The system that was designed to provide medical care and wage replacement for workers who suffer work-related injuries or illness is straining to sustain itself. Rising claim costs and non-regulated reinsurance are contributing factors to the rising costs of work comp.
Today, workers’ comp accounts for one of the fastest growing labor costs. Premiums for workers’ comp have risen 50% nationwide in the last three years – the fastest pace in a decade according to the New York City-based Insurance Information Institute. It really is simple math when every year costs double due to too many claims lasting longer than expected. Some businesses are finding themselves being hit with back-to-back increases of 25% and 40%, even if these businesses are favorable in workplace accident rates. As a business, there is no way to budget for a 20% increase that turns out to be twice that number.
Workers’ Compensation costs have had an enormous impact on several businesses’ bottom line. Accidents simply cost money – not only through direct costs, such as medical and compensation expenses, but in employee morale and client respect as well. Indirect costs are hard to calculate, but if lost, these items can cost your business several times more than direct expenses.
