A recent study examined 1.2 million on-the-job injury reports to determine which populations are most vulnerable to Workers’ Compensation Insurance claims, Property Casualty 360 reported this month. Brand-new hires were responsible for 34% of all claims assessed; among small businesses, first-year workers made up around 43% of claims, the publication reported.
The report also showed that employees at age 60 or older were injured on the job less often but had more expensive claims, costing 15% more than workers ages 35 to 49 and 140% more than employees ages 18 to 24.
Claim costs often increase with age, due in part to factors such as preexisting health conditions, longer recovery periods and other medical complications.
The new data linking work experience and age with Workers’ Compensation Insurance claim frequency and severity also makes sense given labor shortages and other “unprecedented volatility” in the workforce during the COVID-19 pandemic, said Morgan McCoy, Underwriter, Workers’ Compensation, Burns & Wilcox, Charleston, South Carolina.
“This has definitely been a trend, and we did not see this happen as often before COVID-19,” McCoy said. “We 100% have seen the claims rise with first-year employees. The percentage of employees over age 65 is also something Workers’ Compensation carriers want to know about.”
Assessing risks with an evolving workforce
According to projections from the U.S. Bureau of Labor Statistics, about 25% of the workforce will consist of individuals aged 55 and above by 2024, Fortune reported in September of 2022. Of these workers, around one-third will be 65 years or older. In addition, data shows that while 58% of 65-year-olds in the U.S. were retired in the year 2000, today that figure is 45%, the Federal Reserve Bank of Minneapolis reported in February.
While some seniors are working beyond the traditional age of retirement, worker shortages remain a pressing issue for employers. Officials say around 3.5 million individuals are missing from the labor force compared to previous projections, due in part to early retirements, COVID-related deaths and disabilities, and other effects associated with the pandemic, the New York Times reported late last year. With many employers desperate for job candidates, rates of workplace injuries among first-year workers may continue to rise.
Ongoing labor shortages have forced many employers to expand their hiring pools, often bringing on workers who may need additional training and supervision. This can increase the likelihood of workplace injuries and Workers’ Compensation claims.
According to a 2022 survey from Prudential, 22% of workers switched jobs during the pandemic. Many pursued entirely new careers, introducing a wave of inexperienced workers who may face a greater risk of workplace injuries. Workforce shifts that began during the COVID-19 pandemic continue to affect employers across industries.
When workers are injured on the job, Workers’ Compensation Insurance can pay for the employee’s medical expenses, a portion of their salary while they recover, rehabilitation services, return-to-work programs, and more.
Workers’ Compensation Insurance is the very first policy that is going to be triggered when any type of injury claim happens. It is extremely important.
Rehabilitation can be an important component of Workers’ Compensation Insurance, particularly for older employees recovering from injuries. Depending on the circumstances, coverage may also include vocational rehabilitation and retraining programs that help injured workers transition into different roles if they can no longer perform their previous job duties.
McCoy added, “Workers’ Compensation Insurance is the very first policy that is going to be triggered when any type of injury claim happens,” noting that Commercial General Liability (CGL) Insurance and other policies could later be involved. “It is extremely important. If you do not have Workers’ Compensation Insurance and an employee wants to sue you, you are likely going to pay out big time.”
Costly claims possible in any work setting
The most common types of workplace injuries leading to Workers’ Compensation claims were strains and sprains, accounting for 38% of claims, while overexertion was the most common cause of injury, according to the study published in Property Casualty 360. Dislocations were the most expensive among the more common injuries, although “outliers” like amputations were among the most expensive claims evaluated.
Medical costs in the U.S. were up by about 2.3% in February compared to the previous year, which was a slower rate of inflation compared to other goods and services during the same time period, the Kaiser Family Foundation reported in March. However, some experts believe medical inflation will be pushed higher soon, the Los Angeles Times reported on March 29.
Employers should keep in mind that even lower-risk environments, including office and clerical settings, can result in significant Workers’ Compensation claims. A seemingly minor incident can become far more costly when complications arise during treatment or recovery.
While any employee could face unexpected complications following an injury, older workers may be particularly vulnerable to longer recovery times and higher claim costs.
Workers’ Compensation Insurance rates have generally remained stable or declined in recent years, though a sustained increase in claim frequency or severity could eventually affect pricing trends. While it is too early to determine the long-term impact, industry observers will be monitoring these developments closely over the next several years.
Trends involving an aging workforce and a higher incidence of injuries among first-year employees have been developing over time and are becoming increasingly evident in industry data.
The employer’s role in protecting workers
To help limit losses, Workers’ Compensation Insurance underwriters may apply additional underwriting scrutiny to new businesses. In some cases, a company’s age can affect pricing, eligibility or the number of carriers willing to offer coverage, as newer businesses may be viewed as having a greater potential for losses.
Employers should also consider worker safety as it relates to assault and other threats, as workplace violence has been described by the Insurance Journal in 2021 as an “ever-growing concern” for U.S. employers. Earlier this month in California, a grocery store worker claimed he was fired after applying for Workers’ Compensation due to panic attacks after being assaulted three times at work, Fox Business reported. According to McCoy, Workers’ Compensation Insurance claims have also been filed over issues like bullying and harassment in the workplace.
“That is absolutely something I have seen,” McCoy said. “Employers should definitely be aware of it.”
Employers play an important role in protecting workers by providing appropriate training, resources and a safe work environment.
Workplaces should be designed with employees of all ages in mind, including ergonomic considerations and other safety measures that can help reduce the risk of injury.
Whenever someone is hired, they should read and sign [a workplace safety policy]. That is a huge thing and insurance carriers really care about that.
This advice is especially relevant for businesses hiring workers who are new to an industry or role. Providing thorough training, proper resources and adequate onboarding can help employees become comfortable in their work environment and reduce the likelihood of workplace injuries.
McCoy suggested that employers host frequent safety talks with their workers and always have a workplace safety policy in place. “Whenever someone is hired, they should read and sign that policy,” McCoy said. “That is a huge thing and insurance carriers really care about that.”
