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NAIC Panel Reviews Preliminary LTD Claims Report

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Long-term disability claimant recovery rates have been improving in recent years, actuaries have told state insurance regulators.

The Accident and Health Working Group at the National Association of Insurance Commissioners, Kansas City, Mo., received a presentation earlier this week on preliminary results from a group LTD claims experience study conducted by a committee at the Society of Actuaries, Schaumburg, Ill.

A unit of MIB Group Inc., Braintree, Mass., has helped the committee get data on 1.2 million group LTD claims from 21 carriers, including most of the top 15 carriers.

The SOA conducted another major group LTD experience study in 1995, and that study produced Table 95a.

“The current study shows recoveries that are high relative to the Table 95a expectations, especially in the third year of duration and in years 6 through 8,” SOA committee members write in a 2008 LTD experience report. “The death rates are generally lower than Table 95a; much more so in earlier claim durations. We speculate that these differences may be caused by generally less severe disabilities than was observed during the 1995 study, as well as by improvements in claim management.”

The SOA hopes to develop a new table based on the study in early 2010.

SOA actuaries told regulators during the presentation that there have been significant recovery improvements in the last few years, but that there are significant variations by claim diagnosis, according to a summary of the presentation posted on the Accident and Health Working Group’s section of the NAIC website.

SOA actuaries have found, for example, that death rates for claimants with cancer are 3.5 times higher than expected for all claimants; about 13% of the expected rate for claimants with back problems; and about 69% of the expected rate for people with mental and nervous problems.

For women out on LTD claims because of maternity-related problems, the death rate is about 97% of the expected level.

In recent years, mortality improvement has been greater in cancer claims than in non-cancer claims, SOA actuaries reported.