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Long Term Disability (LTD) incidence rates in 2018 will be 4.7% higher compared to 2017 driven by a strengthening Canadian economy, according to a forecast published Tuesday from RBC Insurance.

Using a proprietary algorithm, RBC Insurance has discovered that new LTD claims are linked to gross domestic product (GDP) growth rates. As GDP accelerates or the economy grows, there is an increase in the incidence of LTD claims. When GDP drops, so do the incidence of claims.

“At the start of 2017, the model successfully predicted an increase in incidence for the year (relative to 2016) that was fairly close to the actual rate experienced,” RBC says in a news release.

It is believed that during challenging or uncertain times, workers can be concerned about job security and performance, creating significant mental and/or physiological stress, RBC explains. As the economic outlook brightens and GDP rises, workers may begin to feel more secure and the pent up stress and anxiety can take its toll, making them more likely to succumb to illness and taking a leave from work to recoup, RBC says.

“Using the RBC Insurance Group LTD Forecast, we predict LTD incidence rates will continue their recent rise and increase by 4.7% in 2018 relative to 2017, which will impact both employers and employees alike,” says John Carinci, vice president and head, operations and client experience, RBC Insurance, in a statement.

“Businesses in Canada spent $7.5 billion for LTD coverage in 2016, which is the third largest cost to a group benefits plan after health and dental. Knowing that LTD rates are expected to rise is important information that businesses can use to help manage those costs, support their employees and ensure their operations continue to run smoothly,” he adds.