Producer Connection

4^th Quarter 2009

Comparing Apples and Oranges

What are STD duration statistics really telling you?

If you've been analyzing carriers by comparing their Short Term Disability durations, you might be surprised to learn what these numbers really mean. Here are six critical points to explore for a truer comparison of carrier STD durations:

1. Occupation class/industry.
   Blue-collar jobs are more physical in nature, often making it harder to get employees back to work quickly. An employer may want to be certain their employee is "100 percent" rather than risk a workers' compensation claim on top of an STD claim.
2. Two ways to measure duration.

   Which one is a carrier using?

   Carriers that use date when benefit starts appear to have shorter STD durations. For example: The average duration for a pregnancy, childbirth and puerperium is 43.75 days from date when benefit starts. But a carrier that uses date of disability will report an STD duration of 56.26 days.

   In addition, carriers with a longer benefit waiting period will appear to have a longer STD duration. Consider an employee out for 60 days. Carriers A and B both calculate from date of disability. If carrier A has a seven-day waiting period, the STD duration will show as 67 days. If carrier B has a 14-day waiting period, the STD duration will show as 74 days.

3. Plan design (maximum benefit period).
   Carriers with longer maximum benefit periods will appear to have longer STD durations. A carrier with more STD plans with 26-week maximum benefit periods will have longer STD durations than a carrier with more 13-week maximum benefit periods.
4. Book of business (size of cases).
   Naturally, carriers with bigger books of business are likely to produce more claims (including more longer-duration claims). Given the different sample sizes, the carrier with smaller books may have shorter STD durations.
5. Claims management philosophy.
   How well does the carrier manage its claims? Are they tough but fair? Or do they consistently close claims that should have remained open? Is it a proactive, pre-emptive program (working to prevent claims) or primarily reactive (taking action only after a claim has been filed)?
6. Return to work.
   A solid Return to Work program can have a significant impact on duration. What assistance does the carrier provide? What is their approach, and do they back it up with a comprehensive program?