Panel Discussion #4: Emerging Disability Trends Table ronde n o 4 : Nouvelles tendances en matière d invalidité

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1 Emerging Disability Trends (PD #4) 1 Panel Discussion #4: Emerging Disability Trends Table ronde n o 4 : Nouvelles tendances en matière d invalidité Moderator/Modérateur: Speakers/Conférenciers: Denis M.j. Garand Charles P. Cossette Peter P. Douglas Denis M.J. Garand Moderator Denis M.J. Garand: (recording commences here) from Québec City. He works for la Régie des rentes du Québec, or otherwise known as the Québec Pension Plan. He graduated from the université de Laval in He also comes from Victoriaville, which is a very important point. That is where my ancestors came from when they left Québec. Conférencier Charles P. Cossette : Merci, Denis. Le but de la session, évidemment, c est de faire le tour de plusieurs tendances en ce qui concerne l invalidité. Je vais me concentrer sur ce qui concerne principalement le Régime des rentes du Québec (RRQ), mais aussi on va parle un peu du Régime des pensions du Canada (RPC), et on va l appeler, plus tard, et aussi du Régime américain (OSDI). Donc, le plan de présentation, premièrement, on va revenir un peu pour décrire ce que sont les rentes d invalidité du RRQ et du RPC, étant donné que, je suppose, pas d entre vous, on va parler principalement des compagnies d assurance, donc, les différences importantes à connaître avant d analyser les données de l expérience. Ensuite, je vais parler des taux d incidence au Régime des rentes au cours des années récentes, comment s est repartie par cause d invalidité la clientèle; ensuite, je vais revenir sur l expérience OFPC et au Régime américain (OSDI); et ensuite, on va parler un petit peu de certaines réflexions certaines questions qu on se pose au Québec au sujet de la définition de l invalidité de certain cas, je vais revenir là-dessus. Premièrement, la définition de l invalidité pour avoir droit à ces rentes-là au Québec, c est que la personne doit atteindre une invalidité physique, mentale grave et prolongée. La définition de «grave» c est la capacité de retenir tout emploi toute une occupation véritablement rémunératrice. Ce qui est particulier au Québec, c est qu il y a une règle plus souple pour les gens âgés de 60 à 64 ans, qui n ont pas la capacité de retenir son emploi habituel. Cela c est une mesure qui est entrée en vigueur en 1984, en même temps que la possibilité d avoir la retraite anticipée après de 60 ans. Tout cela était dans une période où est-ce qu il y avait un taux de chômage relativement élevé et aussi une abondance de main-d œuvre, donc, cela, combiné qu à retraite anticipée, c était des mesures pour inciter les gens à laisser des places aux jeunes sur les marchés du travail, principalement, et il y avait beaucoup d autres raisons aussi. Ensuite, sur les tendances de l invalidité grave et prolongée, la définition de «prolongée» c est le fait que toutes les tendances soient de devoir entraîner le décès ou de rendre une durée indéfinie. Une durée indéfinie au Québec, on l applique peut-être un peu plus strictement, c est le fait qu aucune guérison ne soit prévisible dans le cas OFPC. Dans leurs lois, c est écrit aussi «une durée indéfinie», mais, dans les faits, il applique plutôt en disant que c est une durée, selon toutes les tendances, qui devrait durer au moins un an. Donc, la-dessus, il y a une petite différence là qui fait que, chez les gens de moins de 60 ans, de la défini- Proceedings of the Canadian Institute of Actuaries, Vol. XXXIV, No. 2, June 2003

2 Nouvelles tendances en matière d invalidité (TR no 4) 2 tion du Québec est peut-être un peu plus sévère que celle du RPC, alors que, pour les 60 à 64 ans, la définition au Québec est beaucoup plus moins sévère, de sorte qu il y a une grande toutes les incidences beaucoup plus élevées à partir de 60 ans. Les conditions d admissibilité aussi, c est quelque chose qui est bon de savoir pour bien comprendre qui est admissible. Il va falloir cotiser au Régime, au procès du RRQ, deux des trois dernières années ou cinq des dix dernières années ou la moitié de la période cotisable qu il a, la période entre l âge de 18 ans et le moment d invalidité. Ce sont les conditions qui sont applicables depuis juillet 1993; auparavant, c était un peu plus sévère que cela. Cela a été assoupli, à ce moment-là, surtout pour permettre aux gens, qui sont atteints de maladies, qu on dit, évolutives, c est-à-dire que leur maladie fait en sorte que devient, effectivement, incapable de faire tout emploi, mais ils peuvent étant donné que leur condition s est dégradée lentement, mais ils ne peuvent pas avoir cotisé dans les dernières années, donc cela c est tout pour ces cas-là que ces conditions-là étaient modifiées, élargies, à ce moment-là. Du côté du RPC, c est un peu l inverse qui s est passé un peu plus récemment, c est qu on a restreint plus les conditions à des quatre ou six dernières années avec des gains de travail au moins égales à 10 % du MGA. Cela c était dans un but vraiment de réduire des coûts parce qu il y a vraiment eu une explosion du nombre de baissières et des coûts évidemment à l OFPC au cours des années Bon, la façon que les rentes d invalidité se terminent mais, évidemment, il y a le décès parce que ce sont, généralement, des gens avec une incapacité assez grande, mais il y a quand même une grande portion, c est-à-dire, 63 %, de ceux qui terminent en 2002, qui atteint l âge de 65 ans, donc, la rente, à ce moment-là, est convertie automatiquement en rente de retraite. Pour ce qui est du rétablissement, qu il y a l autre possibilité de la cessation de la rente, mais c est quand même assez faible que ce soit RRQ ou RPC, mais c est plus rare au RRQ, étant donné que notre définition est tant un peu plus sévère avant 60 ans, et aussi que le RPC donne plus de soutiens pour la réadaptation professionnelle par rapport au RRQ. L autre chose qui est aussi c est que, comme c est plus sévère au RRQ à 60 ans, mais il y a moins de réévaluation, c est-à-dire que, pour certaines maladies, c est prévu qu après un an, deux ans ou trois ans, il y en a une semaine de réévaluation d invalidité, ce qu il y en a au Québec, mais il n y en a moins qu au RPC. Si on parle plus spécifiquement des taux d incidences, évidemment, comme les taux d incidences augmentent avec l âge, cela augmente plus rapidement à partir d à peu près 50 ans. Dans le cas d un recueil, évidemment, il est très important à l âge de 60, contenu que, du début de la vigueur de la définition moins sévère. Cela diminue un petit peu par la suite après 60, étant donné que les gens sont admissibles à la rente de retraite, donc, quand quelqu un a déjà reçu sa rente de retraite depuis un certain temps, il ne peut pas demander la rente d invalidité. Cela va aussi selon du sexe. Chez les 55 aux 64 ans, les taux d incidence des hommes sont plus élevés que ceux des femmes, et pour les moins de 55 ans, depuis quelques années, ceux des femmes ont dépassé ceux des hommes. Parmi nos bénéficiaires, on a séparé en dessous qu on a vraiment une invalidité totale, une capacité d occuper tout emploi puis ceux qu on a la définition moins sévère qu il a propre emploi, en les séparant, bien son sommaire à 60 ans, mais c est très différent de la