1. CIA Annual Meeting LOOKING BACK…focused on the future

2. CIA Annual Meeting Session 4208 LOOKING BACK…focused on the future Disability Trends and Relationships Denis Garand denis@garandnet.net Disability Trends and Relationships Denis Garand denis@garandnet.net

3. CIA Annual Meeting Session 4208 LOOKING BACK…focused on the future US Individual study NAICS asked for an updated table 85 CIDA based on 70’s experience Study period Jan 1, 1990 to Dc 31, 1999 Poor experience start of decade Good economy end of decade 64% of US market

4. CIA Annual Meeting Session 4208 LOOKING BACK…focused on the future

5. CIA Annual Meeting Session 4208 LOOKING BACK…focused on the future

6. CIA Annual Meeting Session 4208 LOOKING BACK…focused on the future

7. CIA Annual Meeting Session 4208 LOOKING BACK…focused on the future Fraser Garand Study Financial and technical support from: ING Re Munich Re Optimum Re Swiss Re

8. CIA Annual Meeting Session 4208 LOOKING BACK…focused on the future Participants Blue Cross LifeMaritime Life La CapitaleRBC Insurance Co-operators LifeSSQ Empire LifeStandard Life Equitable LifeUnumProvident Liberty HealthWawanesa

9. CIA Annual Meeting Session 4208 LOOKING BACK…focused on the future Fraser Garand Study 12 companies Small group market, average size 42 employees 1,400,000 exposure in 2000 and 2001 These companies represent: Over $800 million LTD premium 27% of the LTD market 34% of the market, groups less than 1000 employees

10. CIA Annual Meeting Session 4208 LOOKING BACK…focused on the future Demographic data FemaleMale Average age 39.1 39.5 Distribution in % 40% 60% Data sourceHome office billed groups

11. CIA Annual Meeting Session 4208 LOOKING BACK…focused on the future Elimination period

12. CIA Annual Meeting Session 4208 LOOKING BACK…focused on the future Definition of disability 97% Own Occupation definition 3% Any Occupation definition

13. CIA Annual Meeting Session 4208 LOOKING BACK…focused on the future Province Distribution of Exposure Full time Employed Canadians NF0.60%1.50% PE0.20%0.40% NS1.80%2.90% NB1.80%2.40% QC41.00%24.60% ON35.90%40.10% MB2.80%3.60% SK2.30%2.80% AB8.00%9.50% BC5.70%12.10% TOTAL100.00%

14. CIA Annual Meeting Session 4208 LOOKING BACK…focused on the future Mapping Industry mapped to NAICS codes Claims mapped to ICD-9

15. CIA Annual Meeting Session 4208 LOOKING BACK…focused on the future Fraser Garand Table 4 month elimination Own Occupation Benefit to age 65 Tables by 5 year age band and gender Quebec, Canada except Quebec

16. CIA Annual Meeting Session 4208 LOOKING BACK…focused on the future Incidence per M, study population Canada 8.1 Canada, except Quebec 5.7 Quebec15.3

17. CIA Annual Meeting Session 4208 LOOKING BACK…focused on the future SOA “4 month” incidence per M GenderRatio Age bandFemaleMaleF/M 20-241.6321.289127% 25-291.7971.387130% 30-342.3711.607148% 35-393.5612.112169% 40-444.5803.039151% 45-496.4544.974130% 50-549.2258.399110% 55-5912.87314.32090% 60-6415.56220.76175%

18. CIA Annual Meeting Session 4208 LOOKING BACK…focused on the future SOA “4 mth” vs study data Incidence rate per M Table Expected Actual Quebec 4.56 15.3 Canada, Ex QC 4.63 5.7

19. CIA Annual Meeting Session 4208 LOOKING BACK…focused on the future Current environment Disability has changed since early 80’s Workforce shift to white collar Changes in technology used in industry Claims management methodology Rehabilitation Medical technology changes Legal environment Integration with C/QPP, WC, auto, other Economic…inflation, participation rates,etc.

20. CIA Annual Meeting Session 4208 LOOKING BACK…focused on the future Variation QC vs ROC Industries105% - 400% Cause of disability Mental and Nervous disorders+ 600% Others+ 150%

21. CIA Annual Meeting Session 4208 LOOKING BACK…focused on the future Quebec table Longer elimination periods High termination rates Civil code vs Common law? Industry Accident rate ????

22. CIA Annual Meeting Session 4208 LOOKING BACK…focused on the future Benefit amount Actual versus Expected (new table) Total 0-999.99<100% 1000-1499.99+100% 1500-1999.99+100% 2000-2499.99+100% >=2500<100%

23. CIA Annual Meeting Session 4208 LOOKING BACK…focused on the future Variation by year YearFemaleMaleTotal 2000103%99%101% 200197%101%99%

24. CIA Annual Meeting Session 4208 LOOKING BACK…focused on the future Persistency of claims QC similar to ROC at 24 month Versus “SOA87” + Young - Older males

25. CIA Annual Meeting Session 4208 LOOKING BACK…focused on the future C/QPP vs study data Incidence rate per M TableExpectedActual QPP 2.2 15.3 CPP 2.8 5.7

26. CIA Annual Meeting Session 4208 LOOKING BACK…focused on the future

27. CIA Annual Meeting Session 4208 LOOKING BACK…focused on the future Future studies  Period 2000-2003  Termination rates

28. CIA Annual Meeting Session 4208 LOOKING BACK…focused on the future Things to consider  Valuation tables changing based on incidence rates  Old rate structure impacted by credibility  Consider LTD rates in two parts  Study your LTD rates, make appropriate adjustments to information for your market, by region.  Use the NAICS table

29. CIA Annual Meeting Session 4208 LOOKING BACK…focused on the future FRASER-GARAND Table Conclusions 1. Canadian incidence is “different” from the SOA 87 table 2. There are significant regional variations 3. Profitability will be impacted as companies revise base –up to two years Hypothesis 1. Claims open beyond 2 years are similar in total to the SOA 87 “24 month” table. But have large variations by age.