Capital Markets vs. Insurance Markets

Mehb Khoja

Hey, everybody, welcome back to Firm and Final. I’m your host, Mehb Khoja and I have a great panel with me today.

I have Tara Krauss, who is the president of A&H with QBE.

We have Theresa Galizia, senior vice president and chief underwriting officer at Berkley

And Alexis Neu, who is a managing director at Guy Carpenter.

And first off, I just wanted to get the audience to get to know you guys a little bit better.

I thought it would be great if you just quickly introduce yourself and tell everybody what you’re doing in the stop loss and reinsurance space. Alexis, why don’t we start with you?

Alexis Neu

Yeah, absolutely. Thank you Mehb.

My name, like you said, is Alexis Neu. I work with Guy Carpenter. I’ve been in the industry for 15 years now, all with Guy Carpenter. Actually started with Guy Carpenter as a summer intern and then was invited back full time. So, bleeding GC blue, which I love to represent.

As you mentioned, I’m a life accident health reinsurance broker with Guy Carpenter. I help organize our life accident health segment as deputy to segment leader Dennis Arizin. As well as, of course, account leadership responsibilities and servicing clients throughout the organization.

Mehb Khoja

Awesome. Theresa, why don’t we go with you next?

Theresa Galizia

Thanks, Mehb.

I’m Theresa Galizia, I’m with Berkley Accident and Health. As Mehb said, I’m the senior vice president and chief underwriting officer. I’ve been here just over five years, and in my prior roles served in similar capacities at two other large, direct writers.

I started my career in managed care, so I have a bit of a unique background.

In addition to employer stop loss, I spent quite a bit of time in the managed care segment, specifically in medical access, HMO reinsurance, provider stop loss insurance. And in addition to the stop loss insurance that I oversee here at Berkley Accident and Health, we also have a managed care practice and a specialty accident insurance practice as well.

So I kind of oversee soup to nuts from the intake set up function through the underwriting process and even the clinical underwriting process. All of that falls under my purview.

And we also have a very strong focus on group captives in the medical stop loss market and the underwriting of the medical stop loss for the group captives segment is also part of what I oversee here at Berkley.

Mehb Khoja

That’s great. Tara?

Tara Krauss

Yeah. So I’m the president of accident and health for QBE. I am close to Alexis in being a lifer with QBE, I was part of an acquisition in 2009. I came on as an underwriting lead and held various roles within the organization, similar to what Theresa did. I was kind of a COO, CUO or what Theresa does, prior to the current role that I’m in as president.

I’ve been in this capacity for almost five and a half years, which is crazy to even reflect on.

I took the job the eve of the pandemic, started to lead a team. And when everyone went remote, it was an interesting time.

Career underwriter. I had a finance degree and got into this space because you found jobs in the newspaper, and I thought it would be the job I took until I knew what I wanted to do with my life. And here I am almost 30 years later, essentially, responsible for the… go ahead?

Mehb Khoja

That’s what I was going to ask. What is a newspaper? I don’t know what that is.

Tara Krauss

I know, right? It is pretty funny when I talk to my kids now. But, you know, hey, we were a little bit, maybe a little bit gritty back then, right? We knew how to hunt.

Mehb Khoja

Yeah, well, thank you all for joining for this episode of Firm and Final. I’ve got to tell you, it was really hard to pull together an all-female panel. And so, my question for you guys is, why isn’t there as much representation of females in the stop loss and reinsurance industry?

Theresa Galizia

I have a lot of this discussion with some of my friends and peers in the industry. I do think there is a quite a bit of representation in certain categories.

So, for example, in claims, in clinical cost containment, and even some of the lower level underwriting roles, I think we have a very fair representation of females.

Where we find areas where there aren’t as many as when you start to get into the executive level roles or even managerial level roles. And I think it’s hard to say exactly why that is, but it’s probably for the same reasons that every professional industry, outside of clinical roles, tends to have the same issue.

