Thanks so much for the answers to my questions.
I doubt this behavior is pain related although I can understand how you might think it would be. Those cats tend to overgroom on their spine or backs...not their abdomen.
1. This actually sounds like Psychogenic Alopecia which means hair loss secondary to an emotional cause. These cats overgroom their bodies because of stress or change in their environments and the other cat trouncing him on occasion would certainly qualify.
We believe that the overgrooming serves as a way of soothing themselves or a way of dealing with misplaced anxiety as you mention.
Some studies have shown that many cats previously thought to suffer from this condition actually have pollen allergies (see below) but I'm convinced that there are a number of cats who do overgroom as you describe because of psychologic issues.
The key here is the way the fur looks and the location... when these cats overgroom, the skin isn't bald but they leave "peach-fuzz" type fur on their bodies. When other allergies are in play, these cats usually create sores and bare skin. And the areas over-groomed with this condition tend to be the abdomen or the backs of the legs--easily accessible areas, in other words.
2. Pollen allergies to such things as dust mites, mold, grasses, trees, etc.
Unless you've moved or have installed new carpet or new landscaping, etc., it would be extremely uncommon for a cat this age to develop this problem.
These cats can lick just about anywhere on their bodies with this problem.
3. There are other reasons why a cat can overgroom as well. Food allergies can be seen but usually the head/neck/face are the only areas itchy. Different types of mites can be responsible but the area affected is not limited to the abdomen exclusively.
If I'm in doubt as to the underlying cause, then I'll sometimes use steroids to help rule in or out a condition. For example, pollen allergies will respond to steroids; food allergies and Psychogenic Alopecia not so much.
You might try Feliway which is a natural pheromone which is intended to reduce anxiety and instill a sense of calm. They are available in a diffuser or spray.
Oral Composure Chews are similar in nature and may be something to consider if he likes oral treats.
I don't consider this to be anything more than a cosmetic problem although it bothers some owners to the point that we medicate their cats to prevent them from over--grooming in this way. But unless the trigger can be identified and removed, then the behavior can continue.
I wouldn't keep him inside since this stress is likely to intensify the behavior.
Hopefully, he's not getting beat up to the point where he develops abscesses and infections.
I hope this helps. Deb