Executive Summary: The Renewal Process: Where the Relationship Is Won or Lost
LFP-05.07 — The Operational Reality#
Renewal is where the level funded relationship is tested. The employer faces a new stop loss rate based on claims experience, potentially new attachment point terms, and possibly lasers on identified high-cost members. The TPA manages the process: compiling claims data, shopping the stop loss market, presenting options, and retaining the account. Renewal management quality correlates directly with employer retention. A TPA that starts 120 days out, shops multiple carriers, and presents transparent analysis retains accounts. A TPA that starts 60 days out, presents a single take-it-or-leave-it option, and cannot explain the rate change loses them.
A well-managed renewal follows a defined timeline. At 120 to 150 days before plan year end, the TPA compiles the renewal data package, including claims experience detail, large claimant summary, enrollment history, and any information relevant to underwriting, and submits to the incumbent and alternative carriers. At 90 to 120 days, carrier quotes arrive and the TPA reviews them across premium, attachment points, laser terms, contract provisions, and carrier financial stability. At 60 to 90 days, the TPA presents options to employer and broker with analysis of what is driving the pricing and what each alternative implies for employer risk and cost. At 30 to 60 days, the selected option is bound and systems are updated for the new plan year.
When that timeline is compressed to 60 days, the employer has no time to evaluate alternatives. The incumbent carrier knows this and can price without competitive pressure. Compressed timelines benefit the carrier at the employer’s expense. They indicate TPA operational failure, not market conditions.
The employer needs to understand what is driving their rate change to evaluate whether it is reasonable. Claims experience is the primary driver, but medical cost trend of 5% to 8% affects all groups regardless of their own experience. Stop loss market conditions add another layer: a carrier tightening its book will increase renewals even for favorable groups. A laser at renewal requires analysis, not just announcement: which member, what condition, what is the laser amount, what is the expected cost of that member’s treatment trajectory, and what are the alternatives.
The employer evaluating TPAs should ask directly: when does renewal preparation begin, how many stop loss carriers are shopped, and what is the TPA’s account retention rate? Reluctance to share retention statistics indicates awareness that the number is unfavorable. The employer who asks these questions at the point of sale and holds the TPA to the answers creates accountability that persists through the relationship.