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© Copyright 2000 Rogers Media. The following article first appeared in the June 2001 edition of
BENEFITS CANADA magazine.
E-POLL
What effect will the economic slowdown have on STD and LTD claim rates?
The economy is slowing down, there go the disability rates. The notion that short-term disability (STD) and
long-term disability (LTD) rates climb when stock markets tumble and job creation grinds to a halt is a
common one among plan sponsors and insurance experts. While there is no formal research to support this
belief, major insurance brokers and consulting firms say there is certainly no shortage of anecdotal
evidence to back it up.
"When times are hard or when people as a group are unhappy, claims incidents go up. I don't know whether it
is conscious or just how the human mind and body work," says Dr. Erhard Busse, president of Oncidium Health
Group Inc. in Burlington, Ont. Busse specializes in examining STD and LTD claims and working with
employers, brokers and plan members to resolve disability cases.
This month's E-poll asks readers whether or not the economy has an effect on claim rates. The majority of
respondents say it does, with 46% believing it has some effect on claims and 38% stating that the economic
environment has a major impact on STD and LTD claim rates. Only 16% say the economy has no effect on
claims.
Busse says that in poor economic times there tends to be a rise in "contentious claims" such as depression
and soft tissue injuries. "It's not hard to find doctors that will support [these claims]. Their job is to
care for the patient not the disability plan," he adds.
When there is economic uncertainty, people's jobs and livelihood are at risk and their stress and anxiety
is higher, says Dr. Arif Bhimji, president of At Work Health Solutions in Concord, Ont. "This tends to
decrease an individual's overall ability to function." Bhimji adds that poor job prospects can make
individuals stay on disability for longer periods of time. "Employees are not malicious or fraudulent--this
is just a predisposition."
Judy Grant, manager of group claims with The Co-operators in Regina, says the workplace plays a major role
in disability claims today. She says 75% to 80% of the claims her company sees are a result, in part, of
conditions and events in the workplace "[Working conditions] impact an individual's willingness to stay
home and an employer's willingness to make accommodations," adds Grant.
In order to prevent disability claims from skyrocketing during a round of cutbacks, employers need to
practice preventative management, says Bhimji. "[They] need to have strong disability management programs
in place before a downturn occurs that look at the medical reasons for absence and disability. The programs
and approach must be fair and consistent, regardless of the economic climate. If an employer has such
programs entrenched they can act as a good dose of prevention in difficult times."
Winning the talent war
Human resources professionals have senior management on side when it comes to attraction and retention
issues.
Despite the economic slowdown, a recent international study by consulting firm Accenture reveals that 75%
of global business leaders believe retaining talent is far more important than acquiring new blood. In
addition, 80% say "human performance" issues are more important today than three years ago. The study,
The High Performance Workforce: Separating the Digital Economy's Winners from Losers, finds that
most companies struggle with retention because they rely heavily on salary increases and bonuses to keep
staff. Organizations winning the proverbial talent war offer employees a wide range of career and skills
development opportunities--two of the key elements to attracting and retaining desired employees today.
The research also suggests that organizations can improve their retention rates and raise the performance
of their workforce by making it easier for employees to find and take on new opportunities within the
organization. The report is based on interviews with nearly 500 senior executives in eight countries.
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