Group Long-Term Disability Insurance Claims and the Business Cycle

Document Type


Publication Date

Fall 2009

Publication Title

Journal of Insurance Issues


This paper explores the relationship between private group long-term disability (LTD) submitted claims incidence and the business cycle. While much of the recent literature connecting disability incidence to the economy tends to focus on employment conditions, we rigorously explore broader economic connections between the submission of LTD claims and the business cycle. Using a group LTD data set from a private-sector carrier with approximately 104 million records drawn from both the manufacturing and wholesale / retail sectors and data for a carefully chosen set of economic variables, we find statistically-significant relationships between the change in LTD incidence and change in the status of various sectors of the U.S. economy. Our findings, we argue, are consistent with the idea that the submission of LTD claims is influenced not just by employment conditions, but also by current and anticipated future conditions in other economic sectors as well. Our results have important implications for the insurance industry, given the size of the market and the long-term nature of claims payments.


Journal of Insurance Issues © 2009 Western Risk and Insurance Association

Journal Information The Journal of Insurance Issues, the official journal of the Western Risk and Insurance Association, is co-sponsored by the Southern Risk and Insurance Association. The Journal publishes original research on subjects associated with risk management, insurance, actuarial science, employee benefits, insurance regulation, or other risk and insurance related topics. From 1979 through 1984 the Journal was published as the Journal of Insurance Issues and Practices. Publisher Information The primary goals of the Western Risk and Insurance Association are to promote education and research in the field of Risk Management and Insurance.