Complex claims in workers’ compensation are defined by two primary factors – cost and duration – exceeding those of typical claims. The prevailing consensus among industry leaders is that the incidence of complex claims is increasing, and over 50% of surveyed stakeholders think that complex claims are a major challenge for the industry.
Complex claims come in multiple forms and the reporting metrics can vary, depending on the criteria and parameters used, but there is ample evidence to support the conclusion that a higher number of claims are costing more and taking longer to resolve. Both medical and indemnity claim severity increased by 6% in 2024, and, according to one large carrier, the average number of injury workdays lost has increased by more than seven days over the last five years, reaching a total average of 80 days. Somewhat paradoxically, the overall frequency of workers’ comp claims decreased by 5% in 2024.
Fewer injuries are not resulting in lower costs, partly due to an increase in what are known as “mega” claims. Mega claims are defined by their multi-million-dollar costs and often include “catastrophic” claims that involve severe injury or illness. Although few in quantity as compared to other types of complex claims, mega claims account for a disproportionate share of total costs.
A far greater number of claims, while never reaching mega status, are still considered large and complex. A recent study from the Workers’ Compensation Research Institute (WCRI) found that the top 5% of claims with seven or more days of disability accounted for 28% of total costs (excluding catastrophic claims and those with very high or very low initial medical costs).
From a sample size of 720,000 claims across 32 states, the top 5% equals 36,000 claims for which the average medical cost was $100,000. That is more than seven times higher than the average of the other 95% of claims, and the disability duration period was 64 weeks, versus 18 weeks.
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