Older Employees Lower Indemnity Costs for Workers’ Compensation

Workers 65 years old and older tend to have lower indemnity costs for workers’ compensation than do younger workers, largely because of their lower weekly wages.

That information from a new industry study could be good news for insurers as the nation’s workforce continues to age.

The new report by the National Council on Compensation Insurance (NCCI) found that the average weekly wage tends to increase with the age of the worker. However, it reaches a maximum when employees hit their early 50s and then declines gradually from ages 60 to 64. It then plummets, by as much as 30 percent, for workers aged 65 and older, possibly reflecting older workers taking part-time jobs or working a shortened work schedule after their retirement from full-time employment, according to the report.

The report also found that indemnity severity increases steadily with age through age group 45 to 49 and then stays relatively flat from ages 60 to 64, after which it declines by roughly 20 percent. Relative to all age groups, indemnity severity for workers aged 65 and older is roughly 4 percent less than it is for workers of all ages, according to NCCI.

Also, older workers file fewer claims, 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.

The new NCCI study – Claims Characteristics of Workers Aged 65 and Older – examines workers’ compensation frequency and severity among workers aged 65 and older. The study can be found at: www.ncci.com.

Topics Workers' Compensation Talent