It’s just that, you know, women tend to take some time off, start families, have different priorities in their life. And I think that, as much as we, as a society, have kind of shifted culturally to having more balance at home, it’s still not an equal balance.

And so, it puts a lot of strain on women when they’re making decisions on whether they want to take that next step.

And one other thing, I think our industry is also, you know… there’s a lot of travel related to our industry once you get to the levels of roles and depending on what kind of support system you have at home or in your communities, it can be a real challenge, especially for women, I think, to be able to accept these roles and take on the travel and the commitment that requires.

Mehb Khoja

Of course.

Tara Krauss

You know, I’ll just add and be completely transparent and vulnerable here, when this role was presented to me, at first it was a big no, for all the reasons that Theresa mentioned.

And my girls were older at the time, I had taken a step back early in my career to go part-time and certainly took the compensation hit and the progression hit.

It was what I wanted at that time in my life. And luckily I worked for an employer who saw my contributions even on a part-time basis. And they were like, we’d take ten of you. Even if it was, you know, two days a week, right?

So, I think more companies… luckily, I work for an organization that is doing this now for women, but more companies need to prevent the woman from completely stepping out of the workforce when she’s climbing in her career.

Because, I think it’s a Kevin O’Leary quote. But, he talks about his high performing… If anyone doesn’t know who he is, he’s one of the sharks on the Shark Tank. He talks about, you know, if you want to give a tough job to someone, give it to a working mother because they know how to multitask like nobody, right. The amount of plates we have going at any given time, and I think we are doing women a disservice. And it is changing, as Theresa said. But we’ve done women a disservice to make them think… And I’ve had people in this situation… Make them think they have to completely opt out the minute they want to become a mother, because it’s just not true.

So if companies could be more flexible… I got that flexibility. And here I am running an $800 million business. So we need to learn from the past.

Women are more than capable. I think there are plenty of men that sponsor strong women. So I don’t think this is a women versus men issue. I take it seriously when it’s like, why is she there? Was it because they had to fill some quota?

No. It’s largely because there was a strong man advocating for her as well. And, you know, we can learn from the differences that we both bring to the table based on gender. I think we’ve come a long way.

There’s an old article. It’s pretty old now. It’s over a decade, but also giving as many women opportunities for these in an interview process as you do men. If there’s only one woman in a pool of four, the study basically found that she has zero chance of being hired.

But if it’s two women and two men, then it’s an equal shot, right? And that’s all women are looking for.

Mehb Khoja

Sure.

Alexis Neu

Absolutely. So I would agree with Theresa that there are pockets within the industry where you see large female representation. And I’m really proud to say that Guy Carpenter is one of those areas. Of my GC colleagues who touch the life, accident, health business in North America, over 40% of us are female, which is great.

And I know that, Mehb, you had Kelly Munger, for example, on your podcast a little while ago. She leads a really successful team at PartnerRe, and her team is very, very female forward as well. And so I do think you see these reflections of female concentrations in certain pockets.

And I would say there are female leadership opportunities, certainly.

We have some reflected here on this conversation today, as well as some of the other reference points that we’ve mentioned.

What is key is having that company support, like Theresa was saying. So support from the leadership and specific individuals within your firm, but also commitment from the company’s leadership. And I know here at Guy Carpenter, it’s pervasive across the industry. Right. We’re a global reinsurance brokerage firm. So, we represent many different disciplines and lines of business within the reinsurance industry and within the insurance industry.

But there’s an organization-wide commitment to supporting women in their careers, but supporting everyone in their careers, really. I mean, we have a really strong DEI program. We focus really heavily on what we call the colleague value proposition.

And so that’s every colleague and every role, making sure that they feel like they’re making an impact. They’re growing their leadership skills, they’re growing in their learning and development, and that they’re feeling like they’re getting rewarded for what they’re bringing to the table.

Mehb Khoja

That’s great.

Alexis Neu

It’s really great the way that they have delivered the messaging now and really made it part of our company framework to talk about this colleague value proposition. But to what Tara was saying, where it really starts is in the hiring process. Right. Like you need to be able to make sure that you’re sourcing diverse applications that are kind of making it up to a certain level for review.

