NCCI Study Examines Losses Over $1 Million in Workers’ Comp. Here Are the Main Takeaways

Traumatic brain injuries. Motor vehicle accidents. Slips and falls. All of these incidents can lead to major injuries. 

They result in time off from work, major surgeries and a different way of life, however briefly, for the injured person. When they occur in the workplace, they can also result in high claims costs, sometimes amounting to $1 million or more. 

While claims of or above $1 million aren’t super common in the industry, they can account for a high portion of a workers’ compensation insurer’s losses. A recent report from NCCI studied the workers’ compensation claims that cost more than $1 million and occurred over the course of the last 15 years.  

The study examined whether new technologies resulted in a decline in the frequency of claims over $1 million, which injury types most commonly resulted in $1 million-plus claims and other factors.   

By the Numbers

• Workers’ comp claims costing more than $1 million make up less than 0.2% of all lost-time claim counts, but account for 10% of all time losses.
• The highest share of claims exceeding $1 million involve multiple body part injuries. These types of injuries accounted for slightly less than 40% of all claims above $1 million. 
• The second most frequent type of injury to result in claims over $1 million are  head and brain injuries. They accounted for nearly 20% of all claims exceeding $1 million. 
• Motor vehicle accidents and slips and falls cause about half of all claims over $1 million.
• Lower back and arm and shoulder injuries accounted for the fewest number of claims over $1 million, with each accounting for less than 10% of total claims over $1 million.  

What’s Driving Large Claims?

Overall, claims over $1 million seem to be on the decline in workers’ comp. 

This trend seems to reflect the long-term decline in overall claim frequency that workers’ compensation has experienced over the last several years. The cumulative change in frequency for claims above and below $1 million was approximately the same for claims above $1 million versus below $1 million over the period studied, according to NCCI.

Interestingly, the report also found that workers’ comp claims exceeding $1 million experienced a steep decline during the Great Recession. 

NCCI speculates that this may be due to high unemployment rates in the construction industry during that time. The construction industry has historically had one of the highest frequencies of large claims among major industry groups.

According to the report, a decline in large losses could be due to the fact that workers’ compensation insurers have been using a variety of predictive technologies to determine which claims may develop into adversely large losses. 

This data can help workers’ compensation programs intervene in order to reduce the risk of creeping catastrophic claims. The study notes that other reports estimate almost two-thirds of claims exceeding $1 million started out as fairly routine. Identifying routine claims that could go astray could allow workers’ compensation insurers to reduce the risk of high losses. 

Despite the ways new technologies can help detect high-risk claims, the industry has been slow to adapt. For the last several months, the industry professionals I’ve interviewed have expressed the need for workers’ comp to embrace new technologies from wearables to increase workplace safety to apps that manage an injured workers’ biopsychosocial care. 

Many of them say that the industry just isn’t there yet, despite how the critical role these tools could play in preventing high cost claims. If this report offers any lessons, it’s that large losses have declined as technology has improved. Let’s keep the industry moving in that direction.   

Recommended Reading  

While it can be easy to detect claims with major injuries that could cost over $1 million, creeping catastrophic claims can be harder to catch. Here’s 3 ways to spot them and tips on how to prevent small injuries from becoming costly over time. 

Injury prevention can also reduce the number of claims over $1 million. Check out this list of five injuries that can be costly and how to prevent them. 

A recession can have a major effect on the number of workers’ comp claims that are filed. Recessions can also affect how quickly someone can return-to-work, however. This report based on findings from WCRI sheds light on the connections between recessions and return-to-work. &