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 10038 Office: 212.346.5540 Cell: (917) 494-5945 stevenw@iii.org www.iii.org
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
WC Profitability 3
Workers Comp Return on Net Worth, 2002-2013 12% 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% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Sources: NAIC; Insurance Information Institute 4
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, 2013 16% Top 25 States 12 states posted doubledigit profit percentages in WC in 2013 14% 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
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, 2013 10% 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
97.0 98.5 98.6 102.0 100.0 101.0 102.6 107.0 105.5 103.2 104.4 102.0 108.6 112.4 112.2 110.3 115.3 118.1 117.6 121.0 120.8 130 Workers Compensation Combined Ratio: 1994 2014P Does the WC line get in trouble once each decade? 125 120 115 110 105 100 95 90 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14P 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 2000-2014P are from Exhibit 6, Best s Special Report, U.S. Workers Compensation Results Sustain Recent Improvement, November 10, 2014. 7
1. A Growing Exposure Base, but with a Different Mix of Risks Health Care, Education, Services Will Lead 8
168 212 322 70 88 102 122 221 183 164 196 360 106 96 110 84 160 150 161 144 217 141 203 226 243 225 203 214 197 199 201 222 203 149 202 164 237 274 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 203 280 271 243 304 321 Monthly Change in Nonfarm Employment, 2011-2014 Thousands Average Monthly Gain 2011: 173,600 2012: 186,300 2013: 194,250 2014*: 240,900 400 350 300 250 200 150 100 229 267 243 50 0 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
Nonfarm Payroll (Wages and Salaries), Quarterly, 2005 2014: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: http://research.stlouisfed.org/fred2/series/wascur; National Bureau of Economic Research (recession dates); Insurance Information Institute. 10
Workers Comp Net Written Premiums vs. Payroll, 1990-2014: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 $2,000 90 91 92 93 94 95 96 97 98 99 0 1 2 3 4 5 6 7 8 9 10 11 12 1314:3Q 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 http://research.stlouisfed.org/fred2/series/wascur ; NCCI; I.I.I. 11
1/31/2010 2/28/2010 3/31/2010 4/28/2010 5/31/2010 6/30/2010 7/31/2010 8/31/2010 9/30/2010 10/30/2010 11/30/2010 12/30/2010 1/31/2011 2/28/2011 3/31/2011 4/28/2011 5/31/2011 6/30/2011 7/31/2011 8/31/2011 9/30/2011 10/30/2011 11/30/2011 12/30/2011 1/30/2012 2/30/2012 3/30/2012 4/30/2012 5/30/2012 6/30/2012 7/30/2012 8/30/2012 9/30/2012 10/30/2012 11/30/2012 12/30/2012 1/30/2013 Feb-13 3/30/2013 4/30/2013 5/30/2013 6/30/2013 7/30/2013 8/30/2013 9/30/2012 10/30/2013 11/30/2013 12/31/2013 1/31/2014 2/28/2014 3/31/2014 4/30/2014 5/31/2014 6/30/2014 7/31/2014 8/31/2014 9/30/2014 10/31/2014 11/30/2014 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. 2010 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. 2011 (+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 http://data.bls.gov; Insurance Information Institute. 12
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. 2010 (+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 http://data.bls.gov; Insurance Information Institute. 13
U.S. Employment in Health Care & Social Services, Monthly, 1990 2014* 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 21 18 Employment in the health care and social service sector grew in virtually every month for the last 24 years, unaffected by recessions, 15 12 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
2. Workplace Safety Improvement Continues, but Room for More The WC industry has certainly helped create/support the improvement 15
Fewer Occupational Deaths 1992 2013p 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 3,500 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13p 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 2011. 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, 2014. 16
