Mega-Trends Influencing the Workers Compensation Insurance Industry

Transcription

1 Mega-Trends Influencing the Workers Compensation Insurance Industry 12 th Annual National Workers Compensation Insurance ExecuSummit Uncasville CT, February 3, 2015 Steven N. Weisbart, Ph.D., CLU, Senior Vice President & Chief Economist Insurance Information Institute 110 William Street New York, NY Office: Cell: (917)

2 Presentation Outline: 6 Mega-Trends 1. A Growing Exposure Base, but with a Different Mix of Risks 2. Workplace Safety Improvement Continues, but Room for More 3. Inflation, WC-style 4. Low Investment Returns 5. The Aging Workforce 6. The Obesity Epidemic 2

3 WC Profitability 3

4 Workers Comp Return on Net Worth, % 10.1% 9.6% 10.0% Profits down during and after a severe recession: cause and effect? 9% 9.0% 6% 6.9% 5.1% 6.2% 5.9% 7.1% 4.2% 3.9% 3% 2.4% 0% Sources: NAIC; Insurance Information Institute 4

5 14.9% 14.5% 14.0% 13.4% 12.5% 12.0% 11.9% 11.8% 11.4% 11.1% 10.3% 10.3% 9.9% 9.8% 9.4% 9.4% 9.1% 9.1% 8.9% 8.8% 8.4% 8.1% 7.8% 7.8% 7.8% Workers Comp Return on Net Worth, by State, % Top 25 States 12 states posted doubledigit profit percentages in WC in % 12% 10% 8% 6% 4% 2% 0% WY NY WV OH MI MT SD VT AR KS AK NH NM NV TX TX AL FL MO UT ND TN NE WA SC 5

6 3.0% 2.5% 2.5% 5.3% 5.2% 5.2% 5.2% 5.1% 4.8% 4.5% 4.3% 4.1% 3.6% 7.7% 7.6% 7.6% 7.5% 7.5% 7.3% 7.2% 6.7% 6.6% 6.4% 6.2% 6.1% 5.9% Workers Comp Return on Net Worth, by State, % Bottom 25 States 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% MN NC OR IL KY VA US IN PA AZ MA RI GA ID CO CT OK IA MD NJ ME LA HI CA DE WI 6

7 Workers Compensation Combined Ratio: P Does the WC line get in trouble once each decade? P Workers Comp underwriting results were the worst they have been in a decade but lately are improving. Sources: A.M. Best; Insurance Information Institute. Data for P are from Exhibit 6, Best s Special Report, U.S. Workers Compensation Results Sustain Recent Improvement, November 10,

8 1. A Growing Exposure Base, but with a Different Mix of Risks Health Care, Education, Services Will Lead 8

9 Jan- Feb Mar Apr- May Jun- Jul-11 Aug Sep Oct- Nov Dec Jan- Feb Mar Apr- May Jun- Jul-12 Aug Sep Oct- Nov Dec Jan- Feb Mar Apr- May Jun- Jul-13 Aug Sep Oct- Nov Dec Jan- Feb Mar Apr- May Jun- Jul-14 Aug Sep Oct- Nov Monthly Change in Nonfarm Employment, Thousands Average Monthly Gain 2011: 173, : 186, : 194, *: 240, The pace of job growth varies considerably from month to month. *Seasonally adjusted. Oct 2014 and Nov 2014 are preliminary data. Monthly gain for 2014 is average for January-November Sources: US Bureau of Labor Statistics; Insurance Information Institute 9

