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One-fifth of workers compensation claims account for about four-fifths of total claim costs. If a company could only identify these problem claims in advance, it could greatly reduce its workers comp expenses. However, most of these high-cost claims are not obvious at first; they emerge slowly over time.
One method used by insurers to aid detection is prédictive modeling. But to maximize any model's utility, there are several vital factors to consider.
Philosophy
It is critical to understand the carrier's claims philosophies in two areas even before diving into the specifics of an insurer's predictive model. First, does the insurer understand that managing workers comp costs requires treating the whole person rather than just the injury? Focusing only on the injury fails to take into account the factors that often determine the success, length and ultimate cost of treating the injured worker.
For example, imagine an employee with a work-related knee injury. Because pain is subjective, a host of psychological issues come into play. Does the injured worker believe he or she can manage the pain? Does the claimant believe the injury is a minor obstacle...