Stop-Loss Insurance

Stop-loss (excess of loss) insurance protects self-funded plans and captives from catastrophic claims. The @openinsure/stop-loss package provides actuarial calculation functions for specific stop-loss, aggregate stop-loss, loss run reporting, and loss ratio analysis.

All financial amounts use the Money type (integer cents) from @openinsure/rating, eliminating floating-point arithmetic errors in financial calculations. Identifiers use branded types (StopLossPolicyId, ClaimantId, StopLossClaimId) for compile-time safety. Aggregate factors are expressed in basis points (e.g. 12500 bps = 125.00%) rather than float percentages.

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Overview

Specific SL

Per-individual protection — the reinsurer pays losses above the specific attachment point per claimant. Supports lasered (individual-specific) attachment overrides.

Aggregate SL

Total loss protection — the reinsurer pays when cumulative losses exceed the aggregate attachment (typically 120–125% of expected losses, expressed in basis points).

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Core Types

The package uses branded types to prevent accidental misuse of plain strings and numbers:

import {
  type StopLossPolicyId,
  type ClaimantId,
  type AttachmentPoint,
  stopLossPolicyId,
  claimantId,
  attachmentPoint,
} from '@openinsure/stop-loss';
import { fromCents } from '@openinsure/rating';

const policyId = stopLossPolicyId('pol_abc123');
const claimant = claimantId('clm_jane_doe');
const attachment = attachmentPoint(fromCents(25_000_00, 'USD')); // $250,000

Type	Description
Money	Integer cents with currency code — all financial amounts use this type from @openinsure/rating
StopLossPolicyId	Branded string identifying a stop-loss policy
ClaimantId	Branded string identifying a covered individual
AttachmentPoint	Branded Money value representing a threshold
StopLossClaimId	Branded string identifying a claim submission

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Specific Stop-Loss

Specific stop-loss protects against a single large claimant (health: single individual; casualty: single occurrence). Claims must strictly exceed the attachment point for reimbursement to apply.

Single Claim Reimbursement

import {
  calculateSpecificReimbursement,
  type SpecificStopLossPolicy,
  type StopLossClaimSubmission,
  stopLossPolicyId,
  claimantId,
  stopLossClaimId,
  attachmentPoint,
} from '@openinsure/stop-loss';
import { fromCents } from '@openinsure/rating';

const policy: SpecificStopLossPolicy = {
  id: stopLossPolicyId('pol_2026_001'),
  attachmentPoint: attachmentPoint(fromCents(25_000_00, 'USD')), // $250,000
  maximumBenefit: fromCents(200_000_00, 'USD'), // $2,000,000
  policyPeriod: {
    effectiveDate: new Date('2026-01-01'),
    expirationDate: new Date('2027-01-01'),
  },
  coveredLives: 450,
  laseredAttachments: [],
};

const claim: StopLossClaimSubmission = {
  id: stopLossClaimId('sc_001'),
  policyId: stopLossPolicyId('pol_2026_001'),
  claimantId: claimantId('emp_4821'),
  incurredAmount: fromCents(82_500_00, 'USD'), // $825,000
  incurredDate: new Date('2026-06-15'),
  submittedDate: new Date('2026-07-01'),
  status: 'open',
  description: 'Cardiac surgery and rehabilitation',
};

const result = calculateSpecificReimbursement(claim, policy);
// result.reimbursed  → $575,000 (825K - 250K attachment)
// result.retained    → $250,000 (attachment point)
// result.excess      → $0       (within $2M max benefit)

Lasered Attachments

High-risk individuals can have a higher attachment point (lasering):

import { type LaseredAttachment } from '@openinsure/stop-loss';

const policy: SpecificStopLossPolicy = {
  // ...same as above
  laseredAttachments: [
    {
      claimantId: claimantId('emp_9102'),
      attachmentPoint: attachmentPoint(fromCents(50_000_00, 'USD')), // $500,000 laser
    },
  ],
};

Claims for emp_9102 are evaluated against the $500,000 lasered attachment instead of the standard $250,000 policy attachment.

Aggregating Costs by Claimant

Specific stop-loss attachment is evaluated on the per-individual total across all claims, not per-claim:

import { aggregateClaimantCosts } from '@openinsure/stop-loss';

const claimantTotals: Map<ClaimantId, Money> = aggregateClaimantCosts(allClaims, policy);
// Map { 'emp_4821' => $825,000, 'emp_1204' => $142,000, ... }

Key concepts:

Term	Definition
Attachment point	The threshold — the captive/plan retains 100% up to this amount per individual
Maximum benefit	Maximum reinsurer payout per individual per policy period
Lasered attachment	Individual-specific attachment override for high-risk claimants
Retained	Amount below the attachment (plan’s responsibility)
Excess	Amount above the maximum benefit (also plan’s responsibility)

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Aggregate Stop-Loss

Aggregate stop-loss protects against adverse total loss experience for the year. The attachment factor is expressed in basis points to avoid floating-point arithmetic.

