insurers brace for disability claims 'deluge' from covid crisis

by: kelsey rolfecanadian employers got a break on their benefits plan costs last year as employees largely stayed home and avoided in-person health practitioners.but experts say the full cost of covid-19 may only start to show up in the coming year, as mental health challenges, pandemic-delayed treatment for various illnesses and the virus itself could prompt more employees to claim or extend short- or long-term disability.“i don’t believe we’ve seen the full impact of the pandemic yet,” said cheryl nicholson, manager of group life and disability at montreal-based insurer ia financial group.private insurers saved an estimated $4.8 billion in health practitioner claims from just the period between march 15 and june 15, 2020 due to stay-at-home orders, insurance comparison platform hellosafe.ca said in a september 2020 report. private health insurance payouts dropped 71 per cent from 2019 levels as canadians avoided providers covered by their benefits.according to theresa tran, principal at benefits and pension consultancy eckler ltd., health practitioner claims — massage therapists, chiropractors and dentists — have started to rebound this year as lockdowns and other virus-containment measures have eased and vaccination rates climbed. premium reductions introduced by insurers during the first wave, in recognition of low claims levels, have largely been phased out.but disability claims have remained an open question, with benefits experts painting vivid pictures of a coming disability claims “deluge” or “tsunami” due to the mental and physical strains of the pandemic.joey raheb, senior vice-president of health solutions in aon plc.’s toronto office, said the “uncertainties” of the past year have caused insurers to approach benefits renewal time with caution as they’re unsure whether a depression in health claims could lead to a period of higher-than-normal benefits usage, and are waiting to see how the virus impacts disability incidence and mortality experience.disability claims across all canadian insurers increased about five per cent in 2020, slightly higher than the average growth rate over the past five years of less than four per cent, the canadian life and health insurance association told the financial post in an email. “[it’s] tough to speculate on the causes of this slight uptick,” said susan murray, vice-president of government relations and policy at the industry association.nicholson said it’s too early to say whether or how much disability claims will increase, but said she already sees indicators of a brewing challenge for employers: employees who were already on leave are staying on disability for longer amounts of time.during the worst of the first, second and third waves, hospitals delayed surgeries and other procedures while covid-19 patients took up an increasing number of beds, and some specialized care and rehabilitation clinics were closed.nicholson said it’s created a backlog for canadians who’ve been waiting to access treatment, whether for serious illnesses or conditions that could, normally, have been easily resolved. she said ia has already seen short-term disability claims extended by a few days, and long-term disability claims by an extra month or two.

“that’s a big concern for people who are unwell, naturally, and a big concern for insurers like us who are trying to support their recovery,” she said. “i believe that’s where we may see the biggest impact.”the insurer has also seen people on disability for other health issues who already had low levels of anxiety facing an “exacerbation of anxiety symptoms or disorders” that were keeping them out of work longer.“individuals…who maybe had sub-threshold anxiety disorder or even a full anxiety disorder that wasn’t disabling to them before, we’re seeing those individuals on claims doing worse with the pandemic,” she said. “having increased anxiety can prolong their disability.”employees’ mental health has long been identified as a challenge to employers: a conservative estimate pegged the economic impact of poor mental health at $50 billion annually. during 2020, claims for mental health supports increased 24 per cent, according to data from clhia’s members.“we’re anticipating, and the data backs us up, a pandemic after the pandemic when it comes to mental health,” said joe blomeley, green shield canada’s executive vice-president of individual, public sector and mental health. he pointed to the growing number of canadians quitting their jobs, in part due to burnout.“i don’t think that’s a three, four-month phenomenon, it’s something that will likely continue post-pandemic. employers have to be equipped to make sure their employees have the services they need to treat mental-health conditions.”blomeley said canadians between ages 35 and 44 had the highest prevalence of mental-health claims across green shield’s business, and between 2019 and 2021 there were huge jumps in claims for younger cohorts: there was a 10 per cent increase for those between the ages of 25 and 34. “in the past year we’ve seen a pretty substantial spike across the board,” he said.insurers have been sounding the alarm for years that mental health challenges are making up a substantial, and still growing, part of short- and long-term disability claims. sun life canada said in a 2021 report that mental-health claims represent more than 30 per cent of its claims, and 45 per cent of its disability expenses. nicholson said ia sees similar claims trends.while many insurers waived the waiting period for short-term disability early in the pandemic to allow those who’d been infected or exposed to isolate without worrying about pay, covid-19 itself has made up only a small percentage of disability claims. for ia, it was less than one per cent. according to industry-wide data from the canadian institute of actuaries, it also had a muted impact on life insurance claims. at its peak, covid-19 represented six per cent of group life insurance claims.but steve raskin, a barrie, ont.-based personal injury and employment lawyer who was previously the vice-chair of the ontario trial lawyers association’s ltd section, thinks the low rate of covid disability claims may change.he said an increasing number of clients are coming to him after having been denied long-term disability for lingering covid symptoms. colleagues who specialize in ltd have told him similar stories, he said.it remains unclear how many people are affected with long-haul symptoms, with various studies pegging the percentage at between five and 40 per cent of people infected with covid-19. raskin said he sees this as a potential problem for employers, particularly as many begin reopening their offices.“i think the true level of the problem is being masked right now,” he said. “when more people go into the office or struggle to go into the office, and all of a sudden they have the stress of commuting and they’re around co-workers who can observe them more closely, i think what’s going to happen is the scope of the problem is going to get bigger.”financial post• email: krolfe@postmedia.com | twitter: kelseyarolfe_____________________________________________________________ if you liked this story, sign up for more in the fp energy newsletter.
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