définition moins sévère. Les taux d incidence est très inférieurs. On le voit dans le graphique qui suit. Donc, il est très important à 60 ans à ce qui donne un taux d incidence d à peu près 6 % pour les hommes et 4 % pour les femmes à l âge de 60 ans, alors que les autres taux, encontre la définition plus sévère qui s applique, c est plus ces taux d un pour cent; donc, il ramène une très grande différence. Lorsqu on vient de voir, c était les taux d incidence moyens au cours de trois années récentes, 1998 à 2000, ce qui devrait savoir c est l évolution dans le temps. Ce qui est indiqué ici c est l évolution depuis Pourquoi on n a pas donné avant 1994, c est que justement, comme je l ai dit tantôt, les conditions d admissibilité aient été élargies. Les taux d incidence sont plus faibles avant 1993, mais c est pour des raisons vraiment que le régime est différent, alors que, depuis 1994, le régime demeure le même, donc, on voit vraiment des taux du groupe 60 à 64, qui sont beaucoup plus élevés, plus élevés chez les hommes que chez les femmes. Donc, pour les hommes, en général, pour les différents groupes d âge, c est relativement stable ou, dans certains cas, à la baisse, alors que, pour les femmes, il y a une tendance générale à la hausse. Les facteurs expliquent les différences entre les hommes et les femmes, c est la participation des femmes aux marchées du travail qui change et qui demeure différente de Délibérations de l Institut canadien des actuaires, Vol. XXXIV, n o 2, juin 2003

3 Emerging Disability Trends (PD #4) 3 celle des hommes, comment les assurances privées s appliquent. Mais, ce qu on remarque c est que l écart entre les hommes et les femmes diminue. Ici, on a les statistiques sur l ensemble de nouveaux bénéficiaires, par groupe d âge, au cours de la période de 1990 à 2001, donc, on évoque que, pour les hommes, c est relativement stable. Ce qui est particulier dans ce graphique-là, c est qu on voit une espèce de hausse soudaine dans les années 1994 et C est une période où est-ce qu il y a eu un transfert de clientèle, c est-à-dire, des gens quittaient à l aide sociale, des gens ils n ont trop de travail, qu ils ont l aide sociale, que le ministère responsable de l aide sociale les obligeait à faire une demande de rentes d invalidité au régime de rentes s il est admissible, s ils avaient cotisé suffisamment, étant donné que l aide sociale est supposée être l aide de dernier recours. Pour les femmes, c est un peu parallèle avec toutes les incidences qu on vient de voir. C est une hausse quand même assez importante au cours de toute la dernière décennie. Les nouveaux bénéficiaires, ici on étudie les nouveaux bénéficiaires par cause d invalidité, selon la définition d invalidité totale, donc, la définition plus sévère, donc, ce qu on peut remarquer dans ce graphique-la, c est que, parmi les à nouveaux qu il y a à chaque année, selon cette définition-là, il y en a à peu près le quart qui sont des tumeurs, ce sont des gens qui ont eu du cancer. Les troubles mentaux, il y a eu une hausse en 1994, pour la raison que je vous ai dite tout à l heure-là, de gens qui étaient transférés du programme de l aide sociale. Notamment, des troubles mentaux, cela inclut, dans ce cas-là, beaucoup de gens qui sont de schizophrènes. Mais, suite à cette hausse-là, c est quand-même relativement stable. La première cause étant le cancer, la deuxième cause, c était, en 1990, les maladies d appareil circulatoire, tout ce qui concerne les troubles cardiaques, entre autres, et maintenant, à 2000, c est maintenant devenu des troubles mentaux qui est la deuxième cause d invalidité parmi les gens invalides totalement. Pour la définition moins sévère, qu on applique à partir de 60 ans au Québec, cela qu ici les nombres sont moins importants, mais la première cause, dans ces cas-là, ce sont les gens atteints de problèmes au système musculaire, donc, c est vraiment dans 40 % des cas, au début des années 1990, et c est maintenant rendu à peu près 50 %. Sur le temps, cela a inclus, entre autres, évidemment, toutes sortes de problèmes aux os et, entre autres, les maux de dos. La deuxième cause, mais qu il est en bête, c est les maladies d appareil circulatoire dans ces cas-là. Suite aux améliorations des techniques médicales, cela demeure la deuxième cause, mais cela a dépassé de 28 à 16 % des nouvelles rentes dans ces cas-là. Les taux mentaux, bien là, il y a une hausse de 5 à 8 %. Donc, là, en somme, les graphiques qu on vient de voir, il y a eu des changements quand-même assez importants dans l importance des causes d invalidité et l appareil circulatoire, lorsqu on regarde tous les cas, c était la première cause, maintenant c est la quatrième cause, et les troubles mentaux, il y a une croissance aussi. On a regardé plus spécifiquement, séparant selon les hommes et les femmes, parce que les maladies d une invalidité sont vraiment différentes quand on sépare les hommes et les femmes. Encore là, si c est tous les cas, donc, cela inclut la définition plus sévère et celle moins sévère, cela inclut les deux. La première cause pour les hommes, c était les maladies d appareil circulatoire en 1990 et c est, maintenant, les troubles du système ostéomusculaire. Les troubles mentaux c est relativement stable depuis 1994 dans ce cas-là. Pour les femmes, c est la première cause, c est aussi le système ostéomusculaire, mais dans une proportion un peu plus importante, puis il y a souvent des cas de fibromyalgie, qui sont inclus dans cette catégorie-là. Bon, les taux mentaux sont stables depuis 1994 et les tumeurs c est une proportion assez importante aussi. C est la deuxième cause, très près de la catégorie du système ostéomusculaire. Évidemment, lorsqu on regarde la répartition par cause d invalidité comme cela parmi les nouveaux bénéficiaires, il faut tenir compte aussi du fait que la durée des rentes est très différente en fonction de l âge que la rente commence et aussi de la cause d hérédité. Donc, les rentes, terminées en 2002 selon la cause d invalidité, sont indiquées ici. La durée moyenne en mois varie quand-même beaucoup d une catégorie à l autre et, évidemment, il (inaudible) du cancer à une durée beaucoup plus faible, mais sauf que la raison de terminaison de leur cas, dans 83 % des cas, c est le décès avant l âge de 65 ans, donc, il y en a seulement 15 % qui atteint 65 ans. Alors que, pour les autres maladies, en général, il y a beaucoup moins de décès, de sorte que, même si les tumeurs sont la cause d invalidité, qui est souvent une des plus importantes parmi l ensemble des nouveaux bénéficiaires, lorsqu on regarde l ensemble des bénéficiaires en paiement à la fin de chaque année, bien, c est beaucoup moindre. Les tumeurs représentent seulement 7 % Proceedings of the Canadian Institute of Actuaries, Vol. XXXIV, No. 2, June 2003

