It is no secret that workers' compensation costs are reaching crisis proportions — the U.S. workers' compensation exposure is $64 to $104 billion, according to Mercer Oliver Wyman.

Overall, the frequency of workers’ compensation claims has declined nationally. The Bureau of Labor Statistics reported that the frequency of occupational injuries and illnesses decreased by 15 percent in the last four years for which data is available.

While the frequency of claims may be declining, employees are spending more time away from work after filing a claim. According to the Bureau of Labor Statistics, the number of workers’ compensation claims involving more than 30 days away from work increased by 15 percent.

Increased healthcare costs are not a driver for rising workers' compensation expenses. In fact, medical fee schedules have remained relatively stable. However, according to Marsh's Dimensions^TM database, the average workers' compensation medical costs per lost-time claim have increased 27 percent in the last four years.

The lower rate of claims is being offset by longer absences with associated higher costs that can have a major impact on an employer’s bottom-line.

A business with $100,000 in workers' compensation losses and a five-percent profit margin needs to generate $2 million in sales to pay its workers’ compensation claims.

What Will You Say When They Ask What Happened?
If you are concerned about workers' compensation costs, you need to be asking yourself the following questions:

• Are my workers’ compensation costs in line with industry peers?
• Aside from my insurance programs, what proactive steps can I take to lower costs and reduce the number and severity of injuries?
• Do we encourage and reinforce safe working behaviors?
• Do we conduct pre-loss and post-injury assessments to target and control workers' compensation cost drivers?
• Do I audit my claims administration vendors regularly?