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The age distribution of the American workforce is changing, an inevitable demographic shift that is impacting insurance buyers and their brokers.
In 2008, there were 28 million workers over age 55. By 2016, that number is expected to be almost 40 million, an increase of 43%. While some of the change was expected due to the aging of the baby boomer population, the recent decline in home asset values and low returns on 401(k)s are increasingly causing some older workers to postpone retirement.
Smart employers are embracing the aging population. They are pleased to see their most loyal, skilled and experienced employees continuing to make significant contributions.
To best harness the value of their mature workers, companies are increasingly taking steps to keep older workers healthy on the job, prevent workplace injuries, and speed return-to-work times after injuries.
Is your company optimizing the productivity of your graying workforce and taking the right steps to control workers compensation costs? A recent NCCI Holdings Inc. study, “Workers Compensation and the Aging Workforce,” helps to shed some light on the issue. We have captured five key findings from the study, and also have developed five key action steps for your company.
• While older workers still have the fewest work-related injuries, all age groups have benefitted tremendously from safety initiatives. In 1994, the annual injury rate for workers ages 20-24 was 300 incidents per 10,000 workers. By 2009, that injury rate had dropped to 97 per 10,000 workers. Over the same 1994-2007 time period, workers ages 45-64 also saw substantial safety improvements. The injury rate for the 45+ workers dropped to 93 incidents per 10,000 workers from 200 incidents per 10,000 workers. Clearly, workplace safety improvements—often resulting from collaborations among policyholders, brokers, agents and insurers—are paying tremendous dividends. Unfortunately, these frequency improvements are being offset by significant severity increases, in particular medical severity increases.
• When factoring in both frequency and severity, all age groups between 35 and 64 have similar workers compensation costs per worker. Workers 35 and older tend to have higher loss severities, but once workers hit age 35, differences in indemnity and medical severities across the 35-64 age spectrum become more muted. This is reassuring news for employers as they see an increasing number of employees in the 55 and older age category.
• A key contributor to the higher indemnity severity for older workers is the higher average wages paid these higher skilled and more experienced employees.
Older employees face different types of injuries compared with younger workers. Older workers tend to have more rotator cuff and knee injuries, while younger workers face more back and ankle sprains. The injury mix is a key driver of the higher severity that insurers see on claims from older workers.
• Along with different injuries types, older workers tend to require more treatments per claim, even after adjusting for the mix of injury types.
• While not covered by the NCCI study, co-morbidity likely plays a role in the longer treatment times seen by some older workers.
Certain co-morbid conditions, such as diabetes and obesity, make more of an impact on disability duration than the aging process itself. For instance, a laceration that may not result in a disability for one worker could result in an infection and slower return to function for a worker with diabetes.
Delays in healing attributable to diabetes are also often seen in shoulder, back, and other soft-tissue injuries. The severity of injuries is also related to co-morbid conditions. One of the best examples of this relationship in older workers is degenerative joint disease, a condition that can affect older persons' hips, knees and spine, and may complicate healing after an injury to these areas.
Your next steps
The following strategies for managing an aging workforce can help prevent workers compensation injuries and improve return-to-work rates, particularly for those injured workers with co-morbid conditions:
• Make sure there's a good match between each worker's capabilities and the job demands. Employees who are good workers but are already having problems due to their health can benefit from job accommodations or, if those aren't feasible, moving to another job or changing their position so they can safely perform the work. It's best to do this before a disability has occurred.
• Create a workplace environment that encourages healthy discussion about early signs of injury. If workers feel comfortable discussing aches and pains immediately, supervisors can make workplace adjustments and prevent expensive injuries from developing.
• Modify jobs to respond to some of the changes that occur with age, based on individual worker input. This might include decreasing the amount of handling of very heavy loads and improving lighting conditions.
• Include components in your wellness programs that specifically address the concerns of older workers. Certain health risk factors such as smoking and obesity have a strong correlation with workplace injury rates and longer return-to-work times.
• Promote supervisor and co-worker engagement with injured workers. Communication with workers on disability leave has been shown to significantly improve return-to-work outcomes. You may also need to modify your return-to-work plans for the prolonged rehabilitation that some injuries may require in older workers.
When you're able to apply and integrate the data on aging workers, everyone benefits. Aging workers can get back to work sooner and remain productive longer, and employers keep that talent and experience for years to come.
Dr. Glenn Pransky is director of the Center for Disability Research of the Liberty Mutual Insurance Research Institute for Safety. Christopher Cunniff is a senior vp and workers compensation product manager in Liberty Mutual Insurance Co.'s commercial markets strategic business unit. Dr. David Deitz is vp and national medical director at Liberty Mutual Insurance's commercial markets unit.