Lehman/A.M. Best Co. 2nd Annual Conference

"I like the idea of writing a lifetime disability product that transitions to long term care." Ron Timpe Chairman, President & Chief Executive Officer StanCorp Financial Group, Inc.

StanCorp CEO Predicts Single-Digit Price Hikes in Disability

The market is pricing disability products in a rational manner, which will lead to mid-single-digit price increases this year, said Ronald E. Timpe, chairman, president and chief executive officer of StanCorp Financial Group Inc. (NYSE: SFG).

The way to succeed in the disability insurance business is to write a good contract that limits the tax-free benefits that policyholders receive to encourage them to return to work as soon as possible. Then spread the risk broadly by geographic region, occupations and salary ranges, Timpe said during a presentation at the second annual Insurance Conference held in New York, co-sponsored by Lehman Bros. and A.M. Best Co.

StanCorp Financial is a holding company for Standard Insurance Co. and Standard life Insurance Company of New York. Core business lines include group and individual disability insurance, 401(k) retirement plans and group life and dental insurance. StanCorp, which came into being as the result of a demutualization in April 1999, sold its individual life business last year and made an acquisition from Minnesota Life that quadrupled its individual disability business.

A new disability concept under consideration by StanCorp is appealing because it could improve customer retention--a problem inherent in disability products. "People reach 65, and they are out the door," Timpe said. "I like the idea of writing a lifetime disability product that transitions to long term care."

(By Marilyn Ostermiller, executive editor, ostermm@ambest.com)