Calculating the Aggregate Attachment Point

import { calculateAggregateAttachmentPoint } from '@openinsure/stop-loss';
import { fromCents } from '@openinsure/rating';

const expectedClaims = fromCents(380_000_00, 'USD'); // $3,800,000
const factorBps = 12500; // 125.00%

const aggAttachment = calculateAggregateAttachmentPoint(expectedClaims, factorBps);
// aggAttachment → $4,750,000 (3,800,000 * 125%)

Aggregate Reimbursement

import {
  calculateAggregateReimbursement,
  calculateAggregateAttachmentPoint,
  type AggregateStopLossPolicy,
} from '@openinsure/stop-loss';

const totalClaims = fromCents(520_000_00, 'USD'); // $5,200,000
const attachment = calculateAggregateAttachmentPoint(
  fromCents(380_000_00, 'USD'), // expected claims
  12500 // 125% factor
);
const corridorBps = 0; // no corridor
const maxBenefit = fromCents(700_000_00, 'USD'); // $7,000,000

const result = calculateAggregateReimbursement(totalClaims, attachment, corridorBps, maxBenefit);
// result.reimbursed → $450,000  (5.2M - 4.75M attachment)
// result.retained   → $4,750,000
// result.excess     → $0

Aggregate attachment is typically set at 120–125% of expected losses (12000–12500 bps), negotiated with the reinsurer based on historical loss ratio volatility.

Corridor

The corridor is a band above the attachment where no recovery occurs, also expressed in basis points:

// 500 bps corridor = 5% of the aggregate attachment
const corridorBps = 500;

// If attachment = $4,750,000, corridor = $237,500
// Effective threshold = $4,987,500

Monthly Accumulator

Track aggregate stop-loss on a month-by-month basis. The accumulator detects when cumulative claims breach the attachment and calculates per-month reimbursements:

import {
  runAggregateAccumulator,
  type AggregateStopLossPolicy,
  stopLossPolicyId,
} from '@openinsure/stop-loss';
import { fromCents } from '@openinsure/rating';

const policy: AggregateStopLossPolicy = {
  id: stopLossPolicyId('agg_2026_001'),
  attachmentFactorBps: 12500, // 125%
  expectedClaims: fromCents(380_000_00, 'USD'), // $3,800,000
  corridorBps: 0,
  minimumAggregate: fromCents(100_000_00, 'USD'),
  maximumAggregate: fromCents(700_000_00, 'USD'),
  policyPeriod: {
    effectiveDate: new Date('2026-01-01'),
    expirationDate: new Date('2027-01-01'),
  },
  policyMonths: 12,
};

const monthlyClaims = [
  fromCents(30_000_00, 'USD'), // Jan: $300K
  fromCents(35_000_00, 'USD'), // Feb: $350K
  fromCents(42_000_00, 'USD'), // Mar: $420K
  // ...remaining months
];

const entries = runAggregateAccumulator(monthlyClaims, policy);

for (const entry of entries) {
  console.log(
    `Month ${entry.month}: cumulative=${entry.cumulativeClaims.cents / 100}`,
    `breached=${entry.attachmentBreached}`,
    `reimbursement=${entry.reimbursementThisMonth.cents / 100}`
  );
}

Each AccumulatorEntry includes:

Field	Description
month	Month number (1–12)
claimsThisMonth	Claims incurred this month
cumulativeClaims	Running total of all claims
attachmentBreached	Whether cumulative claims exceed the aggregate attachment
reimbursementThisMonth	Stop-loss recovery for this month (capped by maximum aggregate)
cumulativeReimbursement	Running total of all reimbursements

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Loss Run Reporting

Generate a comprehensive loss run summary for a specific stop-loss policy:

import { generateLossRunSummary } from '@openinsure/stop-loss';

const summary = generateLossRunSummary(policy, allClaims);

// summary.totalEligibleClaims         → 142
// summary.totalIncurred               → $4,320,000
// summary.totalAboveAttachment        → $1,175,000
// summary.totalBelowAttachment        → $3,145,000
// summary.claimantCount               → 89
// summary.claimantsExceedingAttachment → 4
// summary.statusBreakdown             → [{ status: 'closed', count: 98, ... }, ...]

The LossRunSummary includes a status breakdown across all claims (including denied), while financial totals only count eligible claims within the policy period.

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Loss Ratio Analysis

Calculate the loss ratio to evaluate stop-loss carrier performance:

import { calculateLossRatio } from '@openinsure/stop-loss';
import { fromCents } from '@openinsure/rating';

const result = calculateLossRatio(
  fromCents(50_000_00, 'USD'), // $500,000 premium paid
  fromCents(32_500_00, 'USD') // $325,000 reimbursements received
);

// result.lossRatioBps    → 6500 (65.00%)
// result.lossRatioDecimal → 0.65
// result.premiumPaid      → $500,000
// result.reimbursementsReceived → $325,000

A loss ratio above 10000 bps (100%) means the carrier paid out more than it collected in premium.

Note

Loss ratios are a key metric for renewal negotiations. A consistently low loss ratio (<60%) may justify lower premiums at renewal, while a high loss ratio (>100%) may trigger attachment point increases or premium surcharges.

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Integration with Captive Admin

Stop-loss calculations feed the Captive Admin module’s Loss Fund dashboard:

• Monthly fund ratio tracking
• Specific SL recovery tracking per claimant
• Aggregate corridor visualization
• Actuarial projection (run-out of current year)

See Loss Fund Tracking for the dashboard reference.

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Reinsurance Coordination

Stop-loss programs are often structured as part of the broader reinsurance program. The cession to the stop-loss reinsurer appears in the quarterly cession statement alongside quota share and XOL treaties.

See Reinsurance Management for how cession statements are compiled.