NU Online News Service, Jan. 6, 1:39 p.m. EST
The workforce is aging, but the impact this will have on loss costs may not be as negative as originally thought, according to new NCCI Holdings research.
In a report, "Workers Compensation and the Aging Workforce," NCCI says older workers do generally tend to have higher loss costs per worker, but the difference seems to be between "younger" workers in the 25-34 age group and "older" workers in every age group over 35.
"All groups of workers age 35 to 64 appear to have similar costs per worker," says NCCI. The report adds, "Workers 20 to 24 have markedly lower severities and loss costs and workers 25 to 34 fall in the middle."
NCCI notes, "These are reassuring findings in that an aging workforce may have a less negative impact on loss costs per worker than originally thought."
Outlining patterns seen in the age of the workforce, NCCI says workers 45 and older account for an increasing share, with workers 55 to 64 "growing steadily" and workers 45 to 54 showing a modest increase. The share of workers 45 and older has increased from 34 percent in 2000 to 42 percent in 2010, according to NCCI.
The correlating decline in younger workers has been seen most heavily in the 35 to 44 age group.
The difference in loss costs between older and younger workers comes down to severity, rather than frequency, NCCI says. "Severity for older workers is roughly 50 percent higher than for younger workers with variation in the mix of injuries accounting for half this difference."
Older workers, the report notes, tend to suffer more rotator cuff and knee injuries, which are more expensive than the back and ankle sprains typically suffered by younger workers.
Indemnity severity also comes into play, driven by the typically higher wages earned by older workers. But NCCI notes that, from a workers' compensation perspective, these higher costs are offset "at least to some extent" by the higher premiums for older workers, due to the higher wages they earn.
As for frequency, NCCI says differences in age groups observed in the 1990s have largely disappeared. "The longstanding tenet that younger workers have much higher injury rates is no longer true," according to the report.
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