The 2018 U.S. Group Disability Market Survey covers employer-paid and employee-paid short-term disability and long-term disability insurance products, and includes an analysis of premiums, cases, and covered lives from new sales and in-force business in 2017 and 2018. In total, 25 disability insurance companies contributed to the 2018 survey. Milliman’s Jennifer Fleck and Paul Correia provide more perspective in this paper.
The overall spending on life and disability benefits is significantly less than the costs for healthcare coverage. But a little focus there can often lead to real savings on these products along with greater employee satisfaction.
Benefits managers don’t have to wait until a renewal at the end of a rate guarantee to review the program’s experience. Performing reviews on an annual basis can ensure that there are no surprises.
Benefits managers should consider rate comparisons, quality of service received, and integrated leave management options as well as disability and life insurance specific considerations.
In this article, Milliman’s Jennifer Fleck discusses in more detail what employers should consider when group disability and life insurance benefits come up for renewal.
The disability trust fund is now expected to be depleted in 2032 instead of 2028. This is primarily due to the assumption of lower disability applications and other underlying assumption changes since last year.
According to projections, assuming no legislative changes, only 83% of disability income benefits would be payable after the trust fund is depleted. The projection also shows that the trust fund balance begins to fall in 2019. That means that starting next year, the total cost of the disability income program exceeds the total income on the program, including interest.
Cutting benefits could have substantial impacts to group insurers that would likely need to increase claim reserves for future benefit payments on their policies. Lower Social Security Disability Insurance (SSDI) benefits would mean lower benefit offsets and thus higher long-term disability benefit payments.
It is important that actuaries working with group disability insurance pay attention to changes in the SSDI program which could affect their financial results. Milliman consultant Jennifer Fleck provides some perspective in her article “Social Security disability actuarial status, 2018.”
How will tax reform in the United States affect the profitability of disability income and group life insurance? To offer some perspective, Milliman consultant Jennifer Fleck performed an analysis measuring the effect that the Tax Cuts and Jobs Act could have on the following products:
• Individual disability income
• Group long-term disability income
• Group short-term disability income
• Group life insurance with waiver of premium
The analysis considered three key changes in the tax law affecting life insurers as well as a fourth change, which remains an open issue. The analysis was done with industry average assumptions on profitable plan designs. Read Jennifer’s article “Tax reform: Disability income and group life” to learn more.
Milliman recently released the results of its 2017 U.S. Group Disability Market Survey, a comprehensive report that analyzes the short- and long-term disability (STD/LTD) market, including sales and in-force business.
In total, 25 disability insurers representing over 90% of the market contributed data to the survey, which provides analysis of premiums, cases, and covered lives in 2016 and 2017 for all participating companies. The report ranks participating companies by both STD and LTD in-force premium and new sales totals, and offers insight into current trends in the group disability market.
We’re continuing to see strong growth in the marketplace despite consolidation among U.S. group disability insurers. And while the market consolidation may have played a factor in poorer performance for some insurers in 2017 compared to previous years, overall new sales for STD and LTD markets are up by a combined 7.3%.
Survey highlights include:
• Combined STD and LTD in-force premium for participants was approximately $16.7 billion in 2017 compared with $16.0 billion in 2016.
• STD new sales premiums saw an 8.5% increase from 2016 to 2017, while LTD new sales premiums increased by 6.6%.
• Unum, Lincoln Financial Group, and Cigna retained the top three spots for new STD sales premium in 2017. Unum, The Hartford, and MetLife took the top three spots for new LTD sales premium.
• Average STD premium per life increased by 0.9% for in-force business, and by 2.0% for new sales; average LTD premium per life increased by 2.7% for in-force business and by 3.3% for new sales.
Copies of the full report are only available to participating companies. For a summary of results, click here.
The group life and disability insurance sector has been slower to adopt predictive analytics than other lines of insurance. One reason for the sector’s lag is because insurers often have limited information on who they are insuring. However, there are still many ways to incorporate predictive modeling technology to improve results. Milliman consultant Jennifer Fleck provides some perspective in her article “Group insurance ‘Project Insight’.”