10 Nonfarm Payroll (Wages and Salaries), Quarterly, :Q3 Billions $7,750 $7,500 $7,250 $7,000 $6,750 $6,500 $6,250 $6,000 $5,750 $5,500 Prior Peak was 2008:Q3 at $6.54 trillion Recent trough (2009:Q1) was $6.23 trillion, down 5.3% from prior peak Latest (2014:Q3) was $7.46 trillion, a new peak 05:Q1 05:Q2 05:Q3 05:Q4 06:Q1 06:Q2 06:Q3 06:Q4 07:Q1 07:Q2 07:Q3 07:Q4 08:Q1 08:Q2 08:Q3 08:Q4 09:Q1 09:Q2 09:Q3 09:Q4 10:Q1 10:Q2 10:Q3 10:Q4 11:Q1 11:Q2 11:Q3 11:Q4 12:Q1 12:Q2 12:Q3 12:Q4 13:Q1 13:Q2 13:Q3 13:Q4 14:Q1 14:Q2 14:Q3 Note: Recession indicated by gray shaded column. Data are seasonally adjusted annual rates. Sources: National Bureau of Economic Research (recession dates); Insurance Information Institute. 10

11 Workers Comp Net Written Premiums vs. Payroll, :Q3 Payroll Base* $Billions $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 Wage & Salary Disbursements WC NPW 7/90-3/91 3/01-11/01 WC premium volume dropped two years before the recession began 12/07-6/09 WC NWP $Billions $50 $45 $40 $35 $30 $2, :3Q Continued Payroll Growth and Rate Increases Suggest WC NWP Will Grow Again in 2015 $25 *Private employment; Shaded areas indicate recessions. Sources: NBER (recessions); Federal Reserve Bank of St. Louis at ; NCCI; I.I.I. 11

12 1/31/2010 2/28/2010 3/31/2010 4/28/2010 5/31/2010 6/30/2010 7/31/2010 8/31/2010 9/30/ /30/ /30/ /30/2010 1/31/2011 2/28/2011 3/31/2011 4/28/2011 5/31/2011 6/30/2011 7/31/2011 8/31/2011 9/30/ /30/ /30/ /30/2011 1/30/2012 2/30/2012 3/30/2012 4/30/2012 5/30/2012 6/30/2012 7/30/2012 8/30/2012 9/30/ /30/ /30/ /30/2012 1/30/2013 Feb-13 3/30/2013 4/30/2013 5/30/2013 6/30/2013 7/30/2013 8/30/2013 9/30/ /30/ /30/ /31/2013 1/31/2014 2/28/2014 3/31/2014 4/30/2014 5/31/2014 6/30/2014 7/31/2014 8/31/2014 9/30/ /31/ /30/2014 5,587 5,508 5,536 5,555 5,524 5,512 5,502 5,525 5,503 5,507 5,504 5,462 5,432 5,464 5,475 5,496 5,520 5,524 5,551 5,553 5,590 5,584 5,585 5,606 5,627 5,622 5,627 5,630 5,613 5,620 5,635 5,647 5,648 5,666 5,687 5,720 5,743 5,789 5,813 5,811 5,816 5,829 5,830 5,836 5,849 5,864 5,896 5,876 5,927 5,951 5,964 6,000 6,009 6,017 6,047 6,064 6,082 6,089 6,109 Construction Employment, Jan November 2014* (Thousands) 6,200 6,100 6,000 5,900 5,800 5,700 5,600 5,500 Construction employment is +677,000 above Jan (+12.5%). 5,400 Construction and manufacturing employment constitute 1/3 of all workers comp payroll exposure. *Seasonally adjusted; Oct and Nov 2014 are preliminary Sources: US Bureau of Labor Statistics at Insurance Information Institute. 12