Number of Workplace Homicides, 1992-2013 1100 1000 900 1044 10741080 1036 927 860 800 700 600 500 400 714 651 677 643 632 628 609 559 567 540 526 542 506 456 463 396 300 200 17
18
407,610 408,400 394,090 380,440 349,450 311,890 241,310 223,020 223,920 222,050 229,530 908,310 850,930 840,580 803,060 809,420 766,250 723,680 710,170 684,390 683,640 687,560 Private Industry: Fewer Injuries & Illnesses with Days Away from Work Number 1,000,000 800,000 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. 600,000 400,000 200,000 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 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: http://www.bls.gov/news.release/osh2.t01.htm. 19
Accidents per 10,000 Full-Time Private Workers, 2013 25.0 16 15.4 16.2 4.9 4.2 15.0 28.6 25.3 13.3 11.6 11.8 4.8 3.8 3.8 35.0 30.0 25.0 Healthcare Workers Are Injured by Violence at Almost Four Times the National Rate. Contact With Objects Much Less Common in Healthcare. 20.0 15.0 10.0 5.0 0.0 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: http://www.bls.gov/news.release/osh2.t01.htm. 20
3. Inflation and Claim Severity The Low CPI Doesn t Reflect WC Cost Pressures 21
Workers Compensation Medical Severity Moderate Increase in 2011 Medical Claim Cost ($000s) 30 25 20 15 10 5 Annual Change 1991 1993: +1.9% Annual Change 1994 2001: +8.9% Annual Change 2002 2010: +6.0% $8.1 Cumulative Change = 245% (1991-2011p) +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 $9.9 +10.6% +7.3% +10.1% +8.3% $10.9 $11.8 $13.1 $14.0 +7.7% +5.4% +8.8% +13.5% $15.9 $17.3 Accident Year 2011p: Preliminary based on data valued as of 12/31/2011. 1991-2010: 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 $19.7 +6.3% +5.9% +8.5% $21.3 $22.6 $24.0 +4.2% +6.1% $25.5 $26.6 $26.9 +4% +1.3% 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011p $28.0
WC Medical Severity No Longer Rising Faster Than the Medical CPI Rate 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 8.8% 4.7% 7.7% 5.4% 7.8% 5.8% 6.1% 4.0% 4.4% 4.2% 4.0% 4.4% Change in Medical CPI The average annual growth in WC medical severity from 2002 through 2009 was over 6% vs. the medical CPI (about 4%), which itself was higher than the overall CPI 6.8% 3.7% Change Med Cost per Lost Time Claim 4.0% 3.2% 3.4% 3.0% 1.2% but since 2010 growth in WC medical severity has closely tracked the medical CPI 2.6% 3.0% 3.0% 3.5% 2.5% 2.3% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014* *I.I.I. estimate based on data through October 2014 Sources: CPI and Med CPI from US Bureau of Labor Statistics, WC med severity from NCCI based on NCCI states.
Workers Comp Indemnity Claim Costs, 1993-2013p Indemnity Claim Cost ($ 000s) Average Indemnity Cost per Lost-Time Claim Average indemnity costs per claim have been at or below $22,500 since 2008 25 23 21 19 17 15 13 11 9 7 5 +5.9% +1.0% -3.1% -2.8% +4.9% +1.7% $9.2 $9.7 $9.8 $10.4 $11.2 $12.2 +7.7% $13.5 +9.0% $14.8 +1.0% +3.6% +4.6% +3.1% +10.1% +10.1%+9.2% $16.2 $16.7 $17.5 $17.6 $18.3 $19.3 $20.5 +5.5%+6.5% +0.6% 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013p $22.3 $20.8 $21.9 $22.1 $22.2 $22.7 Accident Year 2010p: Preliminary based on data valued as of 12/31/2011 1991 2010: Based on data through 12/31/2010, developed to ultimate Based on the states where NCCI provides ratemaking services Excludes high deductible policies
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 12% 10% 8% 6% 4% 2% 0% WC Indemnity Severity No Longer Grows Faster than Wages, 1995-2013 2.6% 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
4. Low Investment Returns 26
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*: 1990 2014 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 2014. Sources: Federal Reserve Bank at http://www.federalreserve.gov/releases/h15/data.htm. National Bureau of Economic Research (recession dates); Insurance Information Institutes. 27
