Trends Affecting the Workers Compensation System Workers Compensation

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Trends Affecting the Workers Compensation System Workers Compensation Bottom Line Solutions--Revisited AMCOMP Workers Compensation

Trends Affecting the Workers Compensation System Workers Compensation Bottom Line Solutions--Revisited AMCOMP Workers Compensation Seminar New York, NY September 12, 2013 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

Real GDP Growth, 1997 -2012: New York State vs. U. S. Index (1997=100) +40.

Real GDP Growth, 1997 -2012: New York State vs. U. S. Index (1997=100) +40. 3% since 1997 +36. 4% since 1997 Since 1997, New York State’s economy grew at a similar pace to the U. S. overall, lagging slightly since the 2001 recession. Sources: US Department of Commerce, Bureau of Economic Analysis; Insurance Information Institute. 2

NY State Has Recouped the Jobs Lost in the Great Recession Thousands Employed New

NY State Has Recouped the Jobs Lost in the Great Recession Thousands Employed New peak 8. 899 million employed in May 2013 Pre-recession peak 8. 814 million employed in June 2008 Employment trough: 8. 532 million jobs in June 2009, a loss of 282, 200 jobs from peak Latest: 8. 882 million employed in July 2013 In the last 4 years, New York State added 355, 700 jobs. However, the unemployment rate is still too high, at 7. 48%. Data are Seasonally Adjusted, total nonfarm employed Source: US Bureau of Labor Statistics; Insurance Information Institute. 3

Unemployment Improvement Stalled in NY from Apr 2011 to Apr 2013, but Has Resumed

Unemployment Improvement Stalled in NY from Apr 2011 to Apr 2013, but Has Resumed January 2002 through July 2013 Seasonally Adjusted (%) Recession began in December 2007 NY’s July 2013 unemployment rate was 7. 48%, about the same as the US (7. 39%) NY State’s unemployment rate was lower than the U. S. from 2005 -2012. Sources: US Bureau of Labor Statistics; Insurance Information Institute. 4

Unemployment Rates in NY State Metropolitan Areas, July 2013* Unemployment Rate (%) *Most recent

Unemployment Rates in NY State Metropolitan Areas, July 2013* Unemployment Rate (%) *Most recent available. Data are preliminary and are not seasonally adjusted. Sources: U. S. Bureau of Labor Statistics; Insurance Information Institute. 5

Nonfarm Payroll (Wages and Salaries): Quarterly, 2005– 2013: Q 2 Billions Latest (2013: Q

Nonfarm Payroll (Wages and Salaries): Quarterly, 2005– 2013: Q 2 Billions Latest (2013: Q 2) was $7. 09 trillion, a new peak--$860 B above 2009 trough $7 250 $7 000 $6 750 Prior Peak was 2008: Q 3 at $6. 54 trillion $6 500 Payrolls are 13. 8% above their 2009 trough and up 3. 1% over the past year $6 250 $6 000 $5 500 05: Q 1 05: Q 2 05: Q 3 05: Q 4 06: Q 1 06: Q 2 06: Q 3 06: Q 4 07: Q 1 07: Q 2 07: Q 3 07: Q 4 08: Q 1 08: Q 2 08: Q 3 08: Q 4 09: Q 1 09: Q 2 09: Q 3 09: Q 4 10: Q 1 10: Q 2 10: Q 3 10: Q 4 11: Q 1 11: Q 2 11: Q 3 11: Q 4 12: Q 1 12: Q 2 12: Q 3 12: Q 4 13: Q 1 13: Q 2 $5 750 Recent trough (2009: Q 1) was $6. 23 trillion, down 4. 8% from prior peak Note: Recession indicated by gray shaded column. Data are seasonally adjusted annual rates. Sources: http: //research. stlouisfed. org/fred 2/series/WASCUR; National Bureau of Economic Research (recession dates); Insurance Information Institute. 6

Occupational Deaths, 1992– 2012: Still Falling or Have We Reached a Plateau? 4 000

Occupational Deaths, 1992– 2012: Still Falling or Have We Reached a Plateau? 4 000 4 383 4 690 5 214 5 657 5 840 5 734 5 764 5 575 5 534 5 915 6 054 6 055 6 238 6 202 6 275 4 551 5 000 Includes multiple deaths in Upper Big Branch coal mine and Deepwater Horizon oil rig 5 920 6 000 6 331 6 217 7 000 6 632 Number of Fatal Injuries 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 The death rate per 100, 000 full-time-equivalent workers was 3. 5 in 2009, 3. 6 in 2010, 3. 5 in 2011, and (preliminary result) 3. 2 in 2012. Source: U. S. Bureau of Labor Statistics, National Census of Fatal Occupational Injuries in 2012 (Preliminary Results), released August 22, 2013, and previous reports. 7

