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Workers compensation claims filed by older employees tally medical and indemnity severity losses that are higher on average than claims filed by their younger counterparts.
But employers often pay more workers comp premiums when they have older workers on staff. For insurers, that offsets the added loss costs stemming from the increased severity of claims filed by injured older workers.
Consequently, a research brief released this year by NCCI Holdings Inc. concluded that the growing number of older employees in the U.S. workforce may have a less negative impact on insurer loss costs than industry observers traditionally have anticipated.
Employers often pay more in workers comp premiums when they have older employees because mature workers typically earn more in wages than younger employees. Meanwhile, the premium amount companies pay for workers comp coverage depend, in part, on their total payroll; the larger an employer’s payroll, the greater the workers comp premium the employer pays.
“The rate for (an industry) class is the same, but if older workers (contribute to) higher payrolls, then that is going to generate more premium and that tends to offset the somewhat higher cost of the severity,” said Harry Shuford, NCCI’s chief economist.
NCCI is a Boca Raton, Fla.-based research and workers comp rating entity for 37 states. It conducted its study into claims filed by older worker because of “widespread concern about the potential adverse impact on workers compensation loss costs as the baby boomers postpone retirement and accelerate the aging of the workforce.”
Overall, NCCI concluded in its research brief, “Workers Compensation and the Aging Workforce,” that its findings “can be viewed as reassuring, in that an aging workforce may have less negative impact on loss costs than originally thought.”
Among reasons that NCCI said its findings can be viewed as reassuring is that “all groups of workers age 35 to 64 appear to have similar costs per worker.”
NCCI’s findings, however, do not diminish the need for employer safety programs that consider the specific needs of an aging workforce and a changing work environment in general, Mr. Shuford said.
“There is no doubt that as we get older we are susceptible to different types of injuries than when we are younger and safety and loss control techniques…would be appropriate,” Mr. Shuford said.
NCCI found, for example, that older workers tend to suffer more rotator cuff and knee injuries than younger workers because wear and tear on those body parts accumulate as people age.
The types of injuries older workers tend to suffer account for about half of the increased indemnity and medical severity that their claims exhibit over those filed by younger workers, NCCI’s research shows.
In total, the older worker claims—those filed by claimants ages 45 to 64—accounted for more than 50% greater indemnity severity and more than 50% greater medical severity than claims filed by workers ages 20 to 34.
Safety programs can focus on the higher exposure presented by older workers, Mr. Shuford said. Training, for example, can educate workers on appropriate ways to reach and lift to mitigate shoulder-injury risks.
Past NCCI research has discussed other older-worker challenges, such as an increased likelihood of losing one’s balance. Therefore, handrails and supports to grab onto can improve safety for older workers.
Mr. Shuford said such measures also would benefit younger workers, who, as NCCI’s most recent research showed, suffer more back and shoulder sprains than older employees.
Mr. Shuford said there are several factors, including an aging workforce, that may call for different safety strategies today than those applied in the past.
Emphasis on sound ergonomic principles is more important today, for example, because more employees work at sedentary jobs rather than in physical occupations or jobs requiring operating dangerous machinery.
“Even in manufacturing plants you, are (often) standing at a console or sitting at a console,” Mr. Shuford said. “Either of those creates particular kinds of exposures, but those (risks) are different from standing at a piece of operating equipment and worrying about safety guards.”
As for NCCI’s research brief on aging workers, one of its key revelations is that the greater losses generated by injured older workers, in contrast to those generated by injured younger employees, is explained by the higher wages paid to mature employees, said Chris Cunniff, senior vp and workers compensation product manager for Liberty Mutual Group Inc. in Boston.
“Certainly an aging workforce is part of underlying demographics and shouldn’t be of undue concern, but one that is part of an overall trend where employers and insurers should focus on preventing accidents, (managing injury severity) and controlling costs,” Mr. Cunniff said.
NCCI also found, among other evidence, that a longstanding tenet that younger workers experience much higher injury rates than their older counterparts no longer holds true, as claims frequency differences have “virtually disappeared.”