13 Manufacturing Employment, Monthly, January 2010 November 2014* 11,462 11,453 11,458 11,493 11,527 11,543 11,571 11,550 11,557 11,557 11,581 11,592 11,620 11,653 11,675 11,704 11,711 11,723 11,755 11,763 11,766 11,773 11,771 11,798 11,837 11,859 11,901 11,916 11,928 11,939 11,979 11,956 11,942 11,947 11,951 11,965 11,982 12,004 12,007 12,001 11,994 11,991 11,982 11,990 11,993 12,011 12,046 12,053 12,061 12,081 12,085 12,094 12,109 12,130 12,154 12,157 12,169 12,189 12,217 1/31/ 2/28/ 3/31/ 4/28/ 5/31/ 6/30/ 7/31/ 8/31/ 9/30/ 10/30 11/30 12/30 1/31/ 2/28/ 3/31/ 4/28/ 5/31/ 6/30/ 7/31/ 8/31/ 9/30/ 10/30 11/30 12/30 1/30/ 2/30/ 3/30/ 4/30/ 5/30/ 6/30/ 7/30/ 8/30/ 9/30/ 10/30 11/30 12/30 1/31/ 2/28/ 3/31/ 4/30/ 5/31/ 6/30/ 7/31/ 8/31/ 9/30/ 10/31 11/30 12/31 1/31/ 2/28/ 3/31/ 4/30/ 5/31/ 6/30/ 7/31/ 8/31/ 9/30/ 10/31 11/30 (Thousands) 12,500 Manufacturing employment is 750,000+ above Jan (+6.6%) and still growing. 12,250 12,000 11,750 11,500 11,250 11,000 Manufacturing employment is a surprising source of strength in the economy. Employment in the sector is at a multi-year high. *Seasonally adjusted; Oct and Nov 2014 are preliminary Sources: US Bureau of Labor Statistics at Insurance Information Institute. 13

14 U.S. Employment in Health Care & Social Services, Monthly, * 1/31/1990 9/30/1990 5/31/1991 1/31/1992 9/30/1992 5/31/1993 1/31/1994 9/30/1994 5/31/1995 1/31/1996 9/30/1996 5/31/1997 1/31/1998 9/30/1998 5/31/1999 1/31/2000 9/30/2000 5/31/2001 1/31/2002 9/30/2002 5/31/2003 1/31/2004 9/30/2004 5/31/2005 1/31/2006 9/30/2006 5/31/2007 1/31/2008 9/30/2008 5/31/2009 1/31/2010 9/30/2010 5/31/2011 1/31/2012 9/30/2012 5/31/2013 1/31/2014 9/30/2014 Millions Employment in the health care and social service sector grew in virtually every month for the last 24 years, unaffected by recessions, Cumulative growth over 25 years: 100.1% and this growth is expected to continue indefinitely 9 HC & SS employment *As of Nov 2014 (Nov 2014 and Oct 2014 are preliminary); Seasonally adjusted Note: Recessions indicated by gray shaded columns. Sources: US Bureau of Labor Statistics; National Bureau of Economic Research (recession dates); Insurance Information Institute. 14

15 2. Workplace Safety Improvement Continues, but Room for More The WC industry has certainly helped create/support the improvement 15

16 Fewer Occupational Deaths p Number of Fatal Injuries 7,000 6,500 6,000 5,500 6,217 6,331 6,632 6,275 6,202 6,238 6,055 6,054 5,920 5,915 5,534 5,575 5,764 5,734 5,840 5,657 5,214 5,000 4,500 4,551 4,690 4,693 4,628 4,405 4,000 3, p The death rate per 100,000 full-time-equivalent workers was 3.2 in 2013, down from 3.4 in 2012 and 3.5 in p = preliminary; final data will be released in late Spring 2015 Source: U.S. Bureau of Labor Statistics, National Census of Fatal Occupational Injuries in 2013 (Preliminary Results), released September 11,

17 Number of Workplace Homicides,

18 18

19 407, , , , , , , , , , , , , , , , , , , , , ,560 Private Industry: Fewer Injuries & Illnesses with Days Away from Work Number 1,000, ,000 Goods-producing, 2013 vs. 2003: down 43.7% service-producing goods-producing Service-producing, 2013 vs. 2003: down 24.3% Slight increase because employment rose. 600, , , The total number of illnesses and injuries dropped from 2003 to 2007 despite growth in employment and the aging of the workforce. The drop continued through the Great Recession. Source: U.S. Bureau of Labor Statistics, National Occupational Injuries and Illnesses Requiring Days Away from Work, 2013, Table 1, released December 16, 2014: 19