Private Industry: Fewer Injuries & Illnesses with Days Away from Work service-producing Number Goods-producing,

Private Industry: Fewer Injuries & Illnesses with Days Away from Work service-producing Number Goods-producing, 2011 vs. 2003: down 45. 1% goods-producing 1 000 Service-producing, 2011 vs. 2003: down 24. 7% 800 000 2004 2005 2006 2007 2008 2009 2010 223 920 223 020 684 390 710 170 723 680 311 890 766 250 349 450 809 420 380 440 803 060 394 090 840 580 850 930 2003 241 310 0 408 400 200 000 407 610 400 000 908 310 600 000 2011 The 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 and into the recovery. Source: U. S. Bureau of Labor Statistics, National Occupational Injuries and Illnesses Requiring Days Away from Work, 2011, Table 1, released November 8, 2012. 8

WC Characteristics 9

WC Characteristics 9

NY State Workers Compensation DPW, 2001– 2012 $ Billions WC premium volume in NY

NY State Workers Compensation DPW, 2001– 2012 $ Billions WC premium volume in NY State has recovered from a 19% drop during the financial crisis/soft market. The gain in 2012 alone was 14. 4%. Sources: SNL Financial; Insurance Information Institute. 10

Return on Net Worth, 2002 -2011, Workers Comp: NY vs. U. S. (Percent) Since

Return on Net Worth, 2002 -2011, Workers Comp: NY vs. U. S. (Percent) Since 2004, WC has been a less profitable line in New York than in the nation overall. NY RNW for the period 2002 -2011 is 5. 0% Sources: NAIC, Report on Profitability by Line by State in 2011, p. 284 11

Workers Comp Return on Net Worth, 2011 9, 9% 8, 7% 8, 4% 8,

Workers Comp Return on Net Worth, 2011 9, 9% 8, 7% 8, 4% 8, 2% 7, 9% 7, 5% 7, 4% 7, 3% 7, 1% 6, 6% 6, 4% 6, 2% HI MA VA AK MT IN KY CA MO NE SD MI PA AZ AL US 12, 3% FL NH 13, 1% WV 11, 0% 13, 2% AR TX 14, 0% 18, 4% WA 23, 5% OH 27, 9% WY NV Nine states posted doubledigit profits in WC in 2011 37, 4% ND 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Top 25 States Sources: NAIC; Insurance Information Institute 12

Workers Comp Return on Net Worth, 2011 Bottom 25 States 50% 40% In 2011,

Workers Comp Return on Net Worth, 2011 Bottom 25 States 50% 40% In 2011, in 15 states the Return on Net Worth was under 4% In 2011, in NY, the Return on Net Worth was 3. 1% 30% 6, 1% 6, 0% 5, 6% 5, 5% 5, 0% 4, 9% 4, 5% 4, 3% 4, 0% 3, 9% 3, 8% 3, 5% 3, 1% 2, 8% 2, 7% 2, 6% 2, 5% 1, 8% 1, 1% 0, 8% GA MN TN OR ME MS RI NM CT NJ NC IL MD NY SC WI IA VT LA KS CO OK -20% -0, 7% ID -10% -4, 7% 6, 3% UT 0% DE 6, 2% 10% US 20% Sources: NAIC; Insurance Information Institute 13

Workers Compensation Combined Ratio: 1994– 2012 F 117, 1 103, 6 104, 6 08

Workers Compensation Combined Ratio: 1994– 2012 F 117, 1 103, 6 104, 6 08 11 12 F 98, 5 07 116, 0 116, 6 10 110, 4 121, 7 102, 7 97 105, 1 96 97, 0 95 101, 0 100, 0 105 102, 0 110 107, 0 115 108, 6 120 112, 6 115, 3 125 118, 2 130 90 94 95 98 99 00 01 02 03 04 05 06 09 Workers Comp underwriting results are the worst they have been in a decade. Sources: A. M. Best; Insurance Information Institute. 14

WC Medical Severity Typically Rises Faster Than the Medical CPI Rate The average annual

WC Medical Severity Typically Rises Faster Than the Medical CPI Rate The average annual growth in WC medical severity from 2002 through 2008 was over 6% vs. the medical CPI (about 4%), which itself was higher than the overall CPI 10% 9% 8, 8% 7, 7% 8% 7% 6, 3% 6% 5, 4% 6, 6% 5, 4% 5% 4% 4, 1% 4, 7% 4, 0% 4, 4% 4, 2% 4, 0% 3, 6% 4, 4% 3, 7% 3% 3, 2% 2% 3, 4% 3, 0% 3, 7% 3, 0% 2, 7% 1, 4% Change in Medical CPI 1% Change Med Cost per Lost Time Claim 0% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013: 1 H Sources: CPI and Med CPI from US Bureau of Labor Statistics, WC med severity from NCCI based on NCCI states.

