A Rate Cap endorsement is a renewal protection provision in a stop loss policy that limits how much the carrier can increase premium rates at renewal.
It is designed to give the employer predictability and financial stability, particularly after a high-claims year.
A Rate Cap endorsement establishes a maximum percentage by which stop loss premium rates may increase at renewal.
Common structures include caps such as:
Stop loss policies are typically written on a 12-month term. At renewal, the carrier evaluates:
Without any protection, the carrier may significantly increase renewal rates based on risk.
A Rate Cap endorsement limits that potential increase.
Rate Cap endorsements may include conditions such as:
Some caps apply to:
The exact wording matters.
A Rate Cap endorsement does not:
It strictly limits the percentage rate increase, subject to the terms of the endorsement.
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