A Guide to Catastrophic Workers' Compensation Claims

A Guide to Catastrophic Workers’ Compensation Claims

Workers’ compensation coverage is a significant expense for any company. Depending on your industry and type of business, finding a fair rate in the traditional insurance marketplace can be a daunting task. When faced with a workers’ compensation claim, the financial and operational impacts can be overwhelming. A catastrophic workers’ compensation claim can be even more challenging. However, a workers’ compensation captive program can transform these claims into manageable risks.

What is a Catastrophic Workers’ Compensation Claim?

A catastrophic workers’ compensation claim involves a work-related injury that is significantly life-altering or life-threatening. These injuries may include falls from heights, spinal cord injuries, brain injuries, amputations, or severe burns. Such claims can cost a company anywhere from hundreds of thousands to millions of dollars.

Exposure to Catastrophic Workers’ Compensation Claims Across Industries

While some jobs in industries like construction and manufacturing pose obvious risks, all industries can be exposed to catastrophic workers’ compensation claims. Common causes include:

• Motor Vehicle Accidents: Whether involving a fleet of semi-trucks or a single company van, motor vehicle accidents can result in serious injuries.

• Falls: High-elevation falls and everyday slip-and-fall accidents can lead to severe, catastrophic injuries.

• Burns: Mechanical malfunctions, electrical mishaps, and food service accidents can cause major skin damage, necessitating costly surgeries.

• Workplace Violence: Criminal offenses on the job can result in obvious injuries like gunshot wounds or ongoing issues like PTSD and mental anguish.

• Struck By Accidents: Injuries from being struck by a vehicle, falling objects, or malfunctioning equipment can be traumatic.

The Benefits of Workers’ Compensation Captive Programs

Workers’ compensation captive programs offer significant advantages when dealing with catastrophic claims. Members of these programs are rewarded for prioritizing safety and risk management. Exceptional performance results in unused premiums being returned as dividends, effectively building equity to offset financial devastation from catastrophic claims.

Additionally, captive programs provide reinsurance, a major benefit that comes in two forms:

• Specific Reinsurance: Protects against normal, frequency-type claims.

• Aggregate Reinsurance: Protects the entire captive group from extensive claims.

Whether through traditional insurance or a captive program, catastrophic workers’ compensation claims can have devastating consequences for any company. These claims are not just rare occurrences; they can happen to any business at any time. Avoid the overwhelming impact of claims by exploring the benefits of a workers’ compensation captive program.

A Guide to Catastrophic Workers’ Compensation Claims