Employee age affects workers' compensation utilization because they are more prone to illnesses or workplace injuries, disabilities are likely to be longer, and claims costs are likely to be higher.
As the Hong Kong workforce ages, the average cost of worker’s compensation insurance will increase. For business owners in Hong Kong, it’s important to understand the effect it has on your worker’s compensation insurance premiums.
Remember a time when you were young, maybe in your high school or college days, when you could basically just eat whatever you want and still have energy to work out and do your work? Or when you could go out with friends for drinks and not wake up with a hangover the day after? As you get older, your body becomes a bit frailer and you might find yourself getting sick more often or being more prone to injuries. While this might seem obvious, as a benefits administrator or business owner, it’s important to remember that the same thing applies to your employees as well. As your workforce ages, the way they use their workers compensation will change in 3 big ways.
More Prone to Injury or Illness
As much as we like to overlook the idea, we become slower, clumsier, and more prone to injuries as we get older. This is doubly true for more physically demanding industries like construction or warehouse work. Older employees are more prone to injuries or illnesses in the workplace leading to higher workers' compensation utilization which means higher premiums for workers compensation insurance.
Of course, business owners are not helpless. One way to deal with this is to reduce the chance of injury with smart job design. Make sure you have proper safety training in place for all employees and evaluate your work environment or processes to make sure things are ergonomic and try to limit repetitive actions that can place strain on joints and other body parts. During this evaluation, you should also take into account mental fatigue and determine who is most suitable for a particular task.
Higher Claims Costs
The 2nd change is that the average cost of workers compensationclaims is higher for older workers due to higher average salaries and a higher rate of severe or fatal injuries.
According to research by Marsh & McLennan and others, workers between the ages of 40 and 59 and 3 times more likely than workers 20-39 years old to have high cholesterol, high blood pressure, and other factors that put them at higher risk. These factors lead to claims costs that are nearly double that of younger workers. Another factor is that small injuries like sprains or contusions cost more to treat in older workers than younger ones.
But this is not totally unavoidable - many employers are building onsite gyms, hiring physical therapists to create intervention programs for employees, and enacting other employee wellness programs to prevent injuries and illnesses from occurring to begin with. Progressive employers are looking at employee wellness as an investment rather than a cost. According to a study run by Harvard University, every US dollar spent on wellness programs reduce medical costs by US$3.17 and US$2.73 in absentee costs. Reducing the average cost of worker’s compensation claims at your business means you get to enjoy a lower average cost of worker’s compensation insurance.
Remember when you were younger and you would bounce back from injuries the very next day as if nothing had even happened? This ability to heal and recover goes away as you get older leading to longer periods of disability for your older employees.
The 3rd major change is that older workers who become injured or fall ill experience longer periods of disability than younger workers leading to larger claims. According to a 2014 study published in the Journal of Occupational and Environmental Medicine, there is a strong correlation between age and the length of disability for injured or ill workers.
One way of dealing with this risk is to think about ways older workers might be able to be of use to the business in other roles. Their experience is valuable and there are ways for them to generate good profits for the business without working on the “front lines” exposing themselves to the risk of injury or illness.
Dealing With Higher Worker’s Compensation Insurance Costs
While your older employees likely hold a wealth of knowledge that you depend on to generate future profits, it's important to control your worker’s compensation insurance premiums.
If you’re looking to save on your worker’s compensation insurance in Hong Kong, the employee wellness strategies discussed above are a great place to start. You can also get in touch with a licensed Trusted Union employee benefits consultant to review your policy and identify areas for further cost savings.