20 Accidents per 10,000 Full-Time Private Workers, Healthcare Workers Are Injured by Violence at Almost Four Times the National Rate. Contact With Objects Much Less Common in Healthcare Fall on Same Level Violence Contact With Objects Lifting/Lowering Slip, No Fall Health Care and Social Assistance Service Producing Total Private 167,150 Lost-Time Injuries and Illnesses in the Healthcare Sector in 2013, 13% a Result of Violence. Source: U.S. Bureau of Labor Statistics, National Occupational Injuries and Illnesses Requiring Days Away from Work, 2013, Table 1, released December 16, 2014: 20

21 3. Inflation and Claim Severity The Low CPI Doesn t Reflect WC Cost Pressures 21

22 Workers Compensation Medical Severity Moderate Increase in 2011 Medical Claim Cost ($000s) Annual Change : +1.9% Annual Change : +8.9% Annual Change : +6.0% $8.1 Cumulative Change = 245% ( p) +6.8%+1.3%-2.1% +9.0%+5.1%+7.4% $8.2 $8.1 $8.8 $9.2 Average Medical Cost per Lost-Time Claim $ % +7.3% +10.1% +8.3% $10.9 $11.8 $13.1 $ % +5.4% +8.8% +13.5% $15.9 $17.3 Accident Year 2011p: Preliminary based on data valued as of 12/31/ : Based on data through 12/31/2010, developed to ultimate. Based on the states where NCCI provides ratemaking services; Excludes high 22 deductible policies. $18.7 $ % +5.9% +8.5% $21.3 $22.6 $ % +6.1% $25.5 $26.6 $ % +1.3% p $28.0

23 WC Medical Severity No Longer Rising Faster Than the Medical CPI Rate 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 8.8% 4.7% 7.7% 5.4% 7.8% 5.8% 6.1% 4.0% 4.4% 4.2% 4.0% 4.4% Change in Medical CPI The average annual growth in WC medical severity from 2002 through 2009 was over 6% vs. the medical CPI (about 4%), which itself was higher than the overall CPI 6.8% 3.7% Change Med Cost per Lost Time Claim 4.0% 3.2% 3.4% 3.0% 1.2% but since 2010 growth in WC medical severity has closely tracked the medical CPI 2.6% 3.0% 3.0% 3.5% 2.5% 2.3% * *I.I.I. estimate based on data through October 2014 Sources: CPI and Med CPI from US Bureau of Labor Statistics, WC med severity from NCCI based on NCCI states.

24 Workers Comp Indemnity Claim Costs, p Indemnity Claim Cost ($ 000s) Average Indemnity Cost per Lost-Time Claim Average indemnity costs per claim have been at or below $22,500 since % +1.0% -3.1% -2.8% +4.9% +1.7% $9.2 $9.7 $9.8 $10.4 $11.2 $ % $ % $ % +3.6% +4.6% +3.1% +10.1% +10.1%+9.2% $16.2 $16.7 $17.5 $17.6 $18.3 $19.3 $ %+6.5% +0.6% p $22.3 $20.8 $21.9 $22.1 $22.2 $22.7 Accident Year 2010p: Preliminary based on data valued as of 12/31/ : Based on data through 12/31/2010, developed to ultimate Based on the states where NCCI provides ratemaking services Excludes high deductible policies

25 % 10% 8% 6% 4% 2% 0% WC Indemnity Severity No Longer Grows Faster than Wages, % 5.9% 7.7% 1.7% 2.3% 2.7% 9.0% 10.1% 10.1% 9.2% 5.0%4.9% 4.0% 3.5% Change in Median Usual Weekly Earnings Change in Indemnity Cost per Lost-Time Claim 4.6% 3.1% 3.1% 5.9% 6.5% 9.1% 2.9% 3.1% 3.6%3.9% 2.0% 2.4% 1.0% 1.1% 1.1% 2.0%2.0% 0.5% 2.0% 1.0% 1.2% 1.6% 1.0% -2% -4% -2.7% NCCI data on WC severity is based on the states where NCCI provides ratemaking services. Excludes the effects of deductible policies. Sources: NCCI, BLS, from Current Population Survey

