Dominant Carrier Raises Rate Increase Cap to 50%

In the last year, Providence Benefits has seen rate increases like never before. A 20% rate increase has been on the lower side of 2026.  

But now, a major change from the state's dominant health insurance carrier could make upcoming renewals even more challenging.

For groups renewing October 1, 2026 and beyond, the carrier has increased its maximum rate increase cap from 25% to 50%, according to guidance received by Providence Benefits. This does not mean every employer will receive a 50% increase. However, it does mean some groups could face significantly higher renewal premiums than in previous years.

For brokers and employers already struggling to control healthcare costs, this change raises an important question: What options are available to help protect employers from these increases?

Why This Change Matters for Alabama Employers

Alabama has one of the most concentrated health insurance markets in the country. The state's dominant carrier controls more than 90% of the group health insurance market. At Providence Benefits, more than 95% of the Major Medical GAP plans we currently administer are paired with coverage from this carrier. That means this change could have a significant impact on the employers and brokers we serve.

Consider an employer currently paying $10,000 per month in health insurance premiums. Under the previous 25% cap, its potential renewal increase could have reached $2,500 per month.

With the new 50% cap, that potential increase could reach $5,000 per month. While these figures represent the maximum possible increases rather than expected renewals, the difference is substantial.

We recently spoke with an employer whose employee only premium was approximately $500 per month before its July 1, 2025 renewal. Following increases in both 2025 and 2026, that same premium has climbed to approximately $790 per month. The employer told us its current rates are becoming unsustainable. And with the new rate cap in place, the concern is what another year of significant increases could mean for the company.

What Can Brokers Do About Rising Healthcare Costs?

For brokers, the challenge is no longer just finding affordable premiums. It is finding ways to help employers manage costs without sacrificing the quality of coverage their employees depend on.

That has been the mission of Providence Benefits for more than nine years.

As renewal increases become more difficult to manage, we believe brokers need to explore options beyond simply accepting the renewal or increasing employee deductibles. At Providence Benefits, we are currently focusing on three strategies to help employers address rising healthcare costs.

Our first strategy involves taking a closer look at Cigna Healthcare.

Strategy #1: Consider Cigna Healthcare

Providence Benefits is the only Alabama domiciled General Agency representing Cigna Healthcare in the state. Based on current renewal guidance, Cigna continues to cap renewal rate increases at 20%.

Compare that with the potential 50% increase now permitted by Alabama's dominant carrier.

For employers concerned about unpredictable renewals, that difference alone makes Cigna worth exploring. Of course, there is no guarantee that Cigna's 20% cap will remain in place indefinitely. And a lower renewal cap does not automatically mean Cigna will offer the lowest premiums or best plan for every employer. However, for groups facing significant increases, it provides brokers with another option to consider. In a market where employers are increasingly concerned about the long term affordability of their benefits, having additional options is important.

Two More Strategies Are Coming

Cigna is only the first of three strategies Providence Benefits is exploring to help brokers and employers manage the rising cost of healthcare.

We will be sharing strategies two and three in upcoming articles.

In the meantime, if you have a group facing a significant renewal increase, we encourage you to explore what other options may be available.

Our quoting team, including Chris Harris, David Duffy and Matthew Martin, can help you evaluate whether Cigna could be a good fit for your group.

Visit providencebenefits.com to learn more or contact our team to request a quote.

Rising healthcare costs are not going away. But brokers who take a proactive approach to renewals can help their clients make more informed decisions before those increases become a bigger problem.