Data shows aging workers driving up comp costs

CHICAGO — The aging workforce is becoming a driving factor in increased workers compensation costs, and claims managers are turning to technology and other tools to restrain the long-expected trend, experts say.

Early intervention and management of comorbidities are key to reducing age-related medical costs, they said during interviews last week at Riskworld, the Risk & Insurance Society Inc.’s annual conference.

Workers 60 years and older had the highest increase in overall new claim volume each year between 2020 and 2024, according to data from Sedgwick Claims Management Services Inc.

Other data shows that the average indemnity duration for older workers is nine days longer than that for younger workers and costs 35% more in both income replacement and medical costs, said Max Koonce, Bentonville, Arkansas-based chief claims officer at Sedgwick.

It’s unclear whether workers are getting older on average or returning to the workforce post-retirement, he said, pointing to Bureau of Labor Statistics data that shows employment projections for 2023 to 2033 include a 22.4% rise in workers aged 65 to 74 and a 79% increase in workers older than 75.

Executives with other companies working with injured workers said anecdotally that injuries among older workers are on the rise, and that technology is helping to mitigate rising costs related to claim complications.

“We do see the kind of general strain sprains and overuse injuries increase and have seen that happen more with the aging workforce,” said Kim Radcliffe, Jacksonville, Florida-based senior vice president of Product Management for Enlyte LLC.  She said shifting demographics are the root cause: Workers are getting older.

“And that is resulting in an increased frequency of just those types of injuries, muscle and skeletal, based on just the normal risk factor of aging,” Ms. Radcliffe said.

Greg Larson, Stevens Point, Wisconsin-based assistant vice president of workers compensation claims at Sentry Insurance, said comorbidities — such as diabetes, heart disease and obesity — are the biggest issue in managing injuries suffered by older workers.

“What comes along with comorbidities is that it takes a longer time to recover from a work injury,” he said.

With rising medical costs, which are reflected in state fee schedules, the aging workforce will likely become a key topic regarding comp pricing, especially given the BLC projections, said Joe Picone, Damascus, Virginia-based claim consulting practice leader at Willis Towers Watson US LLC. “Those claims are becoming more costly,” he said.

One way to manage the upward trend in aging worker injuries is early intervention, mostly using technology to better understand risk factors, according to industry experts.

Joel Raedeke, Chicago-based technology and data science officer at Broadspire Services Inc., said one practice is to send injured workers a questionnaire early to flag potential problems.

“With new technology, we’re immediately texting that claimant, capturing that kind of data, and that then goes into the triage. You’re able to address issues more quickly,” he said.

Technology has enabled claims handlers to better sift through pages of medical documentation and alert “somebody to something that might not otherwise be on the radar,” said Joe Powell, Fort Wayne, Indiana-based chief digital officer at Gallagher Bassett Services Inc.

“We’re using AI to help our resolution managers, as we call our adjusters, get up to speed quickly on a claim and to help make the right decisions on a claim,” he said.