Recent data highlights a significant escalation in mental health challenges across the Canadian workforce, contributing to a marked increase in long-term disability (LTD) claims.
For instance, the 2022 Canadian Survey on Disability (CSD), detailed in a January 2025 Statistics Canada analytical product, revealed that mental health-related disabilities experienced the most significant increase among all disability types between 2017 and 2022, rising by six percentage points from 33 percent to 39 percent among persons with disabilities. This surge underscores the profound impact of recent global events, including the COVID-19 pandemic, on the psychological well-being of Canadians.
It presents substantial challenges for employees, employers, the insurance sector, and public policy, signalling a complex interplay of pandemic-induced stress, evolving workplace dynamics, and growing societal awareness of mental health. As Canada grapples with these figures, critical questions arise regarding the adequacy of current support systems and the responsibilities of employers to protect their workforce.
The Unpacking of a National Crisis: Key Trends in Mental Health Disability
The rise in mental health-related LTD claims reflects a broader societal shift in how mental illness is perceived and addressed. This increase represents thousands of Canadian workers whose lives have been severely disrupted by psychological distress, rendering them unable to perform their jobs for extended periods.
Data further reveals this crisis is not uniform, with specific demographics disproportionately affected. Statistics Canada's 2022 CSD data confirms gender disparity in mental health-related disabilities, noting that women aged 15 to 24 (19 percent) were more likely to report such disabilities than men in the same age group (8 percent).
Overall, mental health remains the most common diagnostic category for LTD claims, representing almost 40 percent of claims in 2024, according to a Sun Life report published June 30, 2025.
Various studies and insurer data also consistently specify that anxiety disorders, major depression, and post-traumatic stress disorder (PTSD) are among the conditions most frequently cited in these disability claims. The June 2025 Sun Life report indicates a notable shift in the composition of mental disorder claims, with diagnoses of depression and anxiety-related disorders rising by 33 percent and 50 percent, respectively, since pre-2020 levels. This highlights a clear link between the prolonged stress, uncertainty, and social isolation experienced during the pandemic and a sharp increase in these conditions.
Globally, the World Health Organization consistently reports that depression and anxiety are top causes of lost productivity and disability, costing the global economy an estimated US$1 trillion per year. This confirms that the Canadian experience is part of a larger, urgent global phenomenon.
Behind the Numbers: Contributing Factors to the Surge
The significant rise in mental health LTD claims is multifaceted, stemming from a combination of societal, economic, and systemic forces. The most evident driver remains the COVID-19 pandemic, which introduced unprecedented stress due to health anxieties, financial instability, abrupt shifts to remote work, and widespread social isolation. These prolonged stressors profoundly contributed to the onset or worsening of existing mental health conditions.
Beyond direct pandemic impacts, the crisis has underscored the complexity of disability, with many individuals now living with multiple chronic conditions. A Sun Life report summarized in Insurance Business Canada, reveals that employees on LTD are twice as likely to claim medication for a secondary chronic condition compared to individuals not on LTD. This indicates that physical and mental health are often deeply interconnected, and the pandemic has likely compounded existing health challenges for many Canadians, leading to more complex and prolonged disability scenarios.
Paradoxically, increased awareness and a gradual reduction in the stigma surrounding mental illness have also contributed to rising claim numbers. As public figures and healthcare campaigns encourage open discussion, more individuals feel empowered to acknowledge their struggles and seek professional help.
The Workplace and Insurance Industry: A New Reality
For Canadian employers, the increase in mental health-related disability claims signals that workforce well-being is inextricably linked to operational stability and financial success. The economic cost of inaction is enormous; as previously noted, the World Health Organization estimates that depression and anxiety lead to approximately $1 trillion in lost productivity for the entire global economy annually. In this context, employers are responsible for fostering a psychologically safe work environment.
This extends beyond basic benefits packages to actively implementing preventative strategies, providing accessible mental health resources, and training company managers to recognize signs of distress and support their teams. Failure to do so not only risks higher rates of disability leave but also talent attrition, as younger workers increasingly prioritize employers demonstrating a genuine commitment to employee well-being.
