Disability insurers seem to be making more use of guaranteed standard issue (GSI) programs at the worksite.

Anne Mitchell, a consulting actuary in the Portland, Maine, office of Milliman Inc., writes about the implications of disability insurance GSI programs in a commentary distributed by Milliman.

A GSI program makes disability insurance available to employees as long as they have been working full-time for a specified period of time, Mitchell says.

A GSI program may please employers because it is easy to administer and appealing to employees, but a GSI program can expose an insurer to the risk that the employees who are more likely to become disabled will sign up for the coverage, Mitchell says.

Milliman survey results show that GSI programs accounted for 15% of individual disability insurance sales at the worksite in 2009, up from 11% in 2004, Mitchell says.

To reduce the risk of antiselection, insurers offering GSI programs typically are setting minimum participation levels at 10% to 30% for employers with thousands of employees and at 30% to 75% for employers with fewer than 100 employees, Mitchell says.

- Allison Bell

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