policies & procedures
CAN YOU PREDICT WHEN A DISABILITY
IS MOST LIKELY TO OCCUR?
By John Carinci
One in three employed Canadians will be off work for 90
days or longer at some point during their career due to
disability. Many HR professionals are all too aware of the
negative impact long-term disability (LTD) claims can
have for employees and businesses alike. Employees must deal with
the discomfort of the medical condition itself, along with the significant
emotional and financial stress of being off. And business
owners, especially of smaller operations or departments where the
employee fills a critical role, will feel the loss more keenly if it happens
at a time when the economy – and business – is booming.
LTD CLAIMS LINKED TO GDP
It turns out that this is exactly the time when most LTD claims
occur – when the economy is on an upswing, as RBC Insurance
discovered following years of research.
There has long been an awareness of seasonal disability trends,
with new claims tending to peak in the spring and fall months, and
dropping during the summer. However, by using data from over
300,000 group benefits clients since 2009, a direct link was discovered
between LTD incidence rates and the rise and fall of GDP.
Through extensive analysis and the development of a proprietary algorithm,
the RBC Insurance Group LTD Forecast can now predict
LTD incidence rates up to two years in the future when using RBC
Economic forecasts or six months into the future when using current
GDP values – a helpful tool for businesses of any size.
It may seem strange at first glance and even contrary to reason
that claims increase when times are good. But the belief is that
it’s similar to a prolonged adrenaline rush that puts stress on the
body. When employees are worried about job security and performance
during challenging or uncertain economic times, it creates
significant mental and/or physiological stress. Once the stress diminishes,
thanks to a brighter economic outlook and rising GDP,
they begin to feel more secure again. However, that pent-up stress
and anxiety takes its toll, which results in them falling ill and taking
a leave from work to recoup. This aligns very well with the fact
that the majority of LTD claims are stress-induced, from mental
or nervous system disorders, such as depression or anxiety, to
circulatory diseases such as heart attacks, according to an RBC
COST SAVINGS POTENTIAL
The groundbreaking findings of this research can provide a range
of benefits for the workplace, along with real cost-savings potential.
According to a 2016 report from the Fraser Group, businesses
HRPROFESSIONALNOW.CA ❚ MARCH 2017 ❚ 23