Rates expected to fall on average by 3.2 per cent through first half of 2017
Many long-term disability (LTD) claims can be predicted through a link with GDP rates, according to RBC Insurance.
"We've long been aware of seasonal trends to LTD claims, but what we've now discovered is a link between the incidence of claims with the rise and fall of GDP," said John Carinci, vice-president of group and business markets at RBC Insurance. "LTD claims increase while GDP is rising and the economy is doing better. And when GDP falls, so do LTD claims."
Why would this be? It's similar to a prolonged adrenaline rush putting stress on the body, said the financial institution. During challenging or uncertain economic times, workers are worried about job security and performance, creating significant mental or physiological stress. As GDP rises and the economic outlook brightens, workers begin to feel more secure and that pent-up stress and anxiety takes its toll, which results in them succumbing to illness and taking a leave from work to recoup.
"Long-term disability claims can negatively impact both employees and businesses. Employees must deal with the significant emotional and financial stress of being off, while business owners can be particularly hard-hit as they lose employees right when they need them to gear up during times of economic recovery," said Carinci.
RBC Insurance predicts LTD incidence rates will decrease by 3.2 per cent on average through the first half of 2017 when compared to the last six months of 2016. However, by the end of 2017, LTD incidence rates are expected to be 2.1 per cent higher relative to last year driven by a more positive outlook for the Canadian economy. The forecast was developed using data from over 300,000 RBC Insurance group benefit clients and RBC economic forecasts
Tips for employers
- Create additional focus on employee assistance programs to assist employees as GDP rises.
- Be more attentive to employees during economic downturns to ensure they are aware of the resources available to help them cope with stress and uncertainty.
- Proactively create plans to ensure adequate staffing levels during times of positive economic growth including a buffer for potential claims.
- Look for flexible group benefit plans that have options such as allowing employees to return to work on a part-time basis while still receiving benefits.
- Ensure employees understand the coverage in their plan and make use of any return-to-work benefits such as financial planning, rehabilitation and other services to help make a smooth transition back into the workplace.