WC Indemnity Severity Generally Tracks Average Wages, 2002 -2012 p Index (2001=100) 140 Change

WC Indemnity Severity Generally Tracks Average Wages, 2002 -2012 p Index (2001=100) 140 Change in Median Usual Weekly Earnings Change in Indemnity Cost per Lost-Time Claim 111, 7 110 127, 5 130, 4 123, 6 2010 118, 4 120 124, 6 122, 8 126, 1 134, 2 133, 3 2009 127, 0 136, 9 117, 4 112, 1 105, 8 104, 9 108, 3 2012 p 2011 2008 2007 2006 2005 2004 103, 8 2003 101, 1 103, 1 2002 100 135, 5 133, 6 2012 p: Preliminary based on data valued as of 12/31/2012; 1991 -2011: Based on data through 12/31/2011, developed to ultimate. Based on the states where NCCI provides ratemaking services. Excludes the effects of deductible policies. Sources: NCCI, BLS, from Current Population Survey

A Growing Exposure Base, but with a Different Mix of Risks Health Care, Education,

A Growing Exposure Base, but with a Different Mix of Risks Health Care, Education, Services Will Lead 17

Monthly Change in Nonfarm Employment, 2011 - 2013 104 169 195 172 148 153

Monthly Change in Nonfarm Employment, 2011 - 2013 104 169 195 172 148 153 165 138 160 87 112 125 142 205 166 174 78 69 100 115 150 132 200 225 209 196 205 250 230 300 247 219 271 304 350 311 Thousands 332 Average Monthly Gain 2011: 175, 300 2012: 182, 800 2013*: 182, 600 Aug-13 Jul-13 Jun-13 May-13 Apr-13 Mar-13 Feb-13 Jan-13 Dec-12 Nov-12 Oct-12 Sep-12 Aug-12 Jul-12 Jun-12 May-12 Apr-12 Mar-12 Feb-12 Jan-12 Dec-11 Nov-11 Oct-11 Sep-11 Aug-11 Jul-11 Jun-11 May-11 Apr-11 Mar-11 Feb-11 0 Jan-11 50 The pace of job growth does not appear to be picking up, although there is obviously considerable variability. *Seasonally adjusted. August 2013 and July 2013 are preliminary data. 2013 average is January-August Sources: US Bureau of Labor Statistics; Insurance Information Institute 18

U. S. Employment in Manufacturing Monthly, 1990– 2013* Millions Latest was 11. 963 million

U. S. Employment in Manufacturing Monthly, 1990– 2013* Millions Latest was 11. 963 million 18 17 16 15 14 Recent low point (Jan. 2010) was 11. 46 million, down 16. 6% from start of recession (Dec 2007) 13 12 1/31/2013 1/31/2012 1/31/2011 1/31/2010 1/31/2009 1/31/2008 1/31/2007 1/31/2006 1/31/2005 1/31/2004 1/31/2003 1/31/2002 1/31/2001 1/31/2000 1/31/1999 1/31/1998 1/31/1997 1/31/1996 1/31/1995 1/31/1994 1/31/1993 1/31/1992 1/31/1991 1/31/1990 11 *As of August 2013 (Jul 2013 and Aug 2013 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 Institutes. 19

U. S. Employment in Construction Monthly, 1990– 2013* Millions 8, 0 Peak was 7.

U. S. Employment in Construction Monthly, 1990– 2013* Millions 8, 0 Peak was 7. 7 million in Aug 2006 7, 5 7, 0 6, 5 6, 0 5, 5 It often takes a long time after a recession for construction employment to surpass its pre-recession level 5, 0 4, 5 Latest (Aug 2013) was 5. 8 million 1/31/2013 1/31/2012 1/31/2011 1/31/2010 1/31/2009 1/31/2008 1/31/2007 1/31/2006 1/31/2005 1/31/2004 1/31/2003 1/31/2002 1/31/2001 1/31/2000 1/31/1999 1/31/1998 1/31/1997 1/31/1996 1/31/1995 1/31/1994 1/31/1993 1/31/1992 1/31/1991 1/31/1990 4, 0 *As of August 2013 (Jul 2013 and Aug 2013 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 Institutes. 20