It’s not that we’re weeding out, you know, applications based on certain demographic statistics, like we are just trying to say, are we at least collecting a diverse range of applications?

And then that’s where we start to see this foothold of females and other areas of diversity within our company.

Mehb Khoja

It’s a starting point.

Alexis Neu

Yeah, exactly. Yeah. It starts with the application, and it moves to then that colleague value proposition that I mentioned. And then the next piece is retention. Right. You have to be able to try and keep… and that’s I think both what Tara and Theresa were talking about, how do you make sure that you are creating an environment that is flexible to meet your employees where they are, and make sure that you’re retaining that choice talent within the industry?

Mehb Khoja

I think that’s right on. And I think all three of you work for world class organizations, and I’m glad to have two of you from the carrier side and one from the consulting and brokerage side.

I’ve got to ask you guys, you know, when I look at what’s going on in our market, everybody’s talking about loss ratios going up. There’s industry reports about trend and utilization. High cost claims are going up.

But when you talk to the brokers, they’re not ready to say that it’s a hard market and that there’s still a lot of capacity. So what gives? Are we in a hard market or not?

Tara Krauss

I actually think that, from a carrier position, if we’re not in a hard market, we need to be.

So we’ve continued to see loss ratios climb. We put out a market report. Some of the other leading carriers do as well, as do some of the leading brokerage firms.

And we’ve continued to see that upward trajectory on loss ratios. I think for those that aren’t as familiar with how insurance companies make money, the loss ratios merging into the low to mid 80s is not going to produce a profit for the carrier market. I think it’s a little bit of a disconnect right now between the carrier economics and just the market dynamics.

There’s a ton of capacity. So you’ve got new entrants coming in. And they have some runway before the losses start to hit. And probably a little bit more freedom that some of the other players that have been in it for the long run can apply with the P&L dynamics.

So I don’t think we’re completely there yet.

And it might take another market cycle, but all signs and conversations I’m having with the leading brokerage firms out there is they’re having the same conversations with my peers at other players. And we’re all saying the same thing, that that double digit rate increases are necessary to sustain the market.

Theresa, I’ll turn it to you.

Theresa Galizia

Yeah, I would agree. I, I wouldn’t say it’s a hard market because the reality is it’s not.

I would say it’s firming, though. And I think for carriers with the right amount of discipline and long term view on the market, we’re going to be okay.

Retention may take a bit of a hit, but you can get the rates you need, where you need it, if you’re willing to hold true to what your vision is and what your strategy is.

I will say, you know, specific to trend, we track a lot of different studies on that, as I’m sure my colleagues here do as well. And there’s no denying that medical inflation has gone up, especially since the Covid years where it took a little bit of a dip.

So we’re looking at least 8% medical trend ground up at this point. And when you look at the components of trend, I think that’s a really important topic to highlight because it’s not just the year over year change in unit price. I mean, that’s just one piece of the trend. There’s trends in utilization, right. So higher utilization also is going to increase your overall trend. And we are seeing that the bounce back from the pandemic was more delayed than I think any of us maybe would have thought. I think we all thought there would be some delay, but it really did take until latter parts of 2023 and 2024 to really see that happen, and those delays in care that were experienced over the pandemic.

We are now seeing higher utilization rates.

And then the third component of trend is the emerging technology risk. So therapies that were not available two years ago that are now available today, they’re working their way through the system and they tend to carry high price tags, especially when you look at specialty pharmacy.

The average cost of a specialty pharmaceutical back in 2008 when they first started was like $5,000 to $8000. And now the average price is currently $300,000 and growing. So, where is that going? It’s getting absorbed in the system. And the cost is getting passed through to the employers, to the stop loss insurers, to the reinsurers.

So all these components would suggest we absolutely need to get more rate.

But the capacity is a concern. Right. So the more capacity that’s out there, you’re less likely to get as much rate as you need.

