Workers’ Comp Claim Costs Rise Across U.S.

In an indication of the national scope of workers’ compensation problems, a new study of U.S. employers shows the cost of an average employee claim rising 35% between 1989 and 1991.

But in California--where workers’ compensation costs are a major political issue and are often blamed for damaging the state’s business climate--average costs per claim ranked highest among the nine states singled out. The average cost per claim among California employers was $7,589 in 1991, versus a national average of $5,197 among the 733 employers surveyed.

The study, released Monday, cited rising medical expenses as a leading factor behind cost increases. Only 18% of the employers consider fraud to be a major contributor to costs.

“The cost of workers’ compensation coverage--once a negligible item in most companies’ budgets--has risen at such a dramatic rate that it is attracting increasing attention at the highest levels of corporate management,” David A. Olsen, chairman of Johnson & Higgins, said in a news release.

Johnson & Higgins, a New York-based insurance brokerage, and its employee benefits consulting subsidiary, Foster Higgins, conducted the study.

A separate study released last week by the National Council on Compensation Insurance, which represents the insurance industry in regulatory matters in 37 states, also reported sharp cost increases in workers’ compensation between 1989 and 1991. For claims involving employees who missed at least three days of work because of injury, the average cost per claim rose 22.4% over the two-year period, to $22,795.