4 Nouvelles tendances en matière d invalidité (TR no 4) 4 de l ensemble des bénéficiaires, qui sont payés par le Régime des rentes du Québec. Donc, ici, vraiment, tous les bénéficiaires qu on paie chaque année, c est passé de en 1990 à en Puis, pour des différentes causes, bien, évidemment, ce qui est majeure ici, ce qu on voit, c est que les troubles mentaux, le nombre a plus que doublé et c était la troisième cause d invalidité en 1990; c est maintenant la première cause parmi l ensemble des gens qu on paie. Alors qu inversement, bien, le système ostéomusculaire, c était la première cause; c est maintenant la troisième cause. Lorsqu on regarde l ensemble des bénéficiaires qu on paie, mais seulement ceux qui sont acceptés en fonction de la définition élargie, la définition moins sévère, la première cause, c est évidemment le système ostéomusculaire, et c est en hausse; c était 38 % des nouveaux cas, selon cette définition-là, puis c est maintenant rendu à 52 %. Je vais parler maintenant un peu de l incidence observée au RPC. Bon, il y a eu des fluctuations très importantes dans le taux d incidence. Ici, c est un taux d incidence où tous les âges sont groupés, ce qu on n a pas nécessairement fait pour le RRQ jusqu à maintenant. Il y a des changements très importants, des variations très importantes de l expérience du RPC. Entre autres, dans les années 1980, bon, il a mis en place progressivement des pratiques plus larges en matière d acceptation des rentes d invalidité parce que les autres, selon leur loi, ils ont à peu près la même définition, le RPC a à peu près définition que le RRQ, incapacité d occuper tout emploi, mais il y a eu des pratiques plus larges qui faisaient en sorte qui tenaient compte plus que le RRQ a des facteurs socio-économiques, de sorte que la clientèle a beaucoup augmenté au cours des années 1980 et Par la suite, en 1995, ils ont établi des lignes directrices plus fermes pour éliminer le plus en compte des facteurs socio-économiques, ce qui explique la baisse très importante qu on voie en En plus, en 1998, bien, comme j ai dit au début, ils ont restreint les conditions d admissibilité sur les exigences en termes de cotisation au cours des années récentes. C est cela que plein d autres facteurs d exigence de l incidence ont eu juste la connaissance du programme lui-même. Des gens pouvaient, simplement faire demande parce qu ils ne connaissaient pas le programme. La croissance économique, évidemment, une incidence sur l emploi, une incidence sur les demandes des rentes d invalidité, les changements sur le marché du travail, surtout, en ce qui concerne la participation des femmes, puis la nature des emplois aussi. Les taux d incidences du RPC, selon l âge, ce ressemble un plus en ce qui concerne le RRQ, lorsqu on regarde seulement l invalidité totale, donc, en pourcentage de taux de 1 % chez les gens aux alentours de 60 ans, donc, c est sûr que nous ou le RRQ, c est plus élevé, contenu les définitions moins sévères, mais pour ce qui est la définition plus sévère, on est relativement semblable. Les causes d invalidité, là aussi, il y a une évolution là relativement semblable à celle du RRQ. Étant donné la définition peut-être un petit peu plus sévère avant 60 ans au RRQ, bien, il y a une proportion peut-être un peu plus élevée de tumeurs, de cancer parmi nos gens qui sont reconnus selon la définition plus sévère, mais, en gros, ce n est pas mal le même ordre de grandeur. Aux États-Unis, cela c est des données qui proviennent d une étude, qui a été publiée en 1999, par le «Social Security Administration». Là aussi, c est un taux d incidence groupé. Il y a toute sorte de fluctuation. Dans l administration du programme, il y a eu des changements, par exemple, depuis des années 1980, on avait une baisse qui était due à des différentes restrictions dans les programmes, des montants qui ont été diminués, plus de réévaluations. Par la suite, il y a eu certains cas qui ont été moins sévères pour les troubles mentaux. Les années 1995, là, il y a eu une baisse puis cela semble être expliqué par une croissance économique un peu plus forte et il y a eu une restriction pour certaines causes d invalidité. Par âge, le pattern ressemble pas mal à ce qu on a vu tout à l heure pour le RPC. En général, les taux sont un peu plus élevés parce que le Régime américain considérait un peu plus les différents facteurs vocationnels et liés aux capacités d occuper des emplois. Pour la question de l invalidité, bon, je vous ai donné quand-même plusieurs statistiques depuis tantôt sur la définition moins sévère à partir de 60 ans. Nous, au Régime des rentes, on se pose des questions sur la cohérence qu il y a entre ce qu on paie comme rente de retraite aux rangées de 60 à 64, et les rentes d invalidité, parce qu il y a une grande différence dans les montants de prestation. La rente d invalidité maximale est 900 $, alors que la rente de retraite, pour quelqu un qui commence à 60 ans, est au maximum, je crois, à peu près 500 $ ou 600 $. Donc, les gens, qui sont reconnus, selon la définition moins sévère, souvent ils ne peuvent pas avoir une très grande différence dans leur état entre quelqu un qui décide seulement d arrêter travailler parce que, disons, il est fatigué ou quelque chose comme cela. Donc, la différence d état, entre quelqu un qui demande la rente de retraite et quelqu un qui demande une rente d invalidité, souvent n est pas très grande puis le montant qu on paie est très différent. Délibérations de l Institut canadien des actuaires, Vol. XXXIV, n o 2, juin 2003

5 Emerging Disability Trends (PD #4) 5 Par rapport au fait d encourager les gens à travailler le tout longtemps possible, bien, c est cela qu un travailleur âgé, qui quitte son emploi de carrière pour en occuper un autre, qu il est en toute santé, il peut perdre son droit à la rente d invalidité qu on paie, alors que quelqu un qui reste simplement assis chez lui à attendre, qui, par exemple, a 58 ans puis il ne cherche pas d autre emploi, puis à l âge de 60 ans, il va avoir sa rente d invalidité parce qu il est capable d occuper l emploi qu il occupait. Donc, cela aussi c est quelque chose qui soulève des questions. Il y a eu aussi des problèmes de cohérence avec d autre taux social, notamment, les indemnisations pour les accidents de travail, où est-ce qu il y a des différents programmes dans les autres programmes sociaux, où est-ce qu il y a un encouragement à reprendre le travail le plus possible. Donc, en conclusion, il y a une évolution dans des causes d invalidité qui conduisent moins au décès. Il y a aussi une augmentation d incidences chez les femmes, ce qui fait que tout ce qui y est mis ensemble, la durée de paiement est plus en plus longue et il est plus de bénéficiaires, donc, en sommaire, une augmentation des coûts à prévoir. Si on exclut la définition élargie, dont je parlais tout à l heure, l incidence est quand même similaire à celle du RPC et celle d OSDI, mais cette définition-là, comme je viens de le dire, est remise en question. Cela complète la présentation. Je ne sais pas si des gens ont des copies, il y a différentes autres données qui pourraient être consultées en annexe de la présentation. Merci....