Employer disability management strategies and other predictors of injury claims rates and costs: Analysis of employment-based long-term disability insurance claims

Problem: Recent research indicates that many injuries to workers are not job related and that more than half of these injuries are not compensable under Workers' Compensation. Prior research on predictors or risk factors for these injuries, and the determinants of their costs, is quite limited. Method: This study analyzes data on more than 1000 injury-related paid claims for long-term disability (LTD) benefits by workers in 271 U.S. firms. Multiple regression analyses are used to examine predictors of LTD injury claims rates and determinants of LTD benefit payments per claim. Results: Although less than 20% of these injuries are work related, employer characteristics (industry type, selected disability management practices, and recent exposure to layoffs) are significant predictors of injury claims rates. Availability and/or generosity of other disability income sources, such as Workers' Compensation and Social Security Disability Insurance (SSDI), also impact on observed claims rates. Other strong predictors are the demographic and occupational mixes of employees. Cost per claim is also related to employer characteristics, employee characteristics, and the availability of other fringe benefits offered by the employer. Surprisingly, the level of benefits available under the employer's LTD policy does not have a detectable effect on claims rates. Impact on Industry: The importance of employer characteristics and policies, as predictors of claims rates and costs, suggests that occupational and nonoccupational injury risks may be strongly correlated. Programs to reduce the risks and costs of occupational injuries may also have important payoffs in terms of lower risks and costs for injuries to employees outside of the workplace.