The Income Umbrella (AP Photo/Charles Dharapak)

At publicly traded companies with disability insurance operations, the hot topic during fourth-quarter earnings calls seems to be the future of group disability insurance claims incidence.

Executives at StanCorp Financial Group Inc. (NYSE:SFG), Portland, Ore., kicked the earnings call season off in January by suggesting that, although claims continued to be elevated, they showed  some signs of bottoming out.

The job market ought to get better, and that ought to make disability claims look better, StanCorp executives reasoned.

The general rule of thumb in the disability insurance market is that employers that are hiring do a better job of keeping workers on the job and returning ailing workers to their jobs than employers that are downsizing.

In 2008 and 2009, many disability insurance experts said they were surprised to see how stable disability claims were. Some wondered whether workers with serious health problems were staying on the job because they were too nervous or too broke to file disability claims.

Employment remained weak, and many carriers began seeing claims mount around 2010.

Since StanCorp held its call, the Labor Department has reported signs that employment is starting to recover.

StanCorp’s competitors have been giving mixed assessments of the disability claims situation during their earnings calls.

Executives at Unum Group Corp., Chattanooga, Tenn. (NYSE:UNM), held U.S. group disability operating income steady at $77 million. The ratio of benefits paid to premium revenue increased to 84.7%, from 84.2%.

Unum says the increase in the benefit ratio was due mainly to low interest rates and a decrease in the discount rate the company uses to value claims.

“Submitted and paid new claim incidence trends showed improvement between the third and fourth quarters, and claim recovery trends remain favorable,” Richard McKinney, Unum’s chief financial officer (CFO), said during Unum’s call.

Executives at Assurant Inc., New York (NYSE:AIZ), reported seeing a different situation: Their group disability claims incidence had been holding steady but suddenly increased in the fourth quarter.

Mike Peninger, Assurant’s CFO, noted that disability claims incidence tends to be low and that determining whether an increase in claims is part of a pattern or simply a temporary aberration takes time.

“If we determine that there is actually a sustainable trend, then we’ll have to take corrective action,” Peninger said.

Other companies reporting an increase in disability claims include Cigna Corp., Boomfield, Conn. (NYSE:CI); Hartford Financial Services Group Inc., Hartford (NYSE:HIG); and Prudential Financial Inc., Newark, N.J. (NYSE:PRU).

Executives at Hartford, where the benefit ratio rose to 80.5%, from 79.1%, said they are responding to the increase with a “highly selective pricing approach, targeting specific rate actions on a case-by-case basis.”

One obstacle to raising rates is that the market remains competitive for accounts that are still performing well, executives said.

At Prudential, the benefits ratio increased to 103.4%, from 99%.

Charles Lowrey, the chief operating officer of the U.S. businesses at Prudential, said during his company’s call that the company had obviously had a challenging quarter in the disability insurance market. “I think that really reflects the continuing effects of the economy,” Lowrey said.

Most of the large cases have prices linked to experience, and that means rates will be going up to reflect the increase in claims, Lowrey said.