Direct Effect of a Claim Against Workers’ Comp Insurance

​

The most direct effect an employer may face is increased premiums following a workplace accident. One incident likely will have little to no effect, but several mishaps could raise insurance premiums considerably. The smaller a company, the more significant the impact of a claim.

Your Experience Modification Rate (EMR or MOD) is what insurance companies use to rate your business to determine premium cost. EMR is a numerical rating based on several factors that insurance uses to determine potential risks in providing your business with Workers’ Comp insurance. If your MOD rate increases, it will likely cause an increase in premiums.

​

Another primary effect may be additional wages for injured workers. These cover absences and salaries that don’t qualify for compensation by Workers’ Comp. The direct effects of a workers’ comp claim may be minor. Still, the indirect effects can take an enormous toll on a business’s bottom line.

​

Indirect Effects That Workers’ Comp Claims Have

​

Workplace accidents can have secondary effects that have a more significant impact than premium increases. Some of the fall-out you may experience after an accident includes:

​

• Work stoppages affect productivity

• Motivation drops for remaining employees

• Overtime may be necessary to recover lost production time

• Administrative costs increase with critical reporting

• Expense and time for training new employees

• Lower productivity

• Repairs or damages to equipment and clean-up following an accident

• OHSA inspections fees and potential fines

​

Employers can suffer a loss of reputation and a reduction in public confidence if an accident is widely publicized. Social media exposure can cause almost immediate effects on a business with one viral post. Another potential indirect effect can be different types of lawsuits.