U. S. Employment in Service Industries, Private Sector, Monthly, 1990– 2013* Millions 100 Previous

U. S. Employment in Service Industries, Private Sector, Monthly, 1990– 2013* Millions 100 Previous peak was 93. 721 million (Jan 2008) 95 90 85 80 Latest (Aug 2013) was 95. 664 million, a new peak Recent low point (Oct 2009) was 89. 171 million 75 70 1/31/2013 1/31/2012 1/31/2011 1/31/2010 1/31/2009 1/31/2008 1/31/2007 1/31/2006 1/31/2005 1/31/2004 1/31/2003 1/31/2002 1/31/2001 1/31/2000 1/31/1999 1/31/1998 1/31/1997 1/31/1996 1/31/1995 1/31/1994 1/31/1993 1/31/1992 1/31/1991 1/31/1990 65 *As of August 2013; Seasonally adjusted; July 2013 and Aug 2013 are preliminary Note: Recessions indicated by gray shaded columns. Sources: US Bureau of Labor Statistics; National Bureau of Economic Research (recession dates); Insurance Information Institutes. 21

U. S. Employment in Health Care & Social Services, Monthly, 1990– 2013* Millions Employment

U. S. Employment in Health Care & Social Services, Monthly, 1990– 2013* Millions Employment in the health care and social service sectors grew in virtually every month for the last 22 years, unaffected by recessions… 18 …and this growth is expected to continue indefinitely 15 Cumulative growth over 23 years (through 2012) : 89. 5% 12 1/31/2011 1/31/2010 1/31/2009 1/31/2008 1/31/2007 1/31/2006 1/31/2005 1/31/2004 1/31/2003 1/31/2002 1/31/2001 1/31/2000 1/31/1999 1/31/1998 1/31/1997 1/31/1996 1/31/1995 1/31/1994 1/31/1993 1/31/1992 1/31/1991 1/31/1990 9 *As of Aug 2013 (Jul 2013 and Aug 2013 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 Institutes. 22

Low Investment Returns 23

Low Investment Returns 23

U. S. Treasury Security Yields*: A Long Downward Trend, 1990– 2013 Yields on 10

U. S. Treasury Security Yields*: A Long Downward Trend, 1990– 2013 Yields on 10 -Year U. S. Treasury Notes have been essentially below 5% for a full decade. U. S. Treasury security yields recently plunged to record lows 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 August 2013. Sources: Federal Reserve Bank at http: //www. federalreserve. gov/releases/h 15/data. htm. National Bureau of Economic Research (recession dates); Insurance Information Institutes. 24

Distribution of Bond Maturities, P/C Insurance Industry, 2003 -2012 The main shift over these

Distribution of Bond Maturities, P/C Insurance Industry, 2003 -2012 The main shift over these years has been from bonds with longer maturities to bonds with shorter maturities. The industry first trimmed its holdings of over-10 -year bonds (from 24. 6% in 2003 to 15. 5% in 2012) and then trimmed bonds in the 5 -10 -year category (from 31. 3% in 2003 to 27. 6% in 2012). Falling average maturity of the P/C industry’s bond portfolio is contributing to a drop in investment income along with lower yields. Sources: SNL Financial; Insurance Information Institute. 25

Inflation-Adjusted P/C Industry Investment Gains: 1994– 2012 F 1 ($ Billions, 2012 dollars) Average

Inflation-Adjusted P/C Industry Investment Gains: 1994– 2012 F 1 ($ Billions, 2012 dollars) Average yearly gain: $60. 85 B. We haven’t hit that average in the last 5 years. In 2012 (1 st three quarters) both investment income and realized capital gains were lower than in the comparable period in 2011. And because the Federal Reserve Board aims to keep interest rates exceptionally low until the unemployment rate hits 6. 5%—likely at least another year off—maturing bonds will be re-invested at even lower rates. 1 Investment gains consist primarily of interest, stock dividends and realized capital gains and losses. *2005 figure includes special one-time dividend of $3. 2 B; 2012 F figure is I. I. I. estimate based on annualized actual 2012: Q 3 result of $38. 089 B. Sources: ISO; Insurance Information Institute.

