The paper starts by confirming that the share of older workers is increasing. The analysis then looks at differences in the components of loss costs—frequency (injury rates per worker) and severity—across age groups. The factors that account for the observed differences in severities between older and younger workers are then identified. The analysis concludes by comparing the combined effects of frequency and severity—that is, loss costs per worker.
Key Findings
• In terms of loss costs per worker, the major difference among age groups occurs between the 25 to 34 and the 35 to 44 age groups. All groups of workers age 35 to 64 appear to have similar costs per worker. These are reassuring findings in that an aging workforce may have a less negative impact on loss costs per worker than originally thought.
• The long-standing tenet that younger workers have much higher injury rates is no longer true. Therefore, differences in loss costs by age in recent years primarily reflect differences in severities since differences in frequency by age have virtually disappeared.
• Differences in leading types of injuries are a major factor in differences in severity by age. Older workers tend to have more rotator cuff and knee injuries while younger workers have more back and ankle sprains.
• On the indemnity side, higher wages are a key factor leading to higher costs for older workers.
• For medical, more treatments per claim are a material factor.