(applaudissement)... Modérateur Garand : Merci, Charles. We will change pace. We started off with the public plans, the Canada and Québec pension plans that cover most people. Then we are going to be working with Peter Douglas, who is going to talk about Workers Compensation plans. Then we will come to private insurance plans. Peter Douglas is currently working as a lecturer at the U of R and is also a part-time consultant with the Saskatchewan Workers Compensation Board. He is a graduate of Dalhousie University and also UBC so he did not know which coast he wanted to be on. Now, he is living in Regina so he is not settled yet. We will pass it to Peter. Speaker Peter B. Douglas: Thanks, Denis. Nice to be here. I am going to use the microphone here, but I hope that I am not guilty of using, what my wife calls, my classroom voice in speaking because I do speak to people in rooms as loud and large on a regular basis. So, if I get too loud, please let me know. A little bit more on my background, I am by training a group actuary and, when I took the job at the university, part of the arrangement was that I would work with the Workers Compensation Board so I am moving into a new environment and learning a lot. I know that there are individuals in this room who have worked with Workers Compensation Boards a lot longer than I have. I was talking to one just before the presentation started, and she indicated that it is always a learning experience, which sounds good to me. I am going to talk a little bit about the relationships between Workers Compensation and how it is similar to group disability insurance and also focus on some recent trends as to what has gone on in the Workers Compensation front. We will talk about the Workers Compensation environment. We are going to go through some key statistical measures, which are available, and give you some ideas of some numbers actuaries like to see numbers up front. We will also talk a little bit about trends and observations. When I was group actuary, I used to say that, if you saw one group insurance plan, you saw one group insurance plan. If you have seen one Workers Compensation Board s set of rules and regulations, you have seen one Workers Compensation Board s set of rules and regulations. There are twelve different jurisdictions, all of the provinces it must be fifteen because there are the three territories as well, who have boards. There are differences by province that we will see here. There are regional differences in experience that you would see on the group disability side, that you will see the experience in Québec or that, in the Maritimes, it is different than what you would see in the West or in Ontario. It is important to realize that the differences that Proceedings of the Canadian Institute of Actuaries, Vol. XXXIV, No. 2, June 2003

6 Nouvelles tendances en matière d invalidité (TR no 4) 6 you are going to see partly reflect the industries and the workforce in each of those areas. The workforce in PEI is very different than the workforce in Ontario or B.C. or the Yukon. There are different industries there as well. As we have noted, there are differences in legislation, different benefits, the benefits may pay a different amount, they may start at a different point, they may end at a different point. One key thing is the treatment of various work-related illnesses, which has become a hot topic, and some Boards cover some things that other Boards do not. I guess also that the last thing that the differences in the provinces will reflect will be the management of the Board, and this reflects to their claims management. Just as you might expect between different insurance companies, the same claim might be handled in different ways, this will also be true at the Workers Compensation Board, if you think of them each being an insurance company with each their own practices. One other thing that I did not note on this slide is that there is a difference in terminology. All of the Boards have their own terminology and, since I work with the Saskatchewan Board, I may be guilty of Sask Workers Comp speak. I have used words which mean things to me, but there are equivalent terms that exist all across Canada, and I am going to try to speak in a way that is most applicable to group insurance, but, if there is a word that you do not understand, please put up your hand. Let us talk a bit about what Workers Compensation Boards cover. They cover benefits for work-related illnesses and injuries. We do think mainly of the guys who rip their back out or break a leg on the loading dock, but it is important to remember that you can have work-related illnesses as well. I know that, in Saskatchewan, there has been legislation passed recently, for instance, about firefighters dealing with noxious chemicals, which will be covered by the Board. There are short-term disability awards, which might be similar to the group WI or, in some cases, long-term disability. Permanent disability awards, I tend to refer to those as pensions in my talk here, which is perhaps a confusing term. It is what is used in Saskatchewan from an operations standpoint. I think that permanent awards is a better word. These are individuals who have been adjudged to have a permanent disability and have been awarded a benefit paid on a monthly basis, which replaces some or all of their employment earnings, medical coverage, their rehab benefits and their death benefits. That sounds an awful lot like what you would see in the Group Department of any company operating in the Canadian group insurance market. So there are some similarities. Let us talk a bit about disability. There is this term of TLC, which is not the learning channel. I have also seen that referred to as LTC, times-lost claims, which means that the person has been injured and has to stay away from work for some period of time. Generally, it is first-day coverage. I think that there are a couple of the smaller Boards, where the first couple of days are picked up by sick leave now. These things do vary from province to province. I have listed here a partial CPP offset and I have since worked out that partial is probably not the best word to use here. I looked at Saskatchewan, where there is a 50% CPP offset. I talked to our claims management people and they said: Yes, we think that is pretty similar across Canada. But it is not. Some jurisdictions have no CPP offset, some jurisdictions have a full CPP offset, some jurisdictions have a 50% CPP offset. Of the ones that have a CPP offset, some have the offset applying during the compensation period that is a short period, but not applying to a permanent award. Others have them to both. Again, different flavours in every province. There are two different types of benefits that you are really looking at with Workers Compensation disability. There is, what is called in Saskatchewan, compensation, which covers short-term disabilities. You are working on the fact that the person is going to go back to work. This corresponds to WI or the own-occ period of an LTD plan. There are pension awards, which is for permanent loss of earnings. These pensions, when I speak of pensions here, again, this is the fast-speak, it is covering from the date of injury and ends at age 65. It is not a lifetime pension. That is a confusing word. One thing that has led me to considerable surprise when I got there was that there is not a direct translation from the LTD environment, where you have the end of the own-occ period and, if they are not recovered by that point, you reckon that they are probably a permanent claim. There is no fixed timeframe. It is determined by the claims management. The claims management will generally work with the case until they think that they cannot proceed any further, and then they will look at having an award. That award may be made and, if the person is a quadriplegic, then they will probably make that award pretty darn quick. If the person has to go through some long rehab or vocational retraining, then it could be more than two years. So there is no fixed timeline there. Délibérations de l Institut canadien des actuaires, Vol. XXXIV, n o 2, juin 2003

