Factors influencing the cost of workers' compensation claims: The effects of settlement method, injury characteristics, and demographics

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Abstract
This paper estimates an empirical model of the total costs of finalised workers' compensation claims. The sample was comprised of 8232 claims, made by workers in Western Australia, that were closed in 1990. It is reported that the variables representing the method of claim settlement is an important determinant of the cost of individual workers' compensation claims. In addition, it is also found that type of injury, gender, age, and occupational classification have significant effects on the model. Workers who, sustain musculoskeletal injuries, are male, and/or who are white collar workers incur significantly more costs. In addition to these effects, a positive linear relationship between age and costs was also observed. The empirical models, of the kind specified in this paper, may be capable of performing a useful prescriptive role in rehabilitation programs. Such models can enable "problematic" cases to be identified early in the claim process, so that they might be appropriately referred for intensive rehabilitation intervention.