how much will stop loss premiums increase in 2026?
in 2026, stop-loss insurance premiums will increase by an average of 7.8%. financial regulators and the insurance industry have finalized the rates for next year, and the cumulative increase over the past five years is a whopping 46.3%. In other words, premiums have nearly doubled in five years.
by generation, the increase varies greatly. while the first generation averages 3%, the second generation averages 5%, the third generation sees a 16% increase, and the fourth generation sees a whopping 20% increase. However, these are averages, and the actual increase will vary depending on the age of the policyholder and the loss ratio of each insurer.
stop-loss insurance generations at a glance
stop-loss policies are divided into Generations 1 through 4 based on when they were purchased.
generation 1 is for pre-2009 enrollees, who have almost no deductible but pay a significantly higher monthly premium.
the second generation was sold from October 2009 to March 2017, when a co-payment system was introduced that requires patients to pay 10 to 20 percent of the hospital bill.
the third generation has been available since April 2017, and is characterized by the separation of non-payment treatments such as hydrotherapy into a special supplement, which has reduced premiums by more than 30% compared to the previous generation.
the fourth generation came out in 2021, and like car insurance, it is based on a structure where you pay more for frequent visits to the hospital and get a discount if you don't.
why stop-loss premiums keep rising
the root cause of rising stop-loss premiums is insurer deficits. insurers are losing between 1 trillion and 2 trillion won every year on P&C insurance alone, and since they pay out far more in claims than they receive in premiums, they have no choice but to raise premiums to cover the hole.
as of the third quarter of this year, the overall loss ratio is 120.7%, meaning that for every 100 won in premiums, 120.7 won is paid out in claims.
why 4th generation P&C insurance premiums are rising the most
the loss ratio for the fourth generation of P&C insurance is a whopping 147.9%. the reason behind this high loss rate is the problem of excessive non-paid medical treatment.
non-payment refers to treatments that are not covered by health insurance, such as hydrotherapy or vitamin injections, and unlike payable treatments, hospitals are free to set their own prices. some hospitals even recommend expensive uncompensated treatments after checking if you have no-loss insurance.
interestingly, 70% of no-loss enrollees don't make a single claim in a year, while the top 10% of enrollees take 60% of all non-payment claims, and the top 1 to 2% take 15 to 20% of all payments. This means that the majority of people who rarely go to the hospital have to share the cost of their insurance because of the excesses of a few.
gen 4 also delayed the uncompensated care premium surcharge since its launch in 2021 to gather statistics, and then implemented it for the first time this year, causing loss ratios to skyrocket because members who received a lot of uncompensated care also paid lower premiums.
key changes to 5th generation stop-loss insurance
early next year, we'll be rolling out the fifth generation of stop-loss insurance. the biggest change is raising the non-payment threshold.
if you receive non-emergency non-covered care that is suspected of being overpaid, your deductible will go up to 50%. there's also a $10 million annual coverage limit.
there will also be a program to subsidize one year of premiums for first- and second-generation enrollees who switch to the fifth generation. if you're an older policyholder who is currently paying a high premium, it's worth considering switching.
frequently asked questions
Q How much will stop-loss premiums increase in 2026?
A The average increase will be 7.8%, with generational increases of 3% for Generation 1, 5% for Generation 2, 16% for Generation 3, and 20% for Generation 4. your exact increase will depend on your age and insurer.
Q How do I categorize my stop-loss policy generations?
A Generation 1 is before 2009, Generation 2 is from October 2009 to March 2017, Generation 3 is after April 2017, and Generation 4 is after 2021, based on when you joined.
Q When will the fifth generation of physical loss insurance be released?
A It will be released in early 2026, and the key changes will be a non-benefit deductible of up to 50% and an annual coverage limit of $10 million.
Q Will Gen 1 and Gen 2 policyholders be able to switch to Gen 5?
A Yes, they will be able to switch, and the government is working on a program to subsidize a portion of the premium for one year.
Q Why do stop-loss insurance premiums keep rising?
A Because insurers are losing 1 trillion to 2 trillion won every year, and the loss ratio is over 120% due to uncompensated over-treatment, making premium increases inevitable.
bottom line
the 2026 stop-loss premium hike is inevitable, but by understanding the generational differences and the five generations of stop-loss changes, you can respond wisely.
if you're wondering how much your premiums will increase, let us know in the comments. if you found this article helpful, please subscribe and like it.