7 Emerging Disability Trends (PD #4) 7 It has been very difficult, in the past, to compare provincial Workers Compensation Boards. There is a set of, what is referred to as, the key statistical measures (KSM), developed by the Association of Workers Compensation Boards in Canada, and these are intended to provide consistent measures across all Boards. It is a database, which is updated annually. It started in The most recent data is 2001, and the 2002 data, I understand, will probably go up in the fall of There were new measures added in 2000, unlike in your handout when I stated that the new measures were added at the time of the Roman Empire of A.D.200. I think that, for actuaries, the two key statistics that you want to look at would be how often do the claims occur and how long do they last, so incidence and termination. Here are some of the measures that we can look at from the key statistical measures. One thing that I noticed is that, in terms of these key statistical measures, some of these are available right on the AWCBC that is a horrible acronym website. You could also approach your local, provincial Board and you should be able to get access to these. These are not hidden numbers. But, on the claims incidence side, we have an injury rate, which is the number of time-lost claims, divided by the number of employees. That is an incidence rate and that is in any given year. That is available starting in 2000 on the reports that I have seen, anyway. If you do not have that information, there are still some measures that we can look at. We can look at the time-lost claims counts and compare them to payroll, and try to adjust for estimated wage increases. It is also useful to compare the number of disability claims to the number of fatalities because fatalities tend to remain fairly stable. Here are the wrong numbers and how many claims you get, how many time-lost claims by province. You can see that Ontario and Québec have the bulk of the claims, B.C. is next, and I have tried to arrange these reasonably geographically and I do realize that the Yukon and the territories are not east of Newfoundland, that they are somewhere north, but they just do not just fit in, in any other places. You can see that, in some provinces, the trend has been for a decline. This is over 1998 to In B.C., you can see a decline and, in Saskatchewan, you can see an increase. If you were to look at some of these statistics from a longer standpoint, for instance, for Saskatchewan, you would see that there is very much a cyclical trend of ups and downs. In fact, the 50-year Saskatchewan picture looks an awful lot like a sign wave. It is up and down. That has nothing to do with my presentation. I have been accused of razzle-dazzle in the classroom, but that is not my style. Inter-frequency: So these are our incidence rates. Remember, in comparing this to LTD incidence rates, so this is first-day coverage so we are not including the elimination period here. We have figures for 2000 and We have these by province and we can see that there are definitely differences by province. We can see that Ontario has a fairly low rate, and we can see that the Prairie Provinces actually have a fairly high rate. I talked earlier about comparing the number of claims to payroll and I have just divided the number of time-lost claims by the payroll in millions here, and this is Canada-wide. I have also done a similar ratio for work-related fatalities over the same period. You can see that the fatality figure has remained fairly constant so that may be a measure of the absolute risk of working and that the number of time-lost claims has tended to tail off slightly over time. We also looked at this by province and this is even more striking. I think. You can see that the (inaudible) will be far right, where we have some smaller Boards where you are going to get fluctuations from year to year, anyway, or may be influenced by certain industries. This is a four-year average. We can see that the fatality rate has remained fairly flat across Canada, and the rate of disabilities varies widely by province. We are going to look at termination experience. The other things that we want to look at are the two disability actuaries. There are a few of the key statistical measures that we can use. There is the composite duration of claims. There is the proportion paid at the end of two and six years. There is an indication of the proportion of claims, awarded pensions or awarded permanent awards. I want to remind you that the early experience is not comparable to LTD. That is the early year, you know, the first six (6) months of disability because, first of all, a very much higher rate of accidents in the Workers Compensation Board environment than you would see in the LTD environment. Secondly, you have first-day coverage, in most cases. Proceedings of the Canadian Institute of Actuaries, Vol. XXXIV, No. 2, June 2003

8 Nouvelles tendances en matière d invalidité (TR no 4) 8 Here we have proportion of claims awarded pensions. I have them for 2000 and We can see that there are significant fluctuations by province. Again, some of this is regional experience, some of this is workforce and some of this is legislation, some of this is the management of the Boards. If you remember, the Saskatchewan and Manitoba had high numbers of claims for the lost time, but a low percentage of those are getting the awards. Québec tends to be high on both of those counts. We can see that, in most cases, things have remained reasonably stable from year to year. I just can see that Québec has had a jump in Continuance probabilities, these are based on figures for 2002 and I have averaged them out. We have, what we would call, a 2PX and a 6PX. It is the proportion of claims that remain disabled at the end of two years and the proportion of claims that remain disabled at the end of six years. We can see significant variations by province. I also did a little bit of rough actuarial work here. I had a 2PX and I had a 6PX, which tells me that I can sort of rough out a continued probability that, if you remain disabled for two years, you are going to remain disabled for the six years. There is no exact science here. This is a roughed-out thing, but you can see that there are variations by province, and I have also put on the comparative statistic from the CIA study, and you can see overall that, for some provinces, it is very close to the CIA. Ontario, for instance, is quite a bit higher. There is also this measure, composite duration of claims. Those of you who are eagle-eyed, will note that not all provinces give me statistics for all of the years, which is why there is a gap in Ontario s experience, which is probably the one that you really wanted to see, but such is life. The composite duration of claims is measuring the number of days paid, divided by the number of claims. You can see that there are differences by province and, again, there is a regional trend that things tend to get worse as you go east. They are paid longer the further east that you go. This is a comparison of this continuance to the end of two years by province. Again, I am showing you for 2000 and 2001 and, again, lowest in the West, highest in the East. There is our six-year figure; same thing. The other measure that I have thrown in here is the average assessment rate. This is the cost of benefits per 100. It is a measure (inaudible) and I cannot remember the divisor here, but you can see that there are differences by province, i.e. that some provinces are charging more than others because they have to and that the cost to benefits changes from year to year within the province. Again, this is all stuff that would be similar to what goes on in the group, long-term, disability fund. Plans will have different experiences, depending on which province they are in and they can fluctuate from year to year. Trends: Significant differences by provinces, a slight decrease in the number of claims. That is up to the year I will be interested to see what happens in Certainly, in Saskatchewan, things went up. It also increases in duration, on all of the three measures that we looked at. Another question that I would like to ask is: Can you use Workers Compensation information in looking at group, long-term disability? The KSMs are available on request. There is a rate book for every province, which gives very detailed breakdowns of rates by industries. I think that, for most cases, this rate book is available free of charge in paper and often on the Internet. I know that the Saskatchewan rate book is on the Internet. One thing that has occurred to me is that often the toughest call in underwriting a group disability plan, is to measure the HR environment of the employer. You can measure the demographics, you can measure the industry, you can measure the region, but how is the company run? If you can get the Workers Compensation rate and compare it to the average industry rate for that province, that is a pretty darn good measure of how they are doing as an employer because all of these employers do get the experience rated just in the same way that a group policy would be experienced-rated. If they have a worse than average assessment rate for their industry, probably they have some problems in their shop and probably you need to know about that as a group carrier. If they have a better rate than the industry rate, well, probably they are doing some things right. Probably they have a happy workforce, probably they have a good shop that is running, and probably they are good at getting people back to work. Again, you need to know that from a group LTD standpoint. That leaves me to the end of the Workers Compensation Board side of it....(applause)... Délibérations de l Institut canadien des actuaires, Vol. XXXIV, n o 2, juin 2003

9 Emerging Disability Trends (PD #4) 9 Moderator Garand: Thank you, Peter. I will just switch presentations. I am the final speaker. I will be talking about the recent LTD study. I am a sole practitioner. I provide consulting services on group insurance plans, and I have been doing that for the last two years. Prior to that, I was with Cooperators and have actually had the occasion of working with Peter when I was at Cooperators. I am just switching it so that I can see it up here so that I do not have to turn my head all of the time. Recently, there has been a study that was done in the insurance industry, and we call it the Fraser-Garand Study. The two authors in that were Ken Fraser and myself. It is a proprietary study so, in this discussion, I will not be giving actual details of the study, but I can give you an idea of indications, of what happened. I can give you an idea of what the benefit designs look like for disability plans, what kind of work we did with the data and some general observations. This study actually had some financial and technical support from ING, Munich, Optimum and Swiss Re. We had twelve companies participate in the study, but we actually had four blocks of data submitted. There were two companies that had two different administration systems so we were working with fourteen blocks of information. The study was comprised of twelve companies, mainly in the small-group market. The exposure was $1.4 billion for the years 2000 and When we compare this to the group insurance market, these companies represented approximately $800 million of LTD premium, which would be 27% of the market. But, if we look at the small-group market, with groups less than a thousand employees, these companies would have represented 34% of the market. That is not necessarily to say that all of this is in the study, but these companies, that participated, had 34% of the market. If they had a higher percentage of self-reporting groups, they would not have the same proportion. The demographic data of our study actually matched very closely the Canadian working population. The average age of the females was 39.1; of males, 39.5; 40% of the exposures were female and 60% were male. As I mentioned before, the average number of employees in the groups was 42 employees so it was mainly a small-group study. Of our participants, the median contributor was at 5.5% of the data, and the data source was home-office-billed groups. This is what the distribution of the data looked like. What really surprised me was that there were many varieties of elimination periods so we tried to group them into logical orders. What is not surprising is the 119 days or a four-month elimination period seems to be the dominant plan chosen by employers that would integrate well with an employment insurance program or a Canada pension plan or a Québec pension plan. The definition of disability, 97% was a own-occ definition and 3% was an any-occ definition. That surprised me. I had expected a higher any-occ definition. As you saw for the companies that contributed to this data, we had quite a few Québec-based companies so, in our data, 41% of our data came from the province of Québec, and we compared that to the number of people working in Canada who had full-time employment, and you will see that Québec has 24.6%. So what we ended up doing was that we weighted our data by province so that we could create a Canadian table. Putting together a study like this was actually a tremendous amount of work, far more than I had thought that it would be. Ken has more experience doing studies like this so he was not surprised. From the initial data submissions that we received from everybody, we created a bunch of tests, and then we sent that information back to the carriers. From that, everybody, in most cases, made some re-submissions of data. So we had set it up, sort of cleaning up some of the data and making sure that it fit our study norms. For example, in one case, a company had submitted a few large groups that really did not fit into the study parameters that that we were looking at so we removed some of that data. Obviously, when you get lots of data like this, there is some information that is not correct. Some ages were misstated, some very obviously. The five-year-old, it did not make sense that they were having LTD coverage. Fortunately, it was only a small percentage of the data. Some of the data was for over 65, and then, in discussions with the companies, a lot of those were people, who stayed on their billing systems, and they had not removed them. So we adjusted the data for the lower ages and, for the ages over 65, we cut them off. Some data fields were missing and we did some adjustments for that. For a few of the companies, Proceedings of the Canadian Institute of Actuaries, Vol. XXXIV, No. 2, June 2003

