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Older workers lower indemnity costs

Workers 65 and over that now represent 17% of the workforce are expected to increase as their retirement cushions have dramatically shrunk during the recession. What does this mean for Workers’ Compensation costs?

A recent 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 peaks as workers turn 50. As these workers turn 60-64, they 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’ changing 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.

While it takes older workers longer to recover from injuries – median days away from work is 16, compared to 12 for workers 55 – 64 years of age and 10 days for workers 45 – 54 years of age - indemnity costs are lower due to lower wages.

Exceptions are found in the leisure and hospitality industry and food preparation and service occupations as well as in retail sales, where older workers have higher than average comp costs. These jobs probably experience significant falls/slips/trips, the leading cause of injury among older workers, nearly twice the rate of younger workers. Yet, in the more hazardous manufacturing and construction-related industries and occupations, older workers file fewer claims.

Older workers are generally considered to be safety conscious, loyal and reliable. For employers concerned about Worker’s Comp costs, the study suggests this is not a problem.