How Businesses Can Minimize the Premium Impact of Workers Compensation Claims

Workers Compensation claims can have a major impact on the premiums you pay and can put your business at a major disadvantage compared to your competition. One of the trends throughout the insurance industry is: the longer a claim is open, the higher the total payout. The larger the payout, the bigger the impact on your businesses premiums and bottom line. 

One of the reasons that workers compensation claims get larger the longer that they are open is due to the injection of personal injury attorneys into the situation. Added attorney fees, longer lost wages, and higher medical bills are all contributing factors. 

According to the Insurance Information Institute, between 2002 and 2007 the medical cost per lost-time claim (workers compensation insurance claims where the injured employee is unable to work) rose 50 percent faster than the annual rate of medical inflation for the economy as a whole. The institute estimates that attorney fees increase claim costs by 12 to 15 percent with no net gain in benefits to the worker. Most states index the maximum payment for lost wages to the state’s average weekly wage, a figure that generally rises each year.

Here are some things you can do as a business owner to help minimize the length of time a claim is open, which will minimize future increases to your premium:

1. Prompt notice of claims to the insurance company expedites the onset of medical treatment, speeds up the injured worker’s recovery and return to work, and reduces the likelihood that they will hire an attorney. Therefore, requiring workers to immediately report all injuries, however minor, and promptly reporting them to the insurance company can have a huge impact on the duration of a claim.​
2. A prompt and thorough investigation of the incident is just as important. Interviews with the injured worker and witnesses, photographs, and other information gathered as soon as possible will help the insurance company to properly adjust the claim.
3. If the employee will be out of work for an extended length of time, the employer should keep in regular contact. An injured worker who gets the sense that his employer does not care will become a receptive audience for plaintiff attorneys. Employers may want to call the worker periodically to check on their condition, offer assistance with completing the paperwork, and generally to check on the employee’s emotional state.
4. The employer should have a good understanding of the state law pertaining to the waiting period for benefits covering lost wages. This is especially true if the employer operates in several states, as their laws may vary widely. Understanding how the law applies to the worker’s situation will help the employer set expectations properly. This reduces the chance of misunderstandings that can lead to problems down the road.
5. Return to work programs can shorten claim duration and reduce costs significantly. These programs permit an injured employee to return to work in some capacity before he has recovered to the point where he can resume his previous duties. They reduce payments for lost wages, meet the worker’s need to feel productive again, and remove incentives for the worker to hire an attorney.
6. Employers should review loss reports with their insurance agents and claim adjusters and ask questions about losses that do not appear to be progressing toward closure. They should also look for patterns in the loss reports to identify correctible factors that raise the cost of lost-time injuries.

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