10 Nouvelles tendances en matière d invalidité (TR no 4) 10 there were some unreported claims. Actually, I would say that, for most of the companies, there were unreported claims. There was an IBNR. We picked up the data in the fall of 2002 so we made an estimate of an IBNR. Then we weighted the exposure by province and we applied that same weighting on the exposures to the claims data so that we can create proper regional tables. We mapped all of the industries to the NAICS codes. That is the North American Industrial Classification System. It is a result of NAFTA and we would encourage companies to really move to that system because it is a more up-to-date and current system. We also mapped claims to the ICD-9 codes. That is the International Claims Diagnosis code. There is a version 10 out, but number 9 is what we used. So, from this, we created a table, which had a four-month elimination period. We used the exposure data from 112 days to 129 days. We ended up by only using an own-occ occupation definition. The benefit was to age 65 and, from this, we created tables in five-year age spans and by gender. Very quickly in our study, we noticed that Québec was significantly different than the rest of Canada so we created a separate table for Québec and we created a table for Canada, except Québec, or sometimes we referred to the rest of Canada. This is the Society of Actuaries four-month table. There is not really a Society of Actuaries four-month table; there is a threemonth table. What we did was to take the three-month, basic table, apply the termination rates and create a four-month table. If you look at the structure of that table, you can see that female incidence is generally higher than males up to age 55, which matches a bit what Charles was saying about the QPP; and then the male incident rate is higher after age 55. In our study, it ended up that females were generally higher in all age categories. The Society of Actuaries 1987 table is actually probably not a good table to use in the Canadian context. The US data was basically more focused on the six-month elimination period, which is more common in the US. In our study, we actually had more data than the Society of Actuaries had for their three-month table. In the US, in the early 1980s, which most of this experience comes from, they did not have the same mental/nervous disorder definitions that we have, which also evolved in the mid-1980s in Canada. At that time, it could have been as strict as the US, but it has definitely evolved since the mid-1980s. So, as I mentioned before, what we found is that the female incidence is almost always higher than that of the males. The only exception was Québec in the age category 60 to 65. That is the only place where male incidence was higher than the female incidence. The rates are mostly higher than the Society of Actuaries tables. That is not true at some of the older ages, but, in all of the younger ages, it is mostly higher. We found that there has been a substantial deviation in the incident rates by age, gender, region and possibly duration. What is happening? Why are incident rates changing? I remember that, when I started in the group insurance industry, the claims management methodology was quite different then than what it is today. Rehabilitation probably did not exist. I think that somebody had told me that it was Sun Life that started rehabilitation. I do not know if that is correct, but it was definitely in the late 1970s or early 1980s that they started that and, basically, everybody does that now. The medical technology has changed quite a bit. Anybody who has a gall bladder attack now or, I guess, a gallstone, the medical intervention is different. With heart problems, the medical intervention is different. So everything is changing. The workforce has shifted more to white collar and the technology, used in industries, has changed quite a bit. I started off working for my Dad as a roofer, banging in nails and I shifted to a white-collar job. But, in the roofing industry, I notice that they use nice guns. I used to carry up the shingles up the ladder and now they have nice forklifts. So it is a lot easier. I used to try to feign a bad back with my Dad, but that did not work either. The legal environment has changed quite a bit. In today s context, insurance companies have to be more careful to make sure that they have the appropriate procedures in place. There have been some cases of punitive damages. The integrations have changed substantially in some of the different plans that companies use. In the Canada and the Québec Pension Plans, we saw how some of the numbers have changed over time. There has been some change in definitions, change in administration. Peter mentioned how, in Workers Compensation, there is also some changes there. The auto insurance has an impact on integration. Délibérations de l Institut canadien des actuaires, Vol. XXXIV, n o 2, juin 2003

11 Emerging Disability Trends (PD #4) 11 I cannot remember exactly in what year, but Ontario made a change. They became the second payer for auto insurance and the insurance companies became first payer. So that varies by province. So everything is changing. The economic environment has also had a substantial change. In the early 1980s, we had 12% inflation rates and now we have 2% inflation rates. In Canada, the workforce participation rate, i.e. the number of people between the ages of 18 and 65 who are working, is nearer the all-time high. So that is changing. So what did we see in this study? We mentioned that Québec is substantially higher than the rest of Canada. We also noticed that the Maritimes is higher than Ontario and in Western Canada, and that Ontario had the lowest incidence rates. As was mentioned, Québec was very different and we are not 100% sure why that is. It is very different by age, by gender. What we did notice, though, is that we captured information of how many claims were still open, at the time of the study, and all provinces tended to come to that same number. So it is a very high incidence rate, but also extremely high termination rates in Québec. We are speculating on some of the reasons that there may be for a difference between Québec and the rest of Canada. It may be because Québec is under the civil code and the rest of Canada is under common law. It may be because some of the industries that we had in Québec were different from what we had in the rest of Canada. As I mentioned before, the termination rates were much higher. I looked at each cause of disability, and Québec is higher in every cause of disability. The accident rate, I put that up here because Ken Fraser was talking about this study with his 13-year-old son, and his son had speculated that accidents were higher in than the rest of Canada. I checked out our information and that was correct so we have a