Rumor confirmed: Accident, disability insurance can reduce workers’ compensation claimsArticle added by Tye Elliott on April 29, 2014
Tye Elliott

Tye Elliott

Joined: March 21, 2014

Producers have heard anecdotal tales about linking voluntary accident and disability insurance to reductions in workers’ compensation claims. However, there wasn’t any proof behind the rumors until now.

In a recent survey, employers were asked whether they experienced a reduced number of workers’ compensation claims as a result of including accident or disability insurance in their benefits portfolios. The Aflac Workers’ Compensation Report revealed that 42 percent of all companies providing access to voluntary accident and disability insurance policies experienced declines in their workers’ compensation claims.1

According to the National Safety Council, every 10 minutes 740 people will suffer disabling injuries in the U.S. which come at a cost to employers.2 In fact, in 2011, workers’ compensation benefits cost American employers $77.1 billion.3

The survey also found that 55 percent of large companies offering accident insurance reported declines in workers’ compensation claims, while 34 percent of small- and medium-sized companies each reported declines. Employers surveyed were also asked about the significance of those declines. Here are the survey findings4 :
  • 14 percent of all employers reported declines of 50 percent or more, while 17 percent reported declines of 25 to 49 percent.

  • 12 percent of large businesses reported reductions of 50 percent or more, while 29 percent reported declines of 25 to 49 percent.

  • 13 percent of medium businesses reported reductions of 50 percent or more, while 14 percent reported declines of 25 to 49 percent.

  • 15 percent of small businesses reported reductions of 50 percent or more, while 9 percent reported declines of 25 to 49 percent.
Moreover, despite nearly 3 million nonfatal workplace injuries and illnesses reported by private industry employers in 2012,5 only 7 percent of workers feel it’s extremely likely they or a family member will become disabled in the future.6 This research data further confirms how unprepared and financially vulnerable employees can be if faced with a serious accident or sickness without a safety net. Educating employees and providing access to voluntary accident or disability insurance is a key component to help employers’ control costs while enhancing benefits offerings.

Additionally, of those who provided access to disability insurance, 47 percent of large employers reported overall decreases in workers’ compensation claims; 43 percent of small companies and 33 percent of medium companies also reported declines.1
Participants whose companies offer disability insurance were also asked to gauge the significance of the declines. The results revealed4:
  • 15 percent of all employers reported declines of 50 percent or more, while 15 percent reported declines of 25 to 49 percent.

  • 11 percent of large employers reported declines of 50 percent or more, while 20 percent reported declines of 25 to 49 percent.

  • 18 percent of medium employers reported declines of 50 percent or more, while 7 percent reported declines of 25 to 49 percent.

  • 18 percent of small employers reported declines of 50 percent or more, while 17 percent reported declines of 25 to 49 percent.
What do these findings mean for brokers? These results confirm the link between voluntary accident and disability insurance, and reduced workers’ compensation claims. Producers are now able to stress the potential positive effects of accident and disability coverage on workers’ compensation claims.

Moreover, the high percentage of companies that don’t currently include voluntary insurance among their benefits offerings presents a great opportunity for brokers. Employers were asked whether they currently make voluntary accident insurance available to their workers and 58 percent said they do not. When asked whether they currently make voluntary disability insurance available, 50 percent said no.1

By focusing on these two voluntary products and arming themselves with these statistics, producers have alternate revenue streams to potentially grow their businesses. Producers who offer their clients a benefits strategy that includes both core and voluntary products will have a competitive advantage while helping employers’ mitigate rising costs.

1The Aflac Workers’ Compensation Report reflects a survey conducted in November 2013 by Aflac and Lieberman Research Worldwide. Survey participants included 600 employers at small, medium and large U.S. companies. Small employers are defined as those with three-99 employees. Medium employers are defined as those with 100-499 employees.
2 National Safety Council, Injury Facts, 2011 Edition.
3Workers’ Compensation: Benefits, Coverage, and Costs, 2011, National Academy of Social Insurance, August 2013, http://www.nasi.org/press/releases/2013/08/press-release-workers-compensation-benefits-employer-cost, accessed on April 3, 2014.
4Significant declines are defined as reductions in workers’ compensation claims of 50 to 74 percent; very significant declines are defined as reductions in workers’ compensation claims of 75 percent or greater. Moderate declines are defined as reductions in claims of 25 to 49 percent. 5Bureau of Labor Statistics “Workplace Injury and Illness,” http://www.bls.gov/news.release/osh.nr0.htm, accessed on April 3, 2014.
6 2014 Aflac WorkForces Report, a study conducted by Research Now on behalf of Aflac, January 2014.

This article is for informational purposes only and is not intended to be a solicitation.
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