March 24, 2016 by Michael B. Stack
Catastrophic injury claims make up less than 1% of all workers compensation claims, but different studies show they entail approximately 20% of all workers comp costs.
For the small employer, one catastrophic injury claim can distort the severity factor in the workers comp premium calculations and have a major impact on the workers compensation premiums for years into the future.
Catastrophic Injuries Significantly Alter Employee’s Life
Catastrophic injuries are injuries that disable the employee to the extent the employee can never return to work and significantly alters the employee’s life in general. Common examples of catastrophic injuries are:
• Brain/brain stem injuries.
• Severe burns over 50 % or more of the body.
• Spinal cord injuries.
• Multiple amputations.
• Multiple trauma.
• Total vision loss.
• Occupational lung diseases.
The eventual cost of a catastrophic injury is very difficult to establish early in the life of the claim. Even the experienced adjuster does not have a crystal ball to determine if the overall cost of the claim is going to be $500,000 or $5 million when establishing the initial reserves on the claim. With catastrophic claims, as additional medical and rehabilitation information becomes available, the reserves are often adjusted by large amounts (6 figures or more) several years into the claim. Continue reading Items To Consider When Valuing Catastrophic Work Comp Claims