Unit of Symetra Financial to Offer Stop-Loss Coverage for Unlimited Lifetime, Annual Benefits

A unit of Symetra Financial Corp. will offer medical stop-loss insurance coverage to employers for unlimited lifetime and annual benefits.

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Symetra Life Insurance Co. said the option will be available on all new and renewed stop-loss policies with effective dates of Sept. 1 or later.

With individual lifetime medical maximums removed under the new U.S. health care reform law, companies that self-fund their employees’ health benefits are looking to medical stop-loss insurers to protect them against potentially hefty exposures. Most carriers are eager to offer additional coverage but likely need the help of reinsurers to do so, experts say (BestWire, June 1, 2010).

Reinsurance is in place to allow Symetra to offer this benefit, a spokesperson for Symetra Financial (NYSE: SYA) said in an e-mail. The cost per employee will vary by plan design, but for most policyholders, “it will be a nominal increase.”

The reform law requires most self-funded medical plans to remove individual lifetime maximums for plan years starting six months after the date of its enactment, and Jan. 1, 2011 for calendar year plans, according to Aegis Risk (BestWire, June 1, 2010).

With medical stop loss, employers pay for medical claims up to a certain deductible, and the stop-loss insurer covers claims payments above that level, Symetra said.

The company’s unlimited benefits option “is designed to protect employers from catastrophic risk and help them meet their obligations under the new health care law,” Michael Fry, senior vice president of Symetra’s group division, said in a statement.

Last month, Canada-based Sun Life Financial Inc. (NYSE: SLF, TSX: SLF) said its employee benefits group division will provide unlimited lifetime maximums for stop-loss policies effective on and after Oct. 1.

The big issue is whether carriers will reinsure the risk or take it on themselves and whether capital will erode from reserving for that higher amount, said Sam Fleet, president and chief executive officer of AmWINS Group Benefits (BestWire, June 1, 2010).

Medical stop-loss premiums for Symetra totaled $391.4 million in 2009.

In January, Symetra raised about $282.5 million in net primary proceeds from its initial public offering to become a publicly traded company (BestWire, Jan. 29, 2010)

Symetra Life Insurance Co. currently has a Best’s Financial Strength Rating of A (Excellent)

(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com)