The Aging Workforce 27

The Aging Workforce 27

34% 32, 8% 32, 3% 1 in 3 in this age group are working.

34% 32, 8% 32, 3% 1 in 3 in this age group are working. Virtually none of them are “baby boomers” 26% 24% The brown bars indicate recessions. 22, 1% 22, 5% 22, 3% 23, 0% 22, 8% 23, 0% 22, 9% 23, 5% 24, 4% 24, 3% 24, 9% 24, 4% 24, 8% 25, 2% 26, 3% 26, 5% 26, 2% 28% 27, 9% 27, 2% 27, 0% 27, 4% 27, 9% 27, 3% 27, 8% 27, 6% 26, 8% 27, 6% 30% 27, 9% 28, 5% 28, 7% 29, 3% 29, 5% 32% 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% Labor Force participation rate 31, 1% 32, 2% 32, 5% 31, 8% 31, 7% 32, 9% Labor Force Participation Rate, Ages 65 -69, Quarterly, 1998: Q 1 -2013: Q 2 2013, 1 2012, 3 2012, 1 2011, 3 2011, 1 2010, 3 2010, 1 2009, 3 2009, 1 2008, 3 2008, 1 2007, 3 2007, 1 2006, 3 2006, 1 2005, 3 2005, 1 2004, 3 2004, 1 2003, 3 2003, 1 2002, 3 2002, 1 2001, 3 2001, 1 2000, 3 2000, 1 1999, 3 1999, 1 1998, 3 20% 1998, 1 22% The labor force participation rate for workers 65 -69 might grow even faster in the future as seniors find they can’t fully retire on their meager retirement savings. Not seasonally adjusted. Sources: US Bureau of Labor Statistics, US Department of Labor; Insurance Information Institute.

9% Source: US Bureau of Labor Statistics, US Department of Labor; Insurance Information Institute.

9% Source: US Bureau of Labor Statistics, US Department of Labor; Insurance Information Institute. The labor force participation rate for workers 70 -74 grew by about 50% since 1998. Growth stalled during and after the Great Recession but has since resumed. 2013, 1 2012, 3 2012, 1 2011, 3 2011, 1 2010, 3 2010, 1 2009, 3 2009, 1 2008, 3 2008, 1 2007, 3 2007, 1 2006, 3 2006, 1 2005, 3 2005, 1 2004, 3 2004, 1 2003, 3 2003, 1 2002, 3 Labor Force participation rate 2002, 1 2001, 3 2001, 1 2000, 3 2000, 1 1999, 3 1999, 1 15% 1998, 3 18% 12, 5% 12, 2% 12, 4% 12, 9% 12, 4% 13, 6% 13, 1% 13, 3% 13, 5% 13, 6% 13, 8% 14, 4% 13, 7% 14, 2% 13, 8% 14, 2% 14, 0% 14, 4% 14, 6% 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, 0% 18, 4% 19, 3% 19, 5% 19, 2% 19, 1% 19, 9% 19, 6% 18, 8% 19, 3% 21% 1998, 1 Labor Force Participation Rate, Ages 70 -74, Quarterly, 1998: Q 1 -2013: Q 2 Nearly 1 in 5 in this age group is working. A dozen years ago it was 1 in 8. 12%

Fatality Rates Improved Slightly Since 2006 but Still Climb Sharply With Age Fatal Work

Fatality Rates Improved Slightly Since 2006 but Still Climb Sharply With Age Fatal Work Injury Rate per 100, 000 full-time-equivalent workers No improvement in fatal work injury rate for this age group The fatality rate for workers 65 and older was 5 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. Source: US Bureau of Labor Statistics, at http: //www. bls. gov/iif/oshcfoi 1. htm/#2010 30

Older Workers Lose More Days from Work Due to Injury or Illness Median Days

Older Workers Lose More Days from Work Due to Injury or Illness Median Days Away From Work 16 14 Youngest baby boomer is age 48 (in 2013) 2008 2009 2010 2011 12 9 9 10 8 6 5 5 8 9 10 11 12 12 12 13 14 Oldest baby boomer is age 67 (in 2013) 15 15 13 14 10 6 6 4 2 0 20 -24 25 -34 35 -44 45 -54 55 -64 65+ Median lost time of workers age 65+ is 2 -3 X that of workers age 25 -34 Source: US Bureau of Labor Statistics, Nonfatal Occupational Injuries and Illnesses Requiring Days Away From Work, 2011 (Table 10), released November 8, 2012. 31

Older Workers Are Much More Likely to Break a Bone Incidence Rate* (2011) Fractures

