Small Workers Comp Claims Can Be Expensive
The Other Side of the Coin – many small Workers Comp claims, but no major ones. This is one of those dangerous Workers Comp budget busters. As I said in my last post, there is a built-in safety net for a business that has one serious claim but few other claims.
The other side of the coin is that an employer is penalized very heavily for many small Workers Comp claims. I do not mean medical only claims, but instead lost time claims. You can have one $100,000 claim or 10 $5,000 claims. One would think the $100,000 claim would cost the employer twice as much. This is far from true.
There is a built-in factor that would reduce the $100,000 claim to a $25,000 claim. The 10 $5,000 claims would not be reduced. So a claim that looks twice as expensive as a group of claims is actually only going to cost 1/2 the premium of the group of smaller claims.
Workers Comp E-Mods are constructed to penalize an employer that has a high number of Workers Comp accidents, as the more accidents that occur, the higher the likelihood that one of the many claims could turn serious. I do not necessarily agree with the assumption, but it is the structure that is in place today for E-Mods.
Next Up – There is no such thing as a small WC claim
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