Older Employees Lower Indemnity Costs for Workers' Comp

Insurers have new information at their disposal that may help explain workers’ compensation frequency and severity among workers who are 65 years and older.

The report, published by the National Council on Compensation Insurance (NCCI), finds that although the average weekly wage tends to increase with the age of the worker, it reaches a maximum as these workers turn age 50. As these workers turn ages 60-64, they will experience a gradual decline in wages, followed by a huge drop (as much as 30%), if they continue to work after age 65.

The research hints at workers’ change to part-time status and shortened workweeks as they age. This affects indemnity severity, which increases gradually with age through age group 45 to 49 and then remains relatively flat from ages 60 to 64, after which it declines by roughly 20%. The NCCI report maintains that relative to all age groups, indemnity severity for workers aged 65 and older is roughly 4% less than it is for workers of all ages.

The report notes that claim frequency is higher for older workers in the leisure and hospitality industry and food preparation and service occupations as well as in sales. Yet, in the more hazardous manufacturing and construction-related industries and occupations, older workers file fewer claims.

The NCCI report lists the following additional findings:

• Falls/slips/trips are by far the greatest cause of injury among older workers. Nearly half (47%) of workplace injury claims among workers aged 65 and older result from falls, slips, and trips. That is nearly twice the share as that for all workers.
• Older workers experience higher medical severity, although the differential is small between workers aged 65 and older and nearby age cohorts.

Thanks to recent financial and economic turmoil, reports NCCI, further increases in the number of older workers are likely in coming years.