In workers’ compensation, a small group of claims cost in excess of $1 billion each year. These “mega claims” represent less than 0.1% of total workers’ comp claims but account for over 2% of total loss dollars. And according to the National Council on Compensation Insurance (NCCI), these high-dollar claims are increasing in frequency across all industries.
This increase may be due to a variety of factors that contribute to claim severity, from extended recovery times to new medical advances. Let’s look at the genesis of mega claims, what causes them, and how we can use technology to help contain them.
What Are Mega Claims?
Workers’ compensation organizations generally classify mega claims as those with incurred losses between $2 million and $10 million or more. In a 2024 study of countrywide mega claims from accident years 2001-2021, NCCI defines mega claims as those with incurred losses of at least $2 million (at 2022 cost levels).
Workers’ compensation organizations generally classify mega claims as those with incurred losses between $2 million and $10 million or more. In a 2024 study of countrywide mega claims from accident years 2001-2021, NCCI defines mega claims as those with incurred losses of
That study, which included data from 43 states and the District of Columbia, found that since 2013, the estimated ultimate frequency of mega claims per 100,000 indemnity claims has been steadily increasing.
A total of 11,330 mega claims from accident years 2001-2021 were reported as of Dec. 31, 2022 – which is approximately one out of every 1,295 reported indemnity claims. Of those, 53% were between $2 million and $3 million, 27% were between $3 million and $5 million, 15% were between $5 million and $10 million, and 4% were in excess of $10 million.
Data from workers’ compensation carrier Safety National also shows an increase in mega claims. Over the last six years, claims with $2 million incurred increased by 91% and claims with $10 million incurred increased by 183%.
Characteristics of Mega Claims
While many factors influence claim costs, mega claims commonly have some or all of these characteristics:
- Claimants working in the construction industry
- Prolonged recovery and time away from work
- Multiple injuries
- Significant medical expenses
- Severe or complex injuries
Continue reading the article in full at RxInformer magazine online.
