Long-term disability rates will decrease by 3.2 per cent on average through the first half of this year compared to the last half of 2016, according to a new forecast by RBC Insurance that demonstrates a correlation between disability trends and the economy.
Its forecast, which the company developed over six years using data from more than 300,000 of the company’s group benefits clients, predicts that by the end of 2017, an uptick in the Canadian economy will help boost long-term disability rates by 2.1 per cent in comparison to last year.
According to a news release, understanding the correlation between long-term disability cases and GDP will help organizations manage costs, prevent some claims from happening and ensure adequate staffing during critical seasons. It can also help employees to return to work after an illness.
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“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.
It may seem counterintuitive, but the stress and worry employees experience during uncertain economic times are a key factor in rising claims once the picture improves, the news release suggests. As growth domestic product rises and the economic outlook brightens, workers start to succumb to illness and go on leave to recoup as they begin to feel more secure and the pent up stress and anxiety takes its toll.
“Long-term disability claims can negatively impact both employees and businesses,” said Carinci.
“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.
“For years, we observed cyclical trends with the claims we were seeing, but thanks to the team’s efforts and many late nights developing and analyzing the algorithm’s data, we have a much clearer picture around the timing of new LTD claims. We’re hoping that by sharing this information, we can help employees and businesses proactively manage and prepare for these claims.”
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