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
5. The Aging Workforce 29
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% 1998.1 The brown bars indicate recessions. 1998.3 1999.1 1999.3 2000.1 2000.3 2001.1 1 in 3 in this age group are working. Virtually none of them are baby boomers 2001.3 25.2% 25.2% 26.3% 26.5% 26.2% 27.9% 27.2% 2002.1 2002.3 2003.1 27.0% 2003.3 27.4% 27.9% 27.3% 27.8% 27.6% 26.8% 27.6% 29.3% 29.5% 27.9% 28.5% 28.7% 2004.1 2004.3 2005.1 2005.3 2006.1 2006.3 30.8% 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. 2007.1 2007.3 2008.1 2008.3 2009.1 2009.3 2010.1 2010.3 2011.1 2011.3 2012.1 2012.3 2013.1 2013.3 2014.1 2014.3
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 8. 13.1% 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% 1998.1 1998.3 1999.1 1999.3 2000.1 2000.3 2001.1 2001.3 2002.1 2002.3 2003.1 2003.3 2004.1 2004.3 2005.1 2005.3 2006.1 The labor force participation rate for workers 70-74 grew by about 50% since 1998. Growth in the participation rate has stalled at about 19% since 2013. Source: US Bureau of Labor Statistics, US Department of Labor; Insurance Information Institute. 2006.3 2007.1 2007.3 2008.1 2008.3 2009.1 2009.3 2010.1 2010.3 2011.1 2011.3 2012.1 2012.3 2013.1 2013.3 2014.1 2014.3
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% 1998.1 1998.3 1999.1 1999.3 2000.1 Nearly 1 in 4 men and 1 in 7 women in this age group is working. The percent of women working has nearly doubled. 2000.3 2001.1 2001.3 2002.1 2002.3 2003.1 2003.3 2004.1 2004.3 2005.1 2005.3 2006.1 The labor force participation rate for workers 70-74 grew by about 50% since 1998. Growth in the participation rate has stalled at about 19% since 2013. Source: US Bureau of Labor Statistics, US Department of Labor; Insurance Information Institute. 2006.3 2007.1 2007.3 2008.1 2008.3 2009.1 2009.3 2010.1 2010.3 2011.1 2011.3 2012.1 2012.3 2013.1 2013.3 2014.1 2014.3
Labor Force Participation Rate, Quarterly Ages 75 and over, 1998-2014: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 70-74 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% 1998.1 1998.2 1998.3 1998.4 1999.1 1999.2 1999.3 1999.4 2000.1 2000.2 2000.3 2000.4 2001.1 2001.2 2001.3 2001.4 2002.1 2002.2 2002.3 2002.4 2003.1 2003.2 2003.3 2003.4 2004.1 2004.2 2004.3 2004.4 2005.1 2005.2 2005.3 2005.4 2006.1 2006.2 2006.3 2006.4 2007.1 2007.2 2007.3 2007.4 2008.1 2008.2 2008.3 2008.4 2009.1 2009.2 2009.3 2009.4 2010.1 2010.2 2010.3 2010.4 2011.1 2011.2 2011.3 2011.4 2012.1 2012.2 2012.3 2012.4 2013.1 2013.2 2013.3 2013.4 2014.1 2014.2 2014.3 2014.4 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.
Labor Force Participation Rate, Quarterly Ages 75 and over, 1998-2014: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% 1998.1 1998.3 1999.1 1999.3 2000.1 2000.3 2001.1 2001.3 2002.1 2002.3 2003.1 2003.3 2004.1 2004.3 2005.1 2005.3 2006.1 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. 2006.3 2007.1 2007.3 2008.1 2008.3 2009.1 2009.3 2010.1 2010.3 2011.1 2011.3 2012.1 2012.3 2013.1 2013.3 2014.1 2014.3
2.8 2.6 2.4 2.5 2.8 2.7 2.9 2.4 2.7 3.0 2.6 2.4 2.2 2.2 2.1 3.3 3.1 2.7 2.4 2.7 2.6 2.4 3.7 3.4 3.2 3.0 2.9 2.8 2.7 4.2 4.1 3.7 3.6 3.6 3.4 3.3 3.9 5.0 4.6 4.5 4.3 4.7 4.5 8.8 10.2 11.2 12.2 12.1 11.9 11.5 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 14.0 12.0 10.0 8.0 6.0 4.0 2.0 The fatality rate for workers 65 and older was 4 times that of workers age 25-34. The workplace of the future will have to be completely redesigned to accommodate the surge in older workers. 2006 2007 2008 2009 2010 2011 2012 2013 0.0 18-19 20-24 25-34 35-44 45-54 55-64 65+ 2013 data are preliminary Source: U.S. Bureau of Labor Statistics, at http://www.bls.gov/iif/oshwc/cfoi/cfch0012.pdf 35