So you just have to be really, really disciplined in, and deliberate on the business that you’re targeting, the sources that you’re working with, your portfolio mix, to make sure that your business model is at least leaning into the segments of the market that you think have the highest chance of producing an underwriting margin.

Mehb Khoja

So, Alexis, you’re working more with reinsurers, and Tara and Theresa are more on the stop loss side. So to reinsurers, are they facing the same challenges that stop loss carriers are facing?

Alexis Neu

Yes. I mean, absolutely right. The large claims are hitting everyone. So we talk about medical trend, rising costs. And particularly the continued prevalence of large claims. Those are absolutely hitting the reinsurers just the same as they’re hitting what we call the primary side of the market.

I think, what we’re seeing, Theresa, you mentioned about kind of breaking down the cost component of trend or medical inflation, right?

One of the other key areas that, yeah, we’re seeing that 8% ground up trend.

The other piece is when you look at medical service trend versus the specialty pharma or the RX trend. Right. So we’re still seeing the medical service trend in kind of the mid-single digits we’re seeing. When we just break out the drug component, that’s in the double digits.

And so that’s something that we are trying to break down for not only our clients, but we’re having very keen conversations with reinsurers about, okay, what trends are they seeing when you start to break apart those two pieces.

Now, obviously, for the most part, coverage is still comprehensive in that it’s covering kind of both of those components… not in all cases, but in most cases.

But what we’re seeing really is the trend being driven by the pharmacy side or the drug side, and that while large claims are overall increasing, inflating over this period, the frequency is really what’s driving it, right?

So a lot of times we talk about large claims and it sounds like a severity issue, but really what we’re seeing, it is so much a frequency issue, and a lot of attention gets paid right now in the industry on those emerging therapies or, you know, gene and cell therapies, right, which are brand new to the market.

But what we’re seeing obviously is still a rising cost. And therapies that have been around for a long time, like, more traditional cancer treatments. Now, of course, there’s constant innovation in that space. But, a round of cancer treatment has gone from somewhere around, you know, $500,000 to now, like, those are constantly over $1 million treatment processes.

And so obviously that continues to drive things up, too. So it’s hit from every side it feels like these days. But that point, Tara, that you made about that new capacity continuing to come in and it will take them some time to realize some losses. We’re seeing that as well on the reinsurance side. What we’re seeing these days is kind of that point in the market cycle where we had stability in the reinsurance carrier panel, the big players, prominent players for the last few years.

And now we’re seeing kind of a scramble in terms of where people are landing, new MGAs and MGUs starting up new, traditional P&C carriers saying, we want to enter the life and health space. How do we do it? And player supply seems like maybe a good place that we’d want to be. And so that continued growth of capacity and new capacity into the market will make for some really interesting dynamics here in the short term.

Mehb Khoja

Yeah, it’s an interesting point, and I’m of the opinion that we could lose a couple of carriers and a couple of reinsurers from the space, but it seems to be continuing to attract new stop loss carriers and new reinsurers. So with all the issues you guys are pointing out in the market, why are new entrants interested in coming into this space?

Theresa Galizia

Well, I think it’s still an attractive market when you look at the year over year growth potential.

I mean, we just talked about trend, right? So even if you take stop loss premiums today and trend them forward every single year, this market will grow regardless of whether you have more employers shifting into self-funded, which… that is happening as well.

So it is attractive. It’s a short-tail line, so you can make your corrections much faster than you can in more traditional P&C line. So I think you are seeing traditional P&C carriers that want to dip their toe in A&H and do so through stop loss. It’s fairly easy to get into.

You just have to file a form, which you can if you really want that.

Tara Krauss

Well it’s not THAT easy, Theresa.

Theresa Galizia

I don’t want to put an advertisement out there, but…

Tara Krauss

Yeah, I do think that, you know, the private equity is entering the space as well. But, if the market, the compounded annual growth rate, I think the last couple of years is 12% or higher. In just the past several years, we’ve seen the market go from a $32 billion market to now we’re thinking we’re going to hit $40 billion.