How Insurers Are Adapting to the Influx
The insurance industry is at the epicentre of this crisis, facing a surge in complex and costly LTD claims. This trend strains financial models, paralleled by experiences in other countries like Australia, where mental health conditions accounted for 9 percent of all serious workers' compensation claims in 2021-22, representing a 36.9 percent increase since 2017-18. The median compensation paid for mental health claims in Australia was significantly higher, at $58,615 per serious claim in 2020-21, compared to $15,743 for other injuries in the same period. This demonstrates the substantial financial impact.
In response, Canadian insurers are refining their assessment processes and introducing new support mechanisms. Some prominent companies have introduced innovative tools, such as a Psychosocial Questionnaire, to gain deeper insights into factors influencing a plan member's disability recovery.
They are also exploring and, in some cases, offering pharmacogenomic testing to help claimants find more effective drug treatments faster by analyzing an individual's genetic response to medication. While these tools aim to improve outcomes, the influx of claims has also led to heightened scrutiny, potentially creating new obstacles for individuals seeking timely support.
The Human Cost: Challenges in Claiming LTD for Mental Health
Behind every statistic is a person facing the daunting task of proving their suffering to an insurer. Claiming LTD benefits for a mental health condition is notoriously difficult, as these illnesses often lack clear, objective diagnostic markers like a physical injury. Insurers frequently challenge validity, citing a perceived lack of objective medical evidence or suggesting the condition is not severe enough to prevent work.
This process can be profoundly demoralizing, forcing individuals to justify their illness repeatedly. Such experiences are not unique to Canada; a case in Colonie, New York, for example, illustrates a former psychiatric center director fighting for two years to receive disability benefits for over two dozen diagnosed conditions, underscoring arduous battles against bureaucratic systems.
This is a reality that legal professionals encounter daily. The burden of proof inevitably rests on the claimant, who must compile extensive documentation from physicians, psychologists, and therapists to build a case that can withstand an insurer's scrutiny.
In such adversarial processes, seeking assistance from a seasoned long term disability lawyer such as Diamond & Diamond Lawyers can significantly strengthen a claimant's position, ensuring their rights are protected. The process is often perceived as adversarial, leaving vulnerable individuals feeling overwhelmed and isolated, and further exacerbated by the very system designed to provide support.
Diamond & Diamond Lawyers is a leading Canadian law firm specializing in personal injury cases, including long-term disability claims. It provides crucial legal support to clients to help them secure the entitlements they deserve.
Public Policy and the Path Forward
The surge in mental health disability claims demands a fundamental re-evaluation of Canada's public support systems. Programs like the Canada Pension Plan Disability (CPP-D) benefit provide vital assistance. Still, qualifying can be difficult due to strict criteria and a complex application process, often leading to initial denials. Analyses of disability insurance in Canada consistently highlight a trend of tightening eligibility for public benefits since the mid-1990s. The current crisis has exposed significant gaps in a system struggling to keep pace with the evolving nature of disability, particularly with the rise of invisible illnesses.
A comprehensive, integrated strategy is required, moving beyond isolated solutions. Experts increasingly call for a more cohesive approach that blends government policy, employer responsibilities, and healthcare services.
A Call For Decisive Action
The documented trends in mental health disability claims in Canada are more than mere statistics; they represent a critical turning point for the mental health of Canadian workers. The observed rise in LTD claims is a clear outcome influenced by a multi-year global crisis, compounded by systemic issues within disability and healthcare infrastructures.
This trend carries profound implications, challenging employers to become active partners in their employees' well-being, compelling insurers to adapt to a new and complex claims landscape, and demanding that governments strengthen an already overburdened public support system. The path forward necessitates a unified commitment to dismantling barriers that prevent individuals from receiving needed care and financial support.
Addressing this formidable challenge demands significant investment in preventative care, the reform of outdated policies and assessment methodologies, and a fundamental cultural shift that treats mental health with the same seriousness and urgency as physical health.
