Group LTD Benchmarking Study – 2009

 

The Claim Analytics benchmarking study compares LTD recovery experience across several insurance companies. A key objective is to aid companies in identifying areas where there is potential to improve their claim practices and claims experience. This can result in very significant increases in profitability as even a 1% increase in recovery rates can translate to several million dollars of profit.

 

Performance is measured as the difference between a company’s expected 24-month recovery rate and the average of the expected 24-month recovery rates for all companies, as measured on a standardized portfolio of new Group LTD claims. Expected recovery rates were determined using predictive models that were calibrated using each company’s actual LTD claim experience.

Results

 

 

 

 

 

 

 

 

 

 

 

 

The above chart summarizes the overall performance of each participating company.

 

Participating Companies

 

The participating companies were as follows (in alphabetical order)

 

Hartford Life	Principal Financial
Lincoln Financial	Sun Life Financial
Met Life	Sun Life Financial (ex Genworth)
Mutual of Omaha	Unum

Please note that to preserve anonymity each company have been randomly assigned a letter between A and H.

 

Key Findings

 

1. 1. Wide Range of Performance: The difference in expected recovery rates (performance) between the best and worst performers is 11%. This is very significant given that even a 1% change in recovery rates will affect a company’s profitability by several million dollars.

1. 2. Diagnostic Category: There are wide differences in performance by company for some, but not all, diagnostic categories. These are the diagnostic categories where claims management practices can have a significant impact on outcomes. Performance does not vary greatly by company for other diagnostic categories. These are the diagnostic categories where claims management practices have less impact on outcomes.

 

As an example, consider the two most prevalent diagnostic categories: musculoskeletal and cancers.

 

• The first chart below shows that the range of performance by company for musculoskeletal claims is much wider than the range for overall results. This indicates that musculoskeletal claims are a diagnostic category where claims management practices can influence outcomes.

 

• The second chart below shows the range of performance by company for cancer claims is much narrower than the range for the overall results. This indicates that there is less opportunity for claims management practices to affect outcomes for cancer claims.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1. 3. Monthly Benefit: Most of the differences in performance by company are attributable to claimants with monthly benefits of less than $2,500. This category includes nearly 77% of all claims.

 

The first chart below shows that performance for claimants with monthly benefits of less than $2,500 is very similar to overall performance.

 

The second chart below shows there is very little difference in performance by company for claimants with monthly benefits between $2,500 and $7,499. Company A is the only company whose performance differs by more than 1% from the average for this group of claims.

 

The third chart below shows there are significant differences in performance by company for claimants with monthly benefits of $7,500 or more. Performance by company for these claims is not consistent with overall performance. For example, Company A, Company D and Company F, which all perform well overall, perform below average for claimants with large monthly benefits. While this category includes only 1% of claims, its financial impact is significant as a result of the large benefit amounts.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company Specific Analysis

 

In addition to this, the main report, each participating company will receive a separate, individualized analysis which will reveal to them their company code and provide an analysis of their own performance.

 

Online Recovery Calculator

 

Each participating company will receive access to an online tool that will allow them to calculate the expected recovery rates and performance for sample claimants, based on the following attributes: age, gender, diagnosis, elimination period, region, industry, benefit and benefit ratio.