access to healthcare to reduce the impact on vulnerable populations,” the report stated.

QBE also highlighted escalating preterm birth claim costs. According to the carrier, claims related to preterm birth are increasingly reaching or exceeding the $2 million mark, with the increases driven by hospital expenses for conditions such as congenital anomalies.

Poor societal health has also led to an increase in claims, with increasing dependence on expensive medications, excessive use of antibiotics and prevalent intake of processed foods leading to a rise in obesity and chronic disease rates, significantly exacerbating public health threats in the U.S., according to QBE North America.

The report noted that the specialty drug market, including biologics, gene therapies and cancer treatments, had rapid growth of new drugs approved in 2024, with the market expected to reach $966 billion by 2030. Global spending on cancer drugs alone is expected to reach $370 billion by 2027.