Workers comp costs on the rise as mega claims grow

2016 saw an uptick in so-called mega claims (claims of $10 million or more), which is having a large impact on the workers compensation industry.

By Joel Kranc | September 11, 2018 at 10:10 AM

Workers compensation claims have been known to get high from time to time, but 2016 saw an uptick of 10 so-called mega claims (claims of $10 million or more), which is having a large impact on the workers compensation industry.

According to a research brief from NCCI, while the 2016 level of mega claims is high, it is not unprecedented. The same number of adjusted mega claims occurred in accident year (AY) 2006 and nearly as many in AY 2007 after inflation-adjusting past AYs to today’s dollars. Also, 70 percent of the claims in 2016 were attributable to motor vehicle accidents and falls from elevation. Hospital and home health care account for more than half of the medical costs.

Lost-time claim frequency has been declining by about 4 percent per year, according to NCCI. So, while 2006 and 2016 had the same number of adjusted mega claims, 2016 had fewer lost-time claims in total than did 2006. As a result, mega claims make up a larger proportion of total lost-time claims in 2016 than they did in 2006. Even though the goods and services industry has at least double the number of lost-time claims of any other industry group, it is the contracting industry group that still has the greatest share of mega claims.

Within that (contracting) group, the research can be broken down even further. The carpentry classification has had more mega claims than any other class over the past 15 years. The trucking classification ranks second in both mega claims and all lost- time claims. Roofing, salespeople and clerical workers rank next on the list in terms of mega claims.

Central nervous system injuries (neck/spine or head/brain) and injuries to multiple body parts account for nearly 95% of mega claims. For lost-time claims, these categories make up only 16% of the claim total.

And given that medical expenses account for a great deal of the claims, the report shows that approximately two out of three mega claimants (66.7 percent) spend at least three months as a hospital inpatient. Approximately one in five (20.5 percent) are in the hospital for more than a year.