Median Days Away From Work 16 14 12 10 8 6 4 2 0 Older Workers Lose More Days from Work Due to Injury or Illness 5 5 5 4 5 2009 2010 2011 2012 2013 6 6 6 6 6 9 8 9 9 8 Youngest baby boomer is age 51 (in 2015) 12 12 12 11 10 Oldest baby boomer is age 69 (in 2015) 15 15 14 14 14 14 14 13 13 12 20-24 25-34 35-44 45-54 55-64 65+ Median lost time of workers age 65+ is 2-3X that of workers age 25-34. These numbers are pretty stable they haven t changed much since 2008. Source: US Bureau of Labor Statistics, Nonfatal Occupational Injuries and Illnesses Requiring Days Away From Work, 2013 (Table 10), released December 16, 2014. 36
Percent of Days-Away-from-Work Cases, by Days Lost and Age Group, 2012 1 day 2 days 3-5 days 6-10 days 11-20 days 21-30 days 31 days or more 65+ 11.0 9.0 14.1 9.8 12.4 7.3 36.3 55-64 10.4 8.7 15.2 11.7 11.8 7.0 35.1 45-54 11.9 9.0 15.4 11.5 11.5 7.2 33.6 35-44 13.7 9.8 17.0 12.6 11.3 6.6 29.0 25-34 16.3 12.9 19.4 12.2 11.5 5.8 21.9 20-24 19.9 14.9 20.0 12.9 11.0 5.1 16.1 0 0 0 0 0 1 1 1 1 1 1 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, 2013. 37
Percent of Days-Away-from-Work Cases, by Days Lost and Age Group, 2013 1 day 2 days 3-5 days 6-10 days 11-20 days 21-30 days 31 days or more 65+ 9.4 8.4 13.3 11.8 13.7 8.7 34.7 55-64 10.5 8.5 15.5 11.4 11.8 7.2 35.2 45-54 12.0 9.6 15.5 11.2 10.9 6.8 33.9 35-44 13.7 11.2 17.4 12.1 10.4 5.9 29.4 25-34 17.0 12.5 18.3 12.2 10.5 6.1 23.5 20-24 20.1 14.8 19.2 14.0 10.3 4.8 16.8 0 0 0 0 0 1 1 1 1 1 1 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, 2013. 38
Older Workers Are Much More Likely to Break a Bone Incidence Rate* (2012) Fractures Multiple Traumatic Injuries 16 14 12 11.9 13.9 10 8 6 4 6.6 6.4 2.8 6.9 3.3 3.2 8.6 4.5 4.6 5.0 2 0 20-24 25-34 35-44 45-54 55-64 65+ *per 10,000 full-time-equivalent workers Source: US Bureau of Labor Statistics, US Department of Labor at http://www.bls.gov/news.release/pdf/osh2.pdf Table 14 39
Older Workers Are Much More Likely to Break a Bone Incidence Rate* (2013) Fractures Multiple Traumatic Injuries 18 16 16.5 14 12 10 9.7 11.9 8 6.8 6.6 7.0 6 4 2 1.8 2.6 3.0 3.6 3.5 4.4 0 20-24 25-34 35-44 45-54 55-64 65+ *per 10,000 full-time-equivalent workers Source: US Bureau of Labor Statistics, US Department of Labor at http://www.bls.gov/news.release/pdf/osh2.pdf Table 14 40
20.3 20.5 22 24.0 32.7 31.6 37.8 40.7 39.4 42.7 41.7 46.6 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 50 45 40 35 30 25 20 15 10 5 0 20-24 25-34 35-44 45-54 55-64 65+ Source: US Bureau of Labor Statistics, US Department of Labor at http://www.bls.gov/news.release/pdf/osh2.pdf Table 14 41
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 50 45 40 35 30 25 30.1 35.2 24.1 40.2 32.5 43.5 41.0 39 47.2 22.7 20 17.9 18.8 15 10 5 0 20-24 25-34 35-44 45-54 55-64 65+ Source: US Bureau of Labor Statistics, US Department of Labor at http://www.bls.gov/news.release/pdf/osh2.pdf Table 14 42
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
Obesity Trends Among U.S. Adults BRFSS, 1994 Source: http://www.cdc.gov/obesity/data/trends.html#state 44
Obesity Trends Among U.S. Adults BRFSS, 2013 Source: http://www.cdc.gov/obesity/data/trends.html#state
Lost Workdays per 100 FTEs 40.97 60.17 75.21 117.61 183.63 Claims per 100 FTEs The Most Obese Workers File Twice as Many WC Claims as Healthy-Weight Workers 200 180 160 140 120 100 80 60 40 20 0 5.53 BMI <18.5 (Underweight) The most obese have twice as many claims and 13 times more lost workdays than healthy weight workers 5.80 14.19 18.5-24.9 (Healthy Weight) 7.05 25-29.9 (Overweight) 8.81 10.80 30-34.9 (Obese35-39.9 (Obese Class I) Class II) 11.65 40+ (Obese Class III) 12 10 8 6 4 Lost Workdays Claims Source: Ostbye, T., et al, Obesity and Workers Compensation, Archives of Internal Medicine, April 23, 2007. 46
$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) 18.5-24.9 (Healthy Weight) 25-29.9 (Overweight) 30-34.9 (Obese Class I) 35-39.9 (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, 2007. 47
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 $475 25-29.9 (Overweight) 30-34.9 (Obese Class I) 35-39.9 (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. 971-976. 48
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