The cost of workers' compensation remains a top concern for virtually every employer. The problems are so vexing that 35 states enacted reforms to their workers' compensation laws in 2006 alone. Despite the reforms, most U.S. employers continue to see their workers' compensation costs escalate.

In 2005, workers' compensation consumed 67 cents of every primary casualty insurance dollar paid by employers, according to Marsh’s Casualty Cost of Risk 2006 report.

So what can employers do to control their workers' compensation costs?

• First, control the cost of claims.
• Second, attack the problems in an organized fashion, beginning with a solid pre-loss program.
• Third, when accidents do happen, manage the ensuing claims wisely, ensuring each claim meets compensability guidelines and is properly investigated, and that there is a solid plan in place for the injured employee to return to work as soon as practicable.
• Fourth, keep a practiced eye on the medical component of claims.
• Finally, carefully collect, store, and use the enormous amount of data that workers' compensation claims generate to help benchmark your cost-containment efforts.

Paying attention in all of these areas can help reduce costs while building a best-in-class safety record. Marsh has many resources, experts, and strategies to help companies manage their workers' compensation programs.

• A recently released issue in Marsh's white paper series, Risk Alert, provides a broad look at a number of workers' compensation issues. We invite you to download the report or request a hard copy.

Reducing Costs Associated with Catastrophic Claims
Catastrophic claims represent less than 1 percent of total workers' compensation claims — but can represent as much as 20 percent of total medical payout. Due to the lifetime nature of catastrophic injuries, the impact on premiums and reserves carries over for years.

Marsh has entered into an agreement with Paradigm Management Services that gives Marsh the right to offer clients access to Paradigm's case management services for catastrophically injured workers and those with chronic pain issues.

Paradigm provides a fixed cost for all compensable medical expenses required for an injured worker to achieve a specific functional level—giving clients the benefit of fixed financial outcomes and a higher functional level and quality of life for the injured employee. In its experience over the years with thousands of catastrophic injuries and chronic pain cases, Paradigm has been able to achieve significant savings in lifetime medical costs, substantially improve return-to-work outcomes, and reduce attorney involvement.

Related Information

Learn about our Workers' Compensation Practice and services

White paper: Controlling the

Costs of Workers' Compensation Claims

Learn how Marsh and Paradigm help clients to reduce the costliest workers' compensation expenses: catastrophic injuries.

Contact Marsh to discuss workers' compensation issues: