Why are Disability Premiums Increasing?

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Why are Disability Premiums Increasing?

Posted on February 19, 2013 by encompass_admin

Group Insurance Carriers are responsible for ensuring there are enough reserves put aside to pay future disability claims.

To ensure reserves are adequate, the industry is seeing an increase in Short Term and Long Term Disability premiums.

Factors Impacting Premiums

There are a variety of factors that impact disability rates; however, here are three big one’s:

1.  Economy – with markets and investment returns down, Carriers reserves aren’t performing as well.

2.  Demographics – Even small shifts in demographics can shift premium rates. According to Great-West Life data:

    • Gender – Females tend to stay on claim longer than men until age 39. Beyond age 50, males have a slightly higher duration
    • Age – As employees age, the time off on disability increases and the probability of recovery reduces as we age.

 

3.  Litigation – litigation is becoming more common resulting in increased legal costs for the Insurance Provider.

These are just a few examples of factors affecting disability premiums. If you would like to learn more about Group Disability Insurance, please contact ENCOMPASS.

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