26 4. Low Investment Returns 26

27 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 9% 8% 7% U.S. Treasury 2- and 10-Year Note Yields*: Yields on 10-Year U.S. Treasury Notes have been essentially below 5% for over a dozen years. 6% 5% U.S. Treasury 10-year note yields spiked 4% 3% 2% 1% Recession 2-Yr Yield 10-Yr Yield 0% Since roughly 80% of P/C bond/cash investments are in 10-year or shorter durations, most P/C insurer portfolios will have low-yielding bonds for years to come. *Monthly, constant maturity, nominal rates, through December Sources: Federal Reserve Bank at National Bureau of Economic Research (recession dates); Insurance Information Institutes. 27

28 Long-Term Reduction in the Level of Investment Earnings: Outlook Fed actions will likely keep interest rates low for at least 2015 In a prolonged period of low interest rates, each year maturing higher-rate bonds are replaced with lower rates, building in a low portfolio yield that will last for the duration of the newer bonds Industry must be prepared to operate in an environment in which investment returns are a much smaller fraction of profits Drives rates higher? Regulators will not accept this Stiffens underwriting discipline? Yet to manifest itself Source: Insurance Information Institute. 28

29 5. The Aging Workforce 29

30 Labor Force Participation Rate, Ages 65-69, Quarterly, 1998:Q1-2014:Q4 Labor Force participation rate 34% 32% 30% 28% 26% 24% 22% 20% 22.1% 22.5% 22.3% 23.0% 22.8% 23.0% 22.9% 23.5% 24.4% 24.4% 24.3% 24.9% 24.4% 24.4% 24.8% The brown bars indicate recessions in 3 in this age group are working. Virtually none of them are baby boomers % 25.2% 26.3% 26.5% 26.2% 27.9% 27.2% % % 27.9% 27.3% 27.8% 27.6% 26.8% 27.6% 29.3% 29.5% 27.9% 28.5% 28.7% % 29.3% 30.1% 29.1% 30.3% 30.1% 30.9% 31.0% 30.7% 31.0% 31.4% 30.9% 31.2% 31.6% 31.3% 31.5% 31.4% 32.8% 32.3% 31.1% 32.2% 32.2% 32.5% 31.8% 31.8% 31.7% 32.9% 32.1% 31.8% 31.6% 31.9% 31.3% 31.5% The switch from DB pension plans (with early-retirement incentives) to DC plans (with, in effect, later-retirement incentives) might be partly responsible for raising this rate. Not seasonally adjusted. Sources: US Bureau of Labor Statistics, US Department of Labor; Insurance Information Institute

31 Labor Force Participation Rate, Ages 70-74, Quarterly, 1998:Q1-2014:Q4 Labor Force participation rate 20% 18% 16% 14% 12% 12.5% 12.2% 12.4% 12.4% 12.9% 13.1% 13.6% Nearly 1 in 5 in this age group is working. 15 years ago it was 1 in % 13.3% 13.5% 13.6% 13.8% 14.4% 13.7% 14.2% 14.2% 13.8% 14.2% 14.0% 14.0% 14.4% 14.4% 14.6% 14.9% 14.9% 15.4% 15.6% 15.3% 16.4%17.0% 15.8% 16.2%16.7% 16.9% 17.2% 17.0% 16.7% 16.8% 18.0% 17.5% 17.3% 16.9% 18.6% 18.2% 17.7% 17.9% 18.9% 19.2% 18.0% 18.1% 17.4% 18.4% 18.0% 18.4% 19.3% 19.5% 19.2% 19.1% 19.9% 19.6% 18.8% 19.3% 19.7% 19.0% 19.0% 19.0% 18.9% 18.8% 10% The labor force participation rate for workers grew by about 50% since Growth in the participation rate has stalled at about 19% since Source: US Bureau of Labor Statistics, US Department of Labor; Insurance Information Institute