budding actuary in Ken s son. But this is something that, we think, needs further study. I have done a few presentations to some of the participant companies and nobody has really come up with a really good reason why Québec is very different from the rest of Canada. One of the reasons may be that it is just a different culture or a different entitlement mentality. I am not 100% sure, but that is something that we really need to look at and figure out. When we look at variations by benefit amounts, we did see that there was a difference in the actual incident rate versus the expected on the tables that we produced. Benefit amounts less than $1,000 were lower than our table. Part of the reason may be because somebody is getting a $500 flat benefit and his/her salary is $2,000, there might be an incentive to go back to work. Part of it may also be because we did not have the exact right data. When we asked people for benefit amounts, we suspect that there might be some of the claims that were integrated so they report slightly lower benefit amounts. In the band from $1,000 to $2,500, that is where we had the highest incidence rates and that is probably where we had the highest exposure. There is also a varying evidence for the bands with large salaries or monthly benefits of $2,500 or higher, that had our lowest incident rate. So that would go with somebody who has the very high socio-economic standing, which is the same that you would see in mortality rates. People with higher socio-economic occupations have better mortality. The variation was greater for males than for females and we did study that. As I mentioned, some of this table may not be exactly correct because we feel that some of the reporting may not have been as good as we would have liked. The variation by year, 2000 versus 2001 was not much different so it was basically the same. Ranking by causes of disability, the five main causes of disability, that we had in our study, were: Mental and nervous disorder was the most prominent, musculoskeletal, neoplasm, accident and injuries and circulatory systems. If we had split that by region, we would see different rankings for the top five. We did look at variations by industry and the highest actual to expected, which may not be surprising to most people, is that public administration had much higher incidents of claims versus our tables, as did social service and health care. The lowest actual to expected incident rates was professional, scientific and technical services. This is under the NAIC classification and finance and insurance industry. I did a test of the incident rates in our study data and I used the CPP and the QPP incident rates. What is surprising, even though Charles showed you that QPP has a really big spike at age 60 of accepting people, they would accept roughly 2.2 per 1000, if I were to apply that on our study data. For CPP, if we applied that incident rate to the rest of Canada, they would accept 2.8 per But the insurance companies would see a lower number than that because CPP and QPP cover a broader range of industries that may not be insurable, like self-employed people, farmers, fishermen and other assorted people. This is a table that I did of the CPP and QPP incident rates, just to illustrate the differences of the spike. Charles Proceedings of the Canadian Institute of Actuaries, Vol. XXXIV, No. 2, June 2003

12 Nouvelles tendances en matière d invalidité (TR no 4) 12 had showed you those separately and I put it together. Actually, what I have noticed is that QPP is generally always lower than the CPP, up to age 60, and then over age 60, that is where the QPP really spikes. So some of the issues that we had in producing this table, we did standardize it for region and for age, but we did not standardize it for industry mix so that may be a word of caution and anybody who would use a table like that, or any other industry study, you would have to be careful as to who participated in the study and what industries were in there. We have also only covered the years 2000 and 2001 so that is not a full economic cycle. If we get into a period of recession, the incidence rates will likely change. As I mentioned, there is a substantial variation by age and gender. We need to extend the study to other elimination periods, and the most important one is to study the relationship to termination rates. When I got out of this study, I would suggest that companies pay more attention to whether the valuation basis of their tables should probably change, based on incidence rates. If a group has very high incidence rates, it is probably likely that they will come down to a core of disability claims after a period of time, which could be two or three years. If you have business in Québec, you should be using a different valuation table than if you have business outside of Québec because they are substantially different. We did not have enough data to extend that hypothesis to other regions, but I suspect that that would be the case for other regions, like the Maritimes. I would really consider pricing LTD in two parts. In all of the tests that I have done, it seems that, after a period of time, all claims come down to a core disability rate and that seems to not have much variation by region or by industry. The most variation that you see in LC rates should be in the short-term period, which would be from the elimination period to the change in definition. So that is something that people should possibly consider, in terms of their rating structures, which is to look at those two separate components. I would strongly suggest to companies that they study their LC rates and make appropriate adjustments for their markets. The LTD incidence rates and the people who go on claim beyond two years have changed very substantially from the mid- 1980s, which is a table that most people are using, so it is something that has shifted quite a bit. I think that, with the pressure on LC portfolios, everybody has been raising the rates, but I think that more of a tendency was to do more of an across-the board rate increase, especially when interest rates declined. If you have done that for several years, I would say that your rates are substantially out of line, if you look at it from different demographics. So that is basically what the conclusion is, look at your LTD rates by age and gender because it has changed quite a bit. In our study, as I mentioned, we found that the incidence is very different from the Society of Actuaries seven table. There are significant regional variations and you should really price Québec differently. You should adjust your LTD rates. A hypothesis that we would like to test is claims open beyond two years are probably similar, in total, if I project the Society of Actuaries four-month table, that they would have a large variation by age and gender. So that is it for me. If anybody has any questions, we have some time for questions. I apologize if we do not have that much time, but we will entertain some questions. It seems like lunch is the more important priority here. Thank you very much. For your attendance at this session and we hope that this was informative....(applause)... Délibérations de l Institut canadien des actuaires, Vol. XXXIV, n o 2, juin 2003