I definitely think the ACA helped explode things. There is a necessity now for most employers because of these high therapies for the stop loss coverage, which wasn’t always the case in past decades. But for the same things that Theresa has mentioned, I also think it’s important. It’s very capital to her point. It is on the easier side for some of these P&C parties to diversify.

They see that top line, they see the growth, and it’s very appealing, right?

But they’re maybe a little bit shortsighted on all the complexities that come with challenges and growing in this space and the main 15-20 carriers control the majority of this market, right? So while it’s appealing for new entrants, they really have to jump hurdles.

And you hear it. You see it every renewal cycle. The latest entrant in the space is doing some fancy bells and whistles to kind of call the brokers to their seats at the table. And that can be challenging.

But I think to Theresa’s point, for those that have been in the space long term and have been through multiple market cycles, they know that stability, consistency tends to win out in the long run.

I mean, we’ve seen some really big players in the space have some troubling results this past year. And I think that’s a warning sign to the industry. I think these are reputable players who are good underwriters, and so we’re all vulnerable to it if we don’t handle this more responsibly as a market from the reinsurance coverage all the way down.

Mehb Khoja

Yeah. I don’t think there’s ever been a time that we’ve seen publicly traded firms that play in this space report earnings and talk about stop loss as much as they are.

Tara Krauss

Right.

Mehb Khoja

And so I agree with you. It is a warning sign. It still puzzles me that new entrants are considering coming into the space. But then somebody said it in a way yesterday that really resonated for me. They said there’s a big difference between capital markets and insurance markets, and capital markets are just looking at the top line growth, wondering like, how do they play in that space?

And they’re thinking less about loss ratios. I think those of us who are growing up in the insurance or reinsurance space are always thinking about loss ratios, because at the end of the day, that’s what drives the bottom line for us.

Tara Krauss

Yeah, I mean, our market report this year, we saw some alarming… and we are seeing some alarming trends while we talk about all these new therapies out there. To Alexis’s point, the big claims that we’re being hit with, these are premature births. They’re childhood cancers where we know you can’t get great discounts, or any discounts at the children’s hospital for these treatments, or therapies for, you know, a cancer treatment or things that used to be a fourth line of defense are now first line of defense, whether it’s CAR T-cell.

So gene and cell therapy I think is a topic unto itself. Mehb you’ve covered it several times now, but that’s not really where we’re getting stung right now, right? And I do think you need a very significant amount of gross written premium or a very forgiving reinsurance broker to sustain some of these hits.

If you’re on the smaller side, right, you need a lot of premium to cover one of these, you know, $2 to $4 million claims.

Mehb Khoja

That’s right. And then on the topic of cell and gene, I think, you know, 2 to 3 years ago, that was probably the hottest topic in stop loss and reinsurance. And quite honestly, that momentum hasn’t materialized the way that we saw it. I would say today, the hottest topic in stop loss, at least, is captives and group captives.

Why do you guys think that product has exploded in the past few years?

Tara Krauss

Theresa, you should probably start with this, but this is a very shiny new toy for many in the space.

Theresa Galizia

Yeah. I mean, listen, group captives are, I think there is sometimes a misconception that they’re gimmicky or there’s a lot below the surface that people just don’t understand, but the reality is the simplest explanation.

It’s just another mechanism, another vehicle for transferring risk. And it allows fully insured employers to go into self-funding with a community of like-minded employers. And the captive is one way to reduce the volatility, spread some of the risk and create kind of a shock absorber.

So, they can make that transition, they can do it with more confidence. I think it creates a sense of community.

We at Berkley… Everybody has different ways of promoting their captive programs. We look at each captive can be as unique as it wants to be. We certainly have some turnkey programs, but then we also see ourselves as program builders. So it’s not a one size fits all model.

So if there’s a certain, you know, broker or administrator or other stakeholder out in the industry that wants to create a program centric to their business, we can absolutely help them do that. And when you bring these employers together, I think the sense of community, at least in my opinion, from what I’ve witnessed, is probably the most compelling story, because all these things we talk about, all the hardships in the industry, all the challenges we are facing when they face them together and they look at solutions to make the environment better than it was on their own.

