For most employers in the United States today, mitigating workers compensation claims is a key component of a company’s overall cost management strategy. Rightly so – the actual costs of a single workers compensation claim can be staggering (see table below for some of the most common and costly types of claims).
According to the National Safety Council, the average cost of workers compensation claims is $40,051. In addition to the medical costs, wage replacement, and indirect costs associated with a claim, there is also the negative impact that a claim can have on a company’s experience modification (or e-mod) which can significantly increase workers compensation insurance rates for the next three years.
|Cause of Injury||Medical (avg.)||Indemnity (avg.)||Average Total Cost of Claim|
|All Claims Average||$22,219||$17,832||$40,051|
|Motor Vehicle Accidents||$44,720||$33,573||$78,293|
|Fall / Slip||$26,787||$19,805||$46,592|
Common Risk Reduction Measures
To control the frequency of claims, many companies turn their attention to injury and illness prevention programs and safety training. While certainly important in their own right, especially in high-risk industries, these risk reduction measures and protocols often miss the mark in terms of addressing some common triggers of workers compensation utilization.
While high-risk occupations and skilled labor companies do tend to experience higher levels of utilization, other factors that may contribute to claim incidences across all industries include high levels of turnover, probation periods for benefits, an aging workforce, and increased cost shifting to employees for benefits (an increasingly common trend as businesses try to manage their ever-increasing health insurance premiums).
Accident and Disability Benefits
One strategy that has emerged as an effective and proactive approach to controlling workers compensation claims is offering accident and disability benefits to employees. A study by Aflac found that 42% of all companies providing access to voluntary accident and disability insurance experienced declines in their workers compensation claims – thus helping to maintain or even lower their e-mod rating. Both plans can be designed to provide benefits that are paid directly to employees — only for non-occupational injuries and illnesses — consequently helping to eliminate “Monday morning claims.”
Offering voluntary benefits such as accident and disability insurance at the workplace has also been linked to increased employee attraction, retention, and loyalty, which can help alleviate high turnover rates – another common trigger.
42% of all companies providing access to voluntary accident and disability insurance experienced declines in their workers compensation claims.
An Attractive Option
On a voluntary basis, there is no direct cost to employers for offering these benefits, making it an attractive option for those looking to control costs while enhancing their benefits offering at the same time. The key to any successful voluntary program is having a strong communication and education campaign to ensure employees understand, value, and utilize the benefits. In light of the cost savings on their workers compensation rates and given the affordable nature of these benefits, an increasing number of employers are also opting to include these benefits as a part of their employer-paid total benefits package.
Offering accident and disability benefits to employees is a proactive approach to effectively mitigate workers compensation claims by addressing some of the common triggers for utilization. These benefits provide employees with the financial protection that they need in the time of an injury or illness.
Contact your Leavitt Group insurance advisor to learn more about accident and disability benefits and find out if this is a good option for your organization.
- Naumann, Michael (2015, Oct 30). Voluntary A&D Insurance May Reduce Workers’ Compensation Claims. Property Casualty 360