Disability Experience and Economics Correlations

Abstract

There is anecdotal evidence of the influence of economic conditions on disability claims costs and the proposition is generally accepted. However, there has only been a limited amount of “hard” evidence published in relation to this assumed correlation both in Australia and overseas. This paper examines three distinct measures of disability experience in Australia. These are claim incidence and claim duration for insured disability data and the proportion of the working population disabled, which is obtained from the number of recipients of a Commonwealth disability pension. As there is no universally agreed measure of “the economy”, a range of economic variables is analysed, and the resulting correlations with the measures of disability experience determined<br><br> For each measure of disability a statistically significant relationship is indicated.<br><br> The authors consider the extent to which the observed correlation might be explained by other causes e.g. liberalisation of definitions, higher levels of claims awareness, looser underwriting, etc. Finally the authors predict the experience to be expected for the period after 1995 on the basis of their regression models and test this against the actual published industry experience. Show more