A Rise in Mega Claims: 3 Things You Need to Know to Protect Your Employees and Company

The National Council on Compensation Insurance (NCCI) defines a “mega claim” as an extraordinary occurrence that exceeds $10 million. In a report that received widespread coverage, the NCCI found that 10 mega claims were filed in 2016, representing a dramatic year-over-year increase. In a summary of its findings, the NCCI’s Tony Donato added, “Whether this is a one-time blip or a new trend remains to be seen, but will be key for the industry.”

A total of 10 such claims might not seem like a cause for concern, but imagine how just one mega claim would impact your company, not to mention the affected employee. In addition to the obvious (and massive) financial burden on the organization, the NCCI’s report also found that over 66% of mega claimants spend at least three months in the hospital. 

Not surprisingly, companies across all industries have begun taking these findings seriously. To increase workplace safety and reduce the risk of a mega claim, here are three things that you should know to protect your employees and company.

Accident Survivability is on the Rise

The NCCI’s report found that hospital inpatient expenses represented the majority of mega claim costs in 2016. Additionally, recent BLS survey data shows that fatal workplace injury rates in 2017 slightly decreased from the year prior. With accident survivability on the rise, the importance of return-to-work programs comes into even greater focus—and if you don’t currently have one, now is the time to reconsider.

Business insurance expert Marianne Bonner says that in addition to the obvious benefits these programs provide to affected employees, they also offer serious financial advantages to employers. Bonner writes that companies that offer return-to-work programs see higher retention rates, better productivity, and reduced costs. “Injured employees who return to work part-time will collect fewer disability benefits than they would have if they remained at home,” Bonner adds. “Thus, an RTW program can help reduce your worker's compensation costs.”

Mega Claims Are Often Triggered by Motor Vehicle Accidents and Falls

As part of a large loss study, Willis Re’s Risk and Reinsurance practice analyzed claims exceeding $1 million over a ten year period. According to Sam Dutcher of Willis Re, most claims of $10 million or more were triggered by motor vehicle accidents and trips, slips, and falls. “Each type of accident accounted for 29% of those that triggered large claims,” says Dutcher.

We recently highlighted companies that are proactively addressing workplace safety. In response to a staggering number of foot-related injuries, many of our favorite examples invested heavily in daily stretching and ergonomic training programs. The most successful initiatives had three things in common: they were consistent, engaging, and had buy-in from all levels of management.

Willis Re’s findings further explain why so many companies are prioritizing foot health and balance programs. Not only do these initiatives improve the daily lives of employees, but research shows that they also help companies protect workers from dangerous and preventable accidents that could lead to a mega claim.

Mega Claimants Tend to Be Younger Workers

One of the more surprising takeaways from Willis Re’s study was that the largest claims were often filed by younger workers. “For claims in excess of $10 million, nearly 75% of claimants are under 40 at the date of loss,” Dutcher wrote in his final report. “And [they] will face a lifetime of complicated and costly medical interventions.”

Although another study by NCCI found that workers between the ages of 25 and 44 actually had the lowest incident rates, it did acknowledge that occurrences among workers under 25 are still incredibly high. A fact sheet from the Occupational Safety and Health Administration (OSHA) also warns employers that younger employees are more prone to workplace injuries. “Young workers, ages 14-24, are at risk of workplace injury because of their inexperience at work and their physical, cognitive, and emotional developmental characteristics,” according to OSHA’s website. “They often hesitate to ask questions and may fail to recognize workplace dangers.”

With less experienced professionals entering the workplace at growing rates, this is a critical time to reevaluate your onboarding programs. While additional training resources come with an upfront cost, they are necessary investments that can help protect your company and employees from a life-altering mega claim—if they address the most common injuries that your employees face. Want to know more about how we can help you navigate the Workers Comp’ landscape and create training programs for your company?

Contact us here to learn more.