Regulatory reforms and advancements in workplace safety have caused the frequency and severity of Workers’ Compensation claims to decline significantly. As injury rates drop, Workers’ Compensation costs also decrease; providing significant benefits to the employers.
Here are a few reasons why we are seeing a decline in Workers’ Compensation payouts:
- More workplace safety initiatives that reduce incidents and injuries
- Safer workplaces mean fewer (and less severe) injuries and less time away from work
- More evidence-based treatments result in better outcomes for injured workers which, in turn, reduces their claim amounts and time out of work
- Legislative changes to the Workers’ Compensation process make it more consistent and fair, eliminating significant waste and abuse from the system
There has been a five-year cumulative decrease of 19% in Workers’ Compensation claims, per a recent report by the National Council on Compensation Insurance.
Additionally, the National Academy of Social Insurance reported that the average Workers’ Compensation payments in the United States dropped to $1.25 per $100 of covered wages in 2017. In contrast, it was $1.74 per $100 of covered wages in 2004. This trend tracks nationwide.
Numerous states have improved their Workers’ Compensation systems. A recent study shows costs decreased in 39 states, per the National Academy of Social Insurance’s Study Panel on Workers’ Compensation Data.
Tennessee, for instance, reported the largest percentage decrease in benefits paid, with a decline of 38.2% between 2013 and 2017. This decrease is due largely to changes that limit benefits eligibility.
Ohio experienced the second largest decrease of any state. Ohio’s worker indemnity benefits decreased from $1.20 per $100 in covered wages in 2007 to $0.68 per $100 in 2017. Some of the reasons behind this drop include legislative changes and a more stringent standard around proof of injury. Ohio has also been investing in workplace safety programs for years, which has helped reduce rates from 143,000 in 2008 to just 85,000 in 2018, according to the Ohio Bureau of Workers’ Compensation “Ohio BWC”. The state spends $20 million a year on safety initiatives; including a safety grant program so employers can invest in equipment to make their workplaces safer. Also notable: Ohio BWC has implemented incentives for employers to make workplaces safer.
Florida experienced the seventh-largest decline in Workers’ Comp claim payouts between 2013 and 2017. Florida’s reduction totaled more than 25% – along with substantial declines in total benefits per $100 of covered payroll.
Experts say that while these trends are beneficial to employers, they don’t take anything away from injured workers. Companies have made more of a concerted effort to elevate safety efforts in the workplace and are helping injured employees recover efficiently and completely so they can get back to work sooner. That’s good news for both employees and their employers.
Risk Innovations specializes in monoline Workers’ Compensation. Our carrier partners have comprehensive loss control services and return to work programs that protect the rates of employers and the safety of employees. Risk Innovations has the winning solutions all around!