32 Labor Force Participation Rate, Ages 70-74, Quarterly, 1998:Q1-2014:Q4 Labor Force participation rate 26% 24% 22% 20% 18% 16% 14% 12% 10% 8% Nearly 1 in 4 men and 1 in 7 women in this age group is working. The percent of women working has nearly doubled The labor force participation rate for workers grew by about 50% since Growth in the participation rate has stalled at about 19% since Source: US Bureau of Labor Statistics, US Department of Labor; Insurance Information Institute

33 Labor Force Participation Rate, Quarterly Ages 75 and over, :Q4 Labor Force participation rate 9% 7% 5% 4.5% 4.6% 4.6% 5.0% 4.8% 5.1% 5.4% 5.2% 5.4% 5.3% 5.2% 5.3% 5.2% 5.2% 5.1% The labor force participation rate for workers 75 and over could hit 10% soon. This is close to what the rate was for the group a decade ago. 5.4% 5.1% 5.1% 5.2% 5.0% 5.5%5.9% 5.8% 5.8% 5.9% 6.0% 6.1% 6.5% 6.1% 6.6% 6.3% 6.7% 6.4% 6.6% 6.0% 6.5% 6.5% 7.1% 7.0% 6.9% 6.9% 7.2% 7.4% 7.6% 7.6% 7.0% 7.2% 7.3% 7.3% 6.9% 7.7% 7.5% 7.1% 7.5% 7.6% 7.7% 7.6% 7.6% 7.4% 7.8% 8.6% 7.9% 7.4% 7.7% 8.3% 8.0% 7.6% 8.0% 3% In the last 15 years, the labor force participation rate for workers 75 and over grew from 4.5% to 8.6% (in 2013:Q1), but has since fallen slightly. Sources: US Bureau of Labor Statistics, US Department of Labor; Insurance Information Institute.

34 Labor Force Participation Rate, Quarterly Ages 75 and over, :Q4 Labor Force participation rate 14% 12% Nearly 1 in 8 men in this age group is working. 10% 8% 6% 4% 2% The percent of women in this age group that is working has doubled. 0% The labor force participation rate for workers 75 and over has doubled since 1998, but growth in the participation rate has slowed recently. Source: US Bureau of Labor Statistics, US Department of Labor; Insurance Information Institute

35 Fatal Work Injury Rates Improved Slightly Since 2006 but Still Climb Sharply With Age Fatal Work Injury Rate per 100,000 full-time-equivalent workers The fatality rate for workers 65 and older was 4 times that of workers age The workplace of the future will have to be completely redesigned to accommodate the surge in older workers data are preliminary Source: U.S. Bureau of Labor Statistics, at 35

36 Median Days Away From Work Older Workers Lose More Days from Work Due to Injury or Illness Youngest baby boomer is age 51 (in 2015) Oldest baby boomer is age 69 (in 2015) Median lost time of workers age 65+ is 2-3X that of workers age These numbers are pretty stable they haven t changed much since Source: US Bureau of Labor Statistics, Nonfatal Occupational Injuries and Illnesses Requiring Days Away From Work, 2013 (Table 10), released December 16,

37 Percent of Days-Away-from-Work Cases, by Days Lost and Age Group, day 2 days 3-5 days 6-10 days days days 31 days or more Over one-third of days-lost cases of older workers involved a month or more away from work. And virtually 9 of 10 cases were for at least two days, compared to 8 of 10 for the youngest workers. Source: US Bureau of Labor Statistics, Nonfatal Occupational Injuries and Illnesses Requiring Days Away From Work, 2012 (Table 10), released November 26,

