Offering Voluntary Disability and Accident Insurance May Lower Workers' Compensation Claim Rates

Recent research shows that more than 40 percent of companies offering voluntary disability and accident insurance saw declines in claims for workers' compensation. The online survey analyzed 600 people who worked for large, medium and small employers throughout the United States who had access to these types of coverage in the workplace.

When the answers were categorized by the size of the company, researchers saw that more than 50 percent of larger employers providing accident insurance access saw their workers' compensation claim rates drop. More than 30 percent of medium and small companies also noted the amount of these claims decreasing. Since workers' compensation benefits paid in 2011 increased, researchers say these findings are very important. They estimated there was more than $77 billion paid toward workers' compensation claims in 2011.

Experts say that brokers and insurance agents have heard rumors about disability and accident insurance being linked to lower rates of workers' compensation claims, but this was the first time they saw a clear indication of it being true. They said that employers could use the information to weigh the financial benefits of offering these types of coverage to avoid paying costly claims.

The survey also asked about the significance of declines. The responses of several companies included the following:

- About 15 percent of employers said the decline rate was at least 50 percent, and less than 20 percent of employers reported declines below 50 percent.

- Less than 10 percent of small businesses reported declines of less than 50 percent, but 15 percent reported declines larger than this.

- More than 10 percent of larger businesses saw decreases exceed 50 percent, but about 30 percent reported decline rates less than that.

For companies offering voluntary disability coverage, the findings were similar. About 50 percent of large companies reported decreases in claims. More than 40 percent of smaller companies and more than 30 percent of medium-sized businesses also noted lower rates of workers' compensation claims. When workers were asked to measure the significance of claims, this is how they responded:

- About 15 percent of large companies saw decreases larger than 50 percent, and the same amount saw decreases below this rate.

- Less than 20 percent of medium companies saw declines higher than 50 percent, but less than 10 percent saw decreases smaller than that.

- Less than 20 percent of small employers saw 50 percent or higher decline rates, and about 20 percent saw rates below 50 percent.

Experts say these findings show that making benefits available to workers decreases claim frequency as well. This means employers can save money by investing in these benefits rather than paying out costly workers' compensation claims. To learn more about these voluntary insurance options for the workplace, please give me a call.


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