That’s the exciting part of the business. Because as challenging as all of these things are, there are pockets of optimism and hope.

I think there’s a lot of discussion around transparency right now that I love to see happening, price transparency, unbundling of your stop loss program, making sure that you are meeting your fiduciary responsibility and selecting the right vendors, especially when it comes to PBMs, the transparent PBM model.

I’m glad to see that. That seems to be a topic of conversation at all the industry events that I’ve been going to, because all of these things that might seem small on their own, when you bring them together collectively and build a program around all of that, any type of cost containment solution, it really can make a big difference.

Something as simple as just the plan design itself. Or I shouldn’t say that. That’s simple, but, you know, really constructing your plan in a way that makes sense for your membership, because every membership is going to be different demographically. And while one employer may struggle with a certain disease state category, another one, you know, may have a different issue.

And making sure that you’re not just trying to force vendor cost containment solutions, but making sure that you’re selecting the right ones… that can be really powerful.

And the key to all that is unlocking the data and making sure that you’re doing the data analytics. You have, you know, when you’re self-funded, you’re in the captive, you have a lot more transparency.

You have sightlines into your first dollar claims experience that you otherwise wouldn’t have that allow you to make those more informed decisions.

Tara Krauss

I think you touched on the point of like, the community, that alignment of incentives. You know, you’re getting risk managers who are like, enough is enough. And, or, they’re seeing their insurance, they’re doing really well, and they’re seeing their insurance profits being retained by the insurance company. There’s more flexibility and control. There’s the transparency and there’s long term stability.

We also see that the captive sells because of all of these things mentioned. We tend to see those run sometimes even ten points better than our non-captive portfolio.

But with that said, I don’t think right now I think there’s a little bit of risk in like everybody’s doing it, everybody’s in the space now and professing to be an expert.

And once you’ve seen one captive, you’ve seen one captive, right? There’s like a ton of captive managers out there that, the feasibility studies and the audit and accounting and regulatory compliance perspective should not be, you know, a novice job, right?

Mehb Khoja

You know, it’s not easy to get all that stuff set up.

Tara Krauss

No. And there’s a lot of risk involved. Right. So it’s not an easy button I guess is my point. And you want to make sure you’re partnering with those that have longevity in the space, subject matter expertise on their team. They have good partnerships with captive managers, with the regulators.

Certainly if it’s a captive that’s looking to, or a group of employers that are looking to start their own captive cell right there, there’s upfront costs involved there.

So I do think, it’s an exciting time for captives. I’m glad it’s getting the sightline that it is. But, you know, I would caution that there’s a lot that goes into it, and it’s not for the faint of heart.

Alexis Neu

But I think what is great when you talk about like, the rise of captives and the captive evolution and the story, there is the fact that you’ve had other lines of business that have kind of proven out the captive model, that it can be a great savings opportunity for employers.

So you saw it start kind of in the D&O space and in the cyber space. And so you kind of had this proof of concept and other lines of business adjacent to what we’re doing that employers started to feel more comfortable and more confident. And now as they start to take on much more complex risk with their employee health business into the captive right, that does require that extra level of oversight and care of that conversation with regulators. You want to make sure that you have all those pieces really well ironed out.

But I think, to your point, the captive managers, whoever your consultant is, whoever you’re working with, right? They’re bringing the employer so many more tools to be able to analyze. You’re going to take this risk on and particularly this really complex health risk.

We want to make sure that you are doing so in the best way. And you truly are seeding the volatility away into the reinsurance market that you don’t want to see, but keeping those more predictable results, that’s where you’re going to see the savings.

Tara Krauss

Earlier this week I was at the VCIA conference, and the Vermont domicile is the number one domicile in the world.

And you can sit in a captive owner session.

It’s such a nice… Employee benefits is such a nice compliment, if they’ve already got the captive established. But the number of hands that raise in the room that already have their employee benefits in their captive is very low still.