Older Workers Are Much More Likely to Break a Bone Incidence Rate* (2011) Fractures Multiple Traumatic Injuries 18 15, 3 16 13, 4 14 12 9, 9 10 8 7, 8 6, 7 6, 4 5, 9 6 4 7, 4 3, 1 3, 7 4, 0 4, 3 20 -24 25 -34 35 -44 45 -54 2 0 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/osh 2. pdf Table 14 32

Older Workers Are More Likely to Slip When Walking, but Less Likely to Overexert

Older Workers Are More Likely to Slip When Walking, but Less Likely to Overexert Themselves Incidence Rate (2011) Source/Nature of Injury: Vehicles Floors, Walkways, etc. Overexertion 10 35, 1 23, 8 10, 2 22, 3 12, 8 17, 0 11, 4 12, 7 10, 5 9, 9 20 10, 9 30 12, 1 40 30, 6 34, 7 37, 7 50 39, 6 44, 3 49, 6 60 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/osh 2. pdf Table 14 33

The Obesity Epidemic In 1994, in no state was the percent of adults who

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 12 states, 30% of the adults were obese. 34

32% 20. 7% 31% 35% 32% 30. 4% 35

32% 20. 7% 31% 35% 32% 30. 4% 35

Overweight and Obesity in New York and the U. S. , 2012 New York

Overweight and Obesity in New York and the U. S. , 2012 New York 40% U. S. 37, 0% 36, 9% 34, 2% 35, 8% 30% 27, 6% 23, 6% 25% 20% 15% 10% 5% 2, 6% 1, 8% 0% Underweight (BMI 12. 0 - 18. 4) Normal (BMI 18. 5 - Overweight (BMI 25. 0 Obese (BMI > 30. 0) 24. 9) - 29. 9) Source: US CDC at http: //apps. nccd. cdc. gov/brfss/display. asp? cat=OB&yr=2012&qkey=8261&state=UB 36

11, 65 The most obese have twice as many claims and 13 times more

11, 65 The most obese have twice as many claims and 13 times more lost workdays than healthy weight workers 12 10 BMI <18. 5 (Underweight) 18. 5 -24. 9 (Healthy Weight) 75, 21 5, 80 60, 17 5, 53 183, 63 117, 61 7, 05 8 6 4 25 -29. 9 30 -34. 9 (Obese 35 -39. 9 (Obese 40+ (Obese (Overweight) Class II) Class III) Lost Workdays Claims Source: Ostbye, T. , et al, “Obesity and Workers Compensation, ” Archives of Internal Medicine, April 23, 2007. 37 Claims per 100 FTEs 10, 80 8, 81 14, 19 200 180 160 140 120 100 80 60 40 20 0 40, 97 Lost Workdays per 100 FTEs The Most Obese Workers File Twice as Many WC Claims as Healthy-Weight Workers

$70 000 $51 091 $59 178 WC Medical Claims and Indemnity Costs are 5

$70 000 $51 091 $59 178 WC Medical Claims and Indemnity Costs are 5 -10 x Higher for the Most Obese Workers $60 000 $0 BMI <18. 5 (Underweight) 18. 5 -24. 9 (Healthy Weight) 25 -29. 9 (Overweight) Medical Claims Costs 30 -34. 9 (Obese Class I) $23 373 $23 633 $13 569 $5 396 $7 503 $10 000 $3 924 $20 000 $7 109 $30 000 $13 338 $40 000 $19 661 $50 000 $34 293 Indemnity costs are 11 times higher for the most obese workers than for healthy-weight workers. 35 -39. 9 (Obese 40+ (Obese Class II) Indemnity Claims Costs Source: Ostbye, T. , et al, “Obesity and Workers Compensation, ” Archives of Internal Medicine, April 23, 2007. 38

Additional (to WC) Costs of Obese Workers Estimated Per Capita Costs $6 000 $5

Additional (to WC) Costs of Obese Workers Estimated Per Capita Costs $6 000 $5 000 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 $4 000 $3 000 $2 000 $1 010 $1 000 $0 $148 $0 $85 25 -29. 9 (Overweight) $657 $391 $277 $475 $1 269 $824 30 -34. 9 (Obese Class I) Medical Claims Costs $1 026 35 -39. 9 (Obese Class II) Absenteeism 40+ (Obese Class II) 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. 39

Insurance Information Institute Online: www. iii. org Thank you for your time and your

Insurance Information Institute Online: www. iii. org Thank you for your time and your attention!