Group disability insurance management: gaps but no systemic problem
In its Group disability insurance cross-sectional analysis report published on March 14, Quebec regulator, the Autorité des marchés financiers (AMF), did not see any “systemic problems with the way the industry manages group disability insurance.” Yet the regulator detected some gaps, notably related to information provided to participants and to training of claims examination staff.
The AMF consulted the insurers active in the group life and health insurance market in Quebec, “which account for close to 90% of the group disability insurance market,” to paint a more detailed overall picture of current industry commercial practices and ensure that they were adequate and resulted in fair treatment of consumers. To do so, the regulator sent a request for information to the ten largest insurers in the market and conducted interviews with most of those insurers.
Corrective actions required
The AMF identified four practices that “require corrective action.” The agency found fault with information provided to consumers, which is not always sufficient or timely, together with the decision review process, the complaint examination process and criteria to determine whether or not a health professional needs to be consulted.
Insurers are expected to put in place basic and continuing training for staff that covers claims examination, and to install tools to inform participants “in clear and plain language.”
Measures already in place
The AMF confirms that following its work and discussions, several insurers have already started to implement the recommended measures.
It adds that it will “follow up individually” with the insurers to verify the implementation of the recommended good practices, under its Supervisory Framework.
Aftermath of the Archibald debacle
Without explicitly mentioning it in its announcement of April 2018, this AMF survey was a follow-up to the Samuel Archibald case, which was splashed across the headlines in February 2018. The case was even raised in Quebec’s National Assembly, during the debate surrounding Bill 141.
“The AMF also devotes considerable attention to the special situations that it is made aware of through complaints and reports from consumers or that it learns about from reports or publications in the various media. The AMF believes that the implementation of these recommendations will help reduce the occurrence of such situations while enabling insurers to prevent fraud and strengthen consumer confidence in the insurance industry,” the regulator’s report says.
Group disability insurance by the numbers
The AMF report cites numerous figures that insurers submitted as part of the survey. In 2017, $1.776 billion in premiums were collected, including nearly $408 million in short-term disability (STD) premiums and $1.368 billion in long-term disability (LTD) premiums.
During that same year, insurers paid out in excess of $1.447 billion in benefits, including $360 million in short-term disability benefits and $1.087 billion in long-term disability benefits
The AMF observed that, on average, from 2015 to 2017, 86% of premiums written for short-term group disability insurance and 77% of premiums written for long-term group disability insurance were paid out each year in benefits.
From 2015 to 2017, an average of around 97,000 claims were received every year, approximately 30% of which were for mental health disabilities.
For the same period, the annual average acceptance rate for claims received was 95% for short-term claims and 88% for long-term claims.