How to control the five major factors that raise the cost of claims

How to control the five major factors that raise the cost of claims

There’s much good news in workers’ comp – rates have fallen in most states, frequency of injuries continues to decline, and the industry is healthy – but employers should be concerned by the rising costs of claims when they do occur. Workers comp is one of the most loss-sensitive insurance policies – the more you use, the more you are going to pay. Each loss will typically impact the Experience Mod for three years and several small claims can impact the Mod to a greater extent than a single large loss. And summer often leads to a spike in injuries as many sectors, including agriculture, construction, and hospitality are hiring more employees and increasing production.

Experts agree that a confluence of five factors is driving the costs of claims:

• Aging workers who take longer to recover
• New workers who get injured early and more often
• Rising wages driven by labor shortage
• Rising medical costs, propelled by medical inflation, treatment innovations, and hospital consolidations
• Catastrophic injury severity, although a smaller influence as debilitating events are rare

It behooves employers to understand how these factors have impacted their loss experience and adjust their programs to combat the potential for rising costs.