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New LTD claim approvals drop

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Sellers of U.S. group disability insurance may be having a little easier time holding on to business and controlling claims.

Analysts at the Council for Disability Awareness, a disability think tank backed by insurers, have published 2012 group disability market figures in a summary of results from a survey of the 19 member insurers.

When the Great Recession hit in 2008, the number of employers fell. The surviving employers shrank. The workers who still had disability benefits were more likely to file claims.

In 2012, the size of the market seems to have stabilized.

The number of employers with group long-term disability (LTD) plans held steady at about 207,000 and the number of workers who had LTD coverage increased 1 percent to about 32 million.

The claims picture also may have brightened.

The total number of individuals receiving group disability benefits fell 2 percent to 662,000. Total benefits payments crept up to $9.4 billion from $9.3 billion in 2011.

The number of new approved LTD claims fell 2.9 percent to 154,000. Annualized benefits payments to those new beneficiaries increased about 8 percent to $1.4 billion.

“Looking back on the economic conditions during the past five years, 67 percent of the reporting companies said the economy has moderately impacted claims, while 29 percent said the economy made little or no impact,” the CDA analysts said in a discussion of the survey results.

“Most companies expect claim trends to improve gradually,” the analysts said. “Companies are evenly split on the question of whether claim patterns will eventually return to pre-recession levels, or whether there will be a ‘new normal,’ with claims stabilizing at higher levels than existed prior to 2007.”

One challenge for LTD issuers is the low interest rate environment, and another is the difficulty of finding appropriate jobs for claimants who are trying to return to work, the analysts said.

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