Study Says New Calif. Regulation ‘Significantly Increases’ Cost of Disability Insurance

November 15, 2005

Proposed changes in the regulation of disability income insurance in California could significantly increase the cost of coverage and discourage some injured employees from returning to work, according to a study released this week by America’s Health Insurance Plans.

Prepared by the actuarial consulting firm, Milliman Inc., the report said, “The purchasers of group and individual disability income (DI) insurance, both employers and individuals, will be the ones most affected by the Department’s proposed policy language changes.”

Specifically, the Milliman analysis finds the proposed changes will:

* Significantly increase the cost of DI insurance by as much as 46% for group products and 33% for individual products;

* Limit the range of DI insurance products available to California

* Reduce the total amount of DI protection per life that Californians may access; and

* Discourage some DI claimants from returning to work.

“Disability insurance is a crucial part of the financial security of millions of working Californians. We commissioned this study to give decision-makers better information on the potential impacts of the regulatory changes proposed by the Department of Insurance,” said Karen Ignagni, president and CEO of AHIP, a national trade association representing nearly 1,300 members providing health benefits, including disability income insurance, to more than 200 million Americans.

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