Concerns continue to grow around the workers’ compensation impacts of the baby boomer generation. While the insurance industry has been able to historically handle generational waves as they transition into retirement age, this generation presents a unique blending of risk that is difficult to forecast. The impacts on workers’ compensation are more significant because of the fact that according to a 2014 Gallup Poll, baby boomers are working longer before retiring than any previous generation.
One of the standard workers’ compensation review questions for a carrier is: Any employees under 16 or over 60 years of age? Most of our carriers will still offer coverage when this is the case, but they want to know details about what those employees do before offering a quote.
Understanding the impact of this risk and appropriately pricing for it will be a major challenge for insurance carriers over the next decade. Each state has a different stance on whether workers’ compensation coverage would apply on certain health-related illnesses (like strokes), which could be one of the key driving factors behind how pricing will ultimately be impacted. Some states will provide coverage for a stroke as a workplace injury regardless of reasoning, while others require that the stroke be directly related to work (unusual exertion, etc.).
According to the American Heart Association, a male aged 60-79 is three times more likely to suffer a stroke than a male aged 40-59. Women are more than twice as likely to suffer a stroke in the 60-79 age range.
Workers’ Compensation in Home Health Care
The baby boomer generation is also on the cusp of creating a dramatic impact on workers’ compensation coverage for the home health care industry. This industry presents a real challenge and an opportunity for workers’ compensation carriers as home health care is a potpourri of an emerging risk and a blending risk.
The emerging risk is obvious as baby boomers start to slip into that age range that will require assistance or companion care at home. This risk continues to grow from previous generations because families continue to be spread out geographically further from each other, so the children of baby boomers are less likely to be able to take on that companion care or burden themselves than previous generations.
According to the U.S. Bureau of Labor Statistics, home health care and assisted living industries will be the #1 and #2 fastest growing industries in the country by 2024. This obviously shows a huge workers compensation premium opportunity for carriers too, but so far many carriers are too scared to dip their toes in the water.
The insurance industry is currently experiencing a great push for technology and data compilation. The home health care industry will help define the role that actuaries, agents, and underwriters will play over the next decade. For now, most insurance carriers are avoiding writing home health care policies altogether. They are instead choosing to stick their heads in the sand because big data can’t accurately predict where this industry will trend.
One of the most recent trends in home health care is having similar-aged employees providing the companion care for a patient. It is becoming more common for employees aged 60-70 to work in this industry and the trend has a huge value for the home health care agency. A patient may not need much physical assistance, but they need help picking up things around the house and preparing meals.
If the person assisting the patient is of a similar age, the quality of companionship of companion care can be greatly increased (as long as the physical work isn’t too taxing for the employee). It is these unique risks and understanding them that makes the industry so compelling to agencies and carriers alike.
It’s easy to see how “in-the-box” underwriting won’t work for the home health care industry, but with a good underwriter, a good agent and a well-run home health care organization; some insurance businesses may find the perfect recipe for success in this emerging risk.
Handling the baby boomer generation’s impact on workers’ compensation insurance is not only a crucial issue for the industry over the next few years; it will also start to pave the way for the evolving impact of technology on the country’s workforce.
As dramatic as the baby boomer impact is on the work comp industry, it will be even more dramatic when Gen Y and the Millennial waves impact a few decades from now. It’s the industry’s chance to implement good processes and learn from the mistakes made before those next few generations hit the aging workforce model.