38 Percent of Days-Away-from-Work Cases, by Days Lost and Age Group, day 2 days 3-5 days 6-10 days days days 31 days or more Over one-third of days-lost cases of older workers involved a month or more away from work. And over 9 of 10 cases were for at least two days, compared to 8 of 10 for the youngest workers. Source: US Bureau of Labor Statistics, Nonfatal Occupational Injuries and Illnesses Requiring Days Away From Work, 2012 (Table 10), released November 26,

39 Older Workers Are Much More Likely to Break a Bone Incidence Rate* (2012) Fractures Multiple Traumatic Injuries *per 10,000 full-time-equivalent workers Source: US Bureau of Labor Statistics, US Department of Labor at Table 14 39

40 Older Workers Are Much More Likely to Break a Bone Incidence Rate* (2013) Fractures Multiple Traumatic Injuries *per 10,000 full-time-equivalent workers Source: US Bureau of Labor Statistics, US Department of Labor at Table 14 40

41 Older Workers Are More Likely Than Younger Workers to Slip/Fall, but Less Likely to Overexert Themselves Incidence Rate (2012) Source/Nature of Injury: Falls, slips, trips Overexertion Source: US Bureau of Labor Statistics, US Department of Labor at Table 14 41

42 Older Workers Are More Likely Than Younger Workers to Slip/Fall, but Less Likely to Overexert Themselves Incidence Rate (2013) Source/Nature of Injury: Falls, slips, trips Overexertion Source: US Bureau of Labor Statistics, US Department of Labor at Table 14 42

43 6. The Obesity Epidemic In 1994, in no state was the percent of adults who were obese as high as 20%. By 2010, all 50 states had adult obesity rates of 20% or more. In 18 states in 2013, 30% of the adults were obese. 43

44 Obesity Trends Among U.S. Adults BRFSS, 1994 Source: 44

45 Obesity Trends Among U.S. Adults BRFSS, 2013 Source:

46 Lost Workdays per 100 FTEs Claims per 100 FTEs The Most Obese Workers File Twice as Many WC Claims as Healthy-Weight Workers BMI <18.5 (Underweight) The most obese have twice as many claims and 13 times more lost workdays than healthy weight workers (Healthy Weight) (Overweight) (Obese (Obese Class I) Class II) (Obese Class III) Lost Workdays Claims Source: Ostbye, T., et al, Obesity and Workers Compensation, Archives of Internal Medicine, April 23,

47 $7,109 $3,924 $7,503 $5,396 $13,338 $13,569 $19,661 $23,633 $23,373 $34,293 $51,091 $59,178 WC Medical Claims and Indemnity Costs are 5-10x Higher for the Most Obese Workers $70,000 $60,000 Indemnity costs are 11 times higher for the most obese workers than for healthy-weight workers. $50,000 $40,000 $30,000 $20,000 $10,000 $0 BMI <18.5 (Underweight) (Healthy Weight) (Overweight) (Obese Class I) (Obese Class II) 40+ (Obese Class III) Medical Claims Costs Indemnity Claims Costs Source: Ostbye, T., et al, Obesity and Workers Compensation, Archives of Internal Medicine, April 23,

48 Additional (to WC) Costs of Obese Workers Estimated Per Capita Costs $6,000 $5,000 $4,000 The most obese workers cost employers for greater medical care and by being less productive (by being absent more and being less productive when at work. $3,792 $3,000 $2,000 $1,010 $1,026 $1,000 $0 $657 $391 $277 $1,269 $85 $0 $824 $148 $ (Overweight) (Obese Class I) (Obese Class II) 40+ (Obese Class II) Medical Claims Costs Absenteeism Presenteeism Source: Finkelstein, E., et al, The Costs of Obesity in the Workplace, Journal of Occupational and Environmental Medicine, Volume 52, No. 10 (October 2010), pp

49 Insurance Information Institute Online: Thank you for your time and your attention!