Work Comp Insurance Claims – Quick Filing Save You Money

Recently a study by The Hartford Financial Services Group found that the longer a business waits to file a workers compensation claim, the more that claim will cost.   This direct correlation is no surprise to me; I work in the insurance industry and see the effects of delayed claim reporting frequently.   However, for many businesses this correlation may not be so obvious.  And an even greater number of companies may not understand how higher claim costs will come back to bite them in insurance premiums down the road.  

A common first reaction to this study by many business owners and CEOs might be that they don’t really care about inflated claims costs because the insurance company is paying the claim, not them.  But higher claims costs in workers compensation will affect your rates both directly and indirectly and with delayed reporting also come lower productivity and fines levied against your company.    The indirect cost to your company are driven by the simple formula that the more money that every insurance company has to pay out in claims each year, the higher the rates will be for everyone the next year.  There is a more direct impact for business though.  Workers compensation is an experience rated insurance policy so this means that your loss results this year will show up in your own rates in future years by way of your experience modification factor.  The truth is, the higher your claims costs are now, then, the higher your work comp premium will be in the future.   The link to your experience modification factor is direct and undeniable.   It is important then for you to understand every way that you can reduce the amount paid out for your company’s workers compensation insurance claims.  And quick reporting is a simple fix for most companies.

The Hartford Study shows that the costs of delaying the reporting of a claim beyond the day of the accident increases the costs of the claim by greater and greater amounts as more time passes.  For example, the study reports that filing a claim between 7 and 14 days after a an accident occurs results in an average of 18% more paid for that claim than if the claim had been filed on the day that it happened.  Waiting 15 to 28 days will increase the costs of that same claim by an average of 30%.  Wait 29 or more days and you will see claims costs jump by 45%. 

To better understand why this happens, let’s take a quick look at some of the reasons why early reporting reduces the costs of claims.  Early reporting allows the insurance company to control the medical costs of the claim by directing the appropriate treatment and care for the injured worker.  Early reporting also reduces the duration of a claim’s total activity, which cuts down on the claims handling costs incurred by the insurance company for that claim.  By shortening the claim cycle, the insurance company can get your employee back to work sooner and this reduces your lost productivity.  Quick reporting also allows for better fraud detection and also reduces the chances of attorney involvement.  I don’t have to tell you why involving an attorney almost always drives up claims costs do I?

Looking at it from the other side, there are also a number of reasons why late reporting increases the totals costs of a workers compensation insurance claim.  Late claims reporting can often turn minor injuries into much larger ones with higher settlement costs.  If the insurance company is brought in late on a claim, then often you miss out on the chance to take advantage of the insurance company’s negotiated medical provider fees.  This almost always results in higher medical costs.  And don’t forget that you as the employer could face significant state fines for delayed claim reporting.

You should take some time to make sure that your managers have an established claims reporting process that kicks into action the minute you have a workplace accident that injures an employee.  Setting this up in advance and monitoring it to make sure that it is functioning effectively can save your company in lost productivity, fines and higher work comp insurance rates.  This is a simple way to save your company significant money.

At Clinard Insurance Group, we are  a full line, independent insurance agency located in Winston Salem NC.  We are very active in the workers compensation insurance market and we insure hundreds and hundreds of businesses all across North Carolina and South Carolina.  We would be happy to answer your questions about workers compensation and help you find a policy that will save you money, not only today but for years to come.  Please call us toll free, at 877-687-7557 or visit us on the web at www.ClinardInsurance.com.