The U.S. business group of Sun Life Financial, Inc. (NYSE: SLF, TSX: SLF) today reported a tenfold rise in the number of individual $1 million or more catastrophic claims paid by the company over the past four years. These findings are based on a study released today by Sun Life Financial U.S., the largest independent writer of stop-loss insurance in the U.S., with $915 million of in-force premium as of December 31, 2013.
The most significant rise related to complications surrounding dependent infants, including premature births, failure to thrive newborns and congenital anomalies, according to Sun Life. While there was no single explicit driver for the increase in these particular complications, Sun Life continues to monitor the underlying business, specific claims, and potential trends related to health care costs and demographics. The Company also notes that these diagnoses often stemmed from normal pregnancies that unexpectedly turned into catastrophic claims, reinforcing the need for protection against "unpredictable" catastrophic claims.
“Sun Life is seeing more catastrophic stop-loss claims with higher price tags,” said Karin James, Assistant Vice President of Strategic Operations for Sun Life’s Stop-Loss business. “In 2013 alone, we paid more than double the number of individual $1 million or more catastrophic claims compared to the prior year, by far the biggest annual jump in the study. We anticipate costs will only continue to rise as new technologies are adopted, advanced drug therapies are introduced, and the Affordable Care Act increases access for participants.”
The study ranks the top ten mostly costly stop-loss catastrophic claims filed between 2010 and year-end 2013 by Sun Life Stop-Loss insurance policyholders with up to 100,000 employees. In the four-year period, Sun Life Financial processed over 100,000 claims and reimbursed over $1.9 billion in catastrophic claims to self-funded employers. The report shows the aggregate cost for each claim condition reimbursed by Sun Life. The cost reflects two factors: (1) severity, or the underlying cost of the claim and, (2) frequency, or the number of times the claim occurs.
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