Claims Characteristics of Workers Aged 65 and Older

A December 2006 NCCI study, Age as a Driver of Frequency and Severity, examined how frequency and severity vary by age of worker, focusing on workers between ages 20 and 64.

Events since that study was published-especially the plunge in the stock market and the decline in home prices-have sparked interest in the implications for workers compensation claims of persons working beyond age 64.

Simply put, for many persons in their late 50s and early 60s, whose life savings have been severely depleted and whose homes are now worth far less than anticipated, the idea of a "normal" retirement is now more in the realm of wishful thinking than an achievable reality.

Workers aged 65 and older comprise a small share of employment and injury and illness cases, which is why the previous study limited its analysis to persons aged 64 and younger, however, the labor force participation rate of older workers (those aged 65 and older) has increased by nearly 50% since the late 1980s, and the rate for workers aged 55 to 64 has also increased (from 55% to 65%). Further increases are likely in coming years in light of recent financial and economic disruptions.

This paper examines how workers aged 65 and older differ from all workers in terms of their share of claims; indemnity and medical payments; frequency; and indemnity and medical severity (i.e., cost per claim). It also explores the implications for workers compensation claims management and loss costs. Our key conclusions are:

• Falls/slips/trips are by far the greatest cause of injury among older workers.
• Indemnity severity is less for older workers, largely because of the lower average weekly wage of such workers. There is a distinct (downward) break in indemnity severity between ages 60-64 and 65 and older.
• Medical severity is higher for older workers, although the differential between workers aged 65 and older and nearby age cohorts is small.
• Shares of indemnity and medical payments of older workers have a close relationship to their share of claims.
• Frequency is less for older workers, especially in the more hazardous manufacturing and construction-related industries and occupations. In contrast, claim frequency is higher for older workers in the leisure and hospitality industry and food preparation and service occupations (as well as in sales and related occupations).

-National Council on Compensation Insurance