So there’s a ton of runway there.

But I think it’s really important. That’s why conferences like VCIA are important, like educating captive managers who are largely using it for the P&C covers on the benefits of employee benefits is critical to the market.

Mehb Khoja

So this has been a fantastic conversation. I feel like I could talk to you guys for another two hours, but I know you all have a lot of stuff to do, so I’m going to get you guys out of here with one last question.

We’re coming up to the end of summer. It’s almost that time where stop loss professionals and reinsurance professionals get really busy, and we’re going to go into the 2026 season.

So make a bold prediction for me. What do you think is going to be something big that happens in the 2026 season?

Tara Krauss

I don’t know how bold this is, but I do actually believe… I’m approaching the 30-year mark in this industry. I do believe we are at kind of that turning point where we are going to see the market hardened, we’re not there yet.

I don’t know if we’ll be there for the January ‘26 cycle, but it’s coming.

It’s got… it has to happen. And I think things will shake out quickly as they have in the past.

You might not even see it coming, but when a few of the predominant players get enough coverage to hold their ground and others see that they’re not alone, you will see that wave of hardening and I think we can correct it quickly.

And really, it’s for the benefit of the stability of the market and the employers overall.

Mehb Khoja

Alexis, how about you?

Alexis Neu

Yeah. In the reinsurance market, I think that it’s also difficult to make a bold prediction. Right? We don’t want giant market swings here to be quite honest. Right. So I don’t want to, you know, indicate that the sky is falling or that there’s going to be choice market outcomes compared to last year. I think that things are, relatively from a pricing and coverage perspective, we’re going to continue to see a lot of the same trends that we saw in the 2025 renewal season.

But I think what the wild card for us is, is the fact that we see now that shake up on the underwriter, the reinsurance underwriter side, so many more shops now in the space and hungry for business. But where we have seen new market entrants, they have been taking a much more conservative approach because they are industry veterans. Right? They’re not coming brand new from the outside, from different lines of business and trying to make their stake in the like actual health space.

On the reinsurance side, they have good underwriting discipline. I don’t know that we’re going to see a situation where we have those new market entrants really trying to kind of buy business, so to speak. I think that they are much more conscious of who the capital backing is. And, not wanting to kind of, upset any future profit margins.

So I think that more players in the market space is good. It’ll be interesting to see, you know, what type of success they may or may not see in the market, because certainly, there’s a lot of services that go along with being able to write and provide capacity for this type of business. So if they’re not kind of fully formed in terms of what additional services other than just the underwriting they can provide, they might not quite be there for the 2026 market cycle in terms of seeing as many opportunities as they would have otherwise.

Mehb Khoja

Theresa, why don’t you bring us home?

Theresa Galizia

I’m going to say, in 2026, maybe we’ll see a $50 billion market. Big 5-0. I think we’re going to see more employers go into self-funding.

You know, it’s interesting because everything that’s going on with government and tariffs and continued medical inflation, there’s just all this pressure.

And you’ve got a lot of people losing Medicaid coverage potentially, that maybe if certain people in Washington DC are correct, they’ll end up on their employer plan, which is maybe where they should have been. I don’t know, I’m not taking sides on that argument, but, you’ve got millions of people in play there that could work their way into the commercial system instead of government systems.

So I’m bullish on the market. I think it’s going to continue to grow, hopefully at more appropriate pricing.

And I think captives are going to continue to grow as well, outpacing the growth just in general in the stop loss market. So that would be my prediction.

Mehb Khoja

All right. Great. And I’m going to make a bold prediction too. I think 2026 is the year that AI. really puts a stamp into the stop loss and reinsurance industry. I think we’re all struggling with talent right now, and the workflow process is really tough. And I think this is going to be the year that a lot of companies put AI. into their workflows to make things easier and faster because we have to. We’re running out of talent.

And so with that, I just want to thank my guests one more time. Tara, Alexis and Theresa, thank you so much for joining us on this episode of Firm and Final. We’ll see you next time.