Workers’ compensation claims will increase in severity in 2013
While the frequency of workers’ compensation claims in the US is expected to decrease further in 2013, in line with current trends, their severity and overall cost to insurers will rise, according to a report by Aon Risk Solutions, which blames rising medical costs and gaps in time between incidents occurring and claims being made.
Aon Risk Solutions released its findings in its inaugural Health Care Workers’ Compensation Barometer Report. Vicki Missar, associate director for Aon Global Risk Consulting, identified three key reasons for the severity of claims increasing.
One important factor is the increasing lag times in claims being reported, she said. “Claim severity increases with lag time. The report shows that the longer the delay, the higher the cost.”
She says that this increases from an average of $4,100 when reported by day three compared with $6,200 when reported more than 30 days later. “Instituting and educating management and employees on the need for early report is essential to controlling severity costs,” she said.
Another key factor is rising medical costs. “The cost of medical care in general is on the rise,” said Missar. “Many employers apply solid cost containment strategies, including medical bill review, discounted fee schedules, case management and others that have helped to contain severity but general health care costs continue to rise annually.”
Finally, an aging workforce also plays its part due to an accompanying rise in co-morbidities, whereby the initial diagnosis is complicated by other underlying medical conditions such as arthritis, obesity and mental health. The National Council on Compensation Insurance (NCCI) has reported that the share of workers’ compensation claims that also involve a co-morbidity has tripled in the past decade.
Another NCCI study found that claims that involve co-morbidity, like obesity, generate twice the amount of medical costs compared with a claim without a co-morbidity.
“Companies that are beginning to look at the total health of the worker and integrating their wellness and safety programmes will have greater success in controlling costs associated with co-morbidities,” said Missar.