Workers Comp Mega Claims From A Claims Standpoint
A meeting notice caused me to write this article on Workers Comp mega claims. If you have not signed up for the webinar and you have anything to do with workers’ compensation, please go here and sign up. Yes, I registered earlier this week.

Attending the webinar will be worth your time (trust me). Multiple workers comp rating bureaus rarely work on the same statistical study. The 39-page report can be found here. (PDF file). The conclusions can be found on Page 23. You can tell the actuaries have been busy when the Appendices cover 16 pages.
The rating bureaus that contributed to the report and webinar are:
- California’s WCIRB
- Indiana Compensation Rating Bureau
- Minnesota Workers Comp Insurance Association
- New Jersey Compensation Rating and Inspection Bureau
- North Carolina Rate Bureau
- Delaware Compensation or Rating Bureau
- Compensation Advisory Organization of Michigan
- NCCI
- New York Compensation Insurance Rating Bureau
- Pennsylvania Compensation Rating Bureau
Differing Definitions of Workers Comp Mega Claims

In my little corner of the workers’ compensation world, any claim that has over a $250,000 Total Incurred represents a mega claim. According to the above report, a claim that reaches $3,000,000 in incurred benefits becomes a mega claim. The rating bureaus Total Incurred, and your loss runs Total Incurred usually represent two different figures. Check here for the difference.
Most of the claim departments refer to these claims as “old dogs.” A claim value does not reach $3,000,000 that quickly. This sounds like quite a definition discrepancy. That assumption would be correct.
Why Only $250,000 For A Mega Claim?
The $250,000 incurred level usually causes certain requirements from the claims adjusting staff.
Some of them are:
- The reserves have now reached the Vice President level – more reporting required than just internal file notes and documentation.
- The reinsurance or excess insurance companies now need reports – usually on a prescribed form and some of the claims department internal documentation. Their funds are now at risk.
- The claim or set of claims are now subject to a possible audit by the reinsurer.
- Some states require reports after a claim reaches a certain incurred level
- The insured employer or TPA client now needs more formal reports
- The agent and underwriting department may require reports
- The claims diary system may be shortened -more supervisory and managerial reviews
- Subrogation must be followed – if you look at the above PDF report, a large % of workers comp mega claims are vehicular accidents
- Litigation reports must be generated as most of the mega claim claimants are represented by an attorney.
All the above bullet points generate diary items for the life of the claim. The requirements are not “one-off” reports – usually due every 90 days.
What Causes Mega Claims?

I reviewed a claim this week that involved a hit-and-run auto accident where the Total Incurred sits at almost $1 million. The claim is five years old.
The largest claims I have seen are:
- Auto accidents
- Falls
- Severe burns
- Occupational disease such as mesothelioma
The injured workers often required multiple surgeries which drove the medical costs to much higher incurred levels very quickly.
The likely minimum amount for a workers comp mega claim should be adjusted up in the near future. The $250,000 level has been in place for many years.
Related: FREE Workers Compensation Insurance Definitions with Glossary
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