The baby boomers who actually have private disability insurance could end up staying healthier than disability insurers have anticipated.
Traditionally, every one-year increase in the average age of an employee group has had a big effect on claims.
“Cost increases of 4% to 8% per age year are common,” according to researchers at UnumProvident Corp., Chattanooga, Tenn.
Meanwhile, baby boomers make up 47% of the U.S. workforce, and the boomers born in 1946 have just turned 60.
“Obviously, the baby boomers are getting older,” says Richard Mucci, director of the group benefits operation at Hartford Life, a unit of Hartford Financial Services Group Inc., Hartford.
Disability insurers have been operating on the assumption that a higher survival threat for life-threatening illnesses is translating into a higher morbidity rate, Mucci says.
But figures from the U.S. Census Bureau and private companies such as Disability Reinsurance Management Services Inc., Westbrook, Maine, are hinting that boomers who have group disability coverage may be aging reasonably gracefully.
If disability figures are painting an accurate picture, lower-than-expected claims rates could give disability insurers a boost and, eventually, make it easier for financial professionals to find high-quality coverage for boomer-dominated employer groups at a reasonable cost.
The Census Bureau released its review of 2002 U.S. disability statistics in May.
The bureau does not break out a separate “baby boomer” age category. But a comparison of the 1997 and the 2002 disability prevalence figures reveals rapid improvement in disability prevalence rates for the 45-54 age group.
In 2002, all of the members of that age group were boomers, and the age group includes about half of U.S. boomers.
Only 19.4% of boomers in the 45-54 age group reported having any disability, down from 22.6% in 1997.
A comparison with the previous survey from 1991-1992 shows that the disability prevalence rate for the 45-54 age group has fallen from 23.3% in that survey.
Similarly, the prevalence of “severe disability” in the 45-54 age group has fallen to 12.6% in 2002, from 13.9% in 1997.