Combined short- and long-term group disability inforce premium grew about 6% in 2005, to $11.2 billion, a new report says.
Insurance companies participating in a study by JHA, Portland, Maine, reported a 7% increase in LTD inforce premium and a 4% increase in STD inforce premium. The results were similar to those in 2004, according to JHA.
The survey also shows new U.S. group sales for both products increased by 3%, totaling over $1.9 billion in new annualized premium.
The number of employers offering disability coverage rose by 4% for STD and 3% for LTD. The total number of insured employees rose by 1% for STD and 4% for LTD, JHA reports.
However, client growth was mixed. There were 4% more employers for both products, but the number of employees covered fell 2% for LTD and 5% for STD.
The average number of lives per case for new sales has been declining for the past few years, particularly for LTD, JHA finds.
Part of the reason may be that the smaller business segment “is typically less price sensitive and less competitive than the larger case market,” notes Stacy Varney, vice president of marketing and business development for JHA.
The survey also finds that average premium per life was up 6% for new sales of both products, to $217 for LTD and $193 for STD. Inforce premium per life for both was up 3%, to $228 and $192, respectively.
Meanwhile, the voluntary benefits market for both products declined for the second straight year.
Voluntary LTD sales fell 16% in 2005 to $83 million on top of a 34% slump in 2004, while STD sales in that market were down 8%, to $80 million, compared to a 4% decline in 2004, JHA reports.
Total inforce premium in the voluntary market increased 4% to $376 million for STD and 2% to $613 million for LTD.
The average premium per life in the voluntary STD market rose 14%, to $277, for new sales and 17%, to $309, for new LTD sales in that market.
For inforce policies, average premiums in the voluntary market grew 9%, to $293, for STD and 6%, to $315, for LTD.