Career Advice Job Market Trend Report

Fewer US workers file claims in 2012 amid recovery

SAN FRANCISCO/NEW YORK: The number of US workers filing long-term disability claims declined for the first time in at least four years in 2012 amid an improving economy and employment picture.

About 662,000 workers filed claims, a 2 per cent drop from a year earlier, the Council for Disability Awareness (CDA) said in a report based on data from 2008 through 2012. Still, total claims payments grew to US$9.4 billion in 2012, the fifth straight year of increases, the CDA said.

“Claims are improving,” said CDA president Barry Lundquist. “Consumer confidence levels are higher. The employment rate is improving. People have better opportunities to go back to work, and that’s an important part of the services insurance companies help provide.”

The US unemployment rate hit a four-year-low of 7.5 per cent in April before rising to 7.6 per cent last month. Household wealth jumped to a record in the first quarter, exceeding its pre-recession peak for the first time, the Federal Reserve said on 6 June.

Unum Group, Hartford Financial Services Group and MetLife are among the largest providers of long-term disability coverage through employers, according to data compiled by General Re, a reinsurer owned by Berkshire Hathaway.

Hartford and Prudential Financial, the second-largest US life insurer, have each said they were adding new executives and raising rates after being burned in prior quarters with higher-than-expected claims costs.

Charles Lowrey, chief operating office for Prudential’s US business, said the company was one year into a three-year plan to improve profit margins at the disability business.

“We’re beginning to see the results of our efforts,” he said at a presentation by the New Jersey-based company. “We brought in new senior management. We repriced or let lapse about a third of the book.”

Workers aged 50 and older have been driving new claims as the population ages, CDA said. Lundquist said insurers’ back-to-work efforts and employers’ wellness programmes are helping workers return to the job faster.

“The longer you’re away, the harder it is to get back physically and mentally,” he said. “It’s a way-overlooked side benefit to disability insurance.”

CDA’s members include insurers American International Group, MetLife and Prudential. Nineteen member companies representing more than 75 per cent of the disability-insurance market contributed claims data for the survey, CDA said.