RBC Insurance predicts long term disability incidences to rise in 2018

Long Term Disability Forecast can help businesses manage costs related to claims

Summary: RBC Insurance predicts Long Term Disability (LTD) incidence rates will be 4.7 per cent higher compared to 2017. Research using a proprietary algorithm developed by RBC Insurance shows that group LTD incidence rates rise and fall with the cyclical movement of gross domestic product (GDP). As GDP accelerates or the economy grows, there is an increase in the incidence of LTD claims. When GDP drops, so do the incidence of claims. Using the RBC Insurance Group LTD Forecast to predict disabilities can help businesses manage costs related to claims, retain employees and ensure adequate staffing during critical seasons, while better supporting those employees when they need it most.
TORONTO, January 30, 2018 - RBC Insurance predicts Long Term Disability (LTD) incidence rates will be 4.7 per cent higher compared to 2017 driven by a strengthening Canadian economy. Using a proprietary algorithm, RBC Insurance has discovered that new LTD claims are linked to GDP growth rates. Understanding the correlation between GDP and LTD claims can help businesses manage costs related to claims, ensure adequate staffing during critical seasons, and help employees get support when they need it the most.

“Using the RBC Insurance Group LTD Forecast, we predict LTD incidence rates will continue their recent rise and increase by 4.7 per cent in 2018 relative to 2017, which will impact both employers and employees alike,” says John Carinci, Vice-President and Head, Operations and Client Experience, RBC Insurance. “Businesses in Canada spent $7.5 billion for LTD coverage in 2016, which is the third largest cost to a group benefits plan after health and dental. Knowing that LTD rates are expected to rise is important information that businesses can use to help manage those costs, support their employees and ensure their operations continue to run smoothly.”

How the RBC Insurance Group LTD forecast works
Based on research conducted by RBC Insurance, as GDP accelerates and the economy grows, there is a corresponding increase in the incidence of LTD claims. Conversely, when the rate of GDP drops, so does the incidence of LTD claims. At the start of 2017, the model successfully predicted an increase in incidence for the year (relative to 2016) that was fairly close to the actual rate experienced. It is believed that during challenging or uncertain times, workers can be concerned about job security and performance, creating significant mental and/or physiological stress. As the economic outlook brightens and GDP rises, workers may begin to feel more secure and the pent up stress and anxiety can take its toll, making them more likely to succumb to illness and taking a leave from work to recoup.

“With the anticipated rise in LTD claims, businesses should proactively create awareness of the support available to employees and create contingency plans to ensure adequate staffing,” says Julie Gaudry, Senior Director, Group Insurance, RBC Insurance. “While employees must deal with the significant emotional and financial stress of being off work, business owners can be particularly hard-hit as they lose employees during times of strong economic activity.”

RBC Insurance offers the following tips to help businesses manage LTD claims:

Create additional focus on Employee Assistance Programs (EAP) to support employees as GDP rises – programs such as EAP can help employees manage certain conditions and work-life issues before spiraling to the point of disability
Create contingency plans to ensure adequate staffing levels during times of positive economic growth including a buffer for potential claims
Look for flexible Group Benefit plans that have options such as allowing employees to return to work on a part-time basis while still receiving benefits
Ensure employees understand the coverage in their plan and make use of any ’Return to Work Benefits’ such as financial planning, rehabilitation and other services to help make a smooth transition back into the workplace