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Delays in reporting claims can increase costs by over 50%: study

One of the overarching principles of workers' comp cost control is early reporting and intervention. About fifteen years ago, a groundbreaking study by the Hartford Financial Services Group found that injuries reported between the 4th and 5th week following an injury are 45% more expensive than those reported in the first week. While the details of the findings vary somewhat, a recently released study by the National Council on Compensation Insurance (NCCI) comes to a similar conclusion: "claims with a delay of more than two weeks are more complex to settle, take longer to close, and involve a longer period before the injured worker can return to work." They also are more likely to involve attorneys.

Some key findings:

The study included workplace injuries with lost work-time other than fatal or permanent total claims and excluded claims for occupational disease or cumulative injury. For these claims, median costs are lowest for claims that are reported after the day of the accident but within two weeks of the accident. This pattern holds for all four of the most common types of injury (sprains and strains, fractures, contusions, and lacerations).

Claims with more than a two-week delay in reporting are characterized by a lower medical share of total cost, greater attorney involvement, more use of lump-sum payments, lower paid to incurred ratio at 18 months, and a lower closure rate at 18 months.

Employer takeaway: Delays in reporting claims will increase your costs and the potential for litigation. Prompt reporting ensures your employee gets the proper medical care in a timely manner, can return to work more quickly, improves morale, and is effective cost management.