Controlling Workers Compensation Cost – Case Study 

workers comp case study

Table of Contents

This is a case study that explains how an agent helped their client control their workers compensation cost.


A claim just occurred, and a worker was not going to be able to return to work for 30-45 days. The business owner wanted to know if it made financial sense to keep the worker on full payroll for those 30-60 days or let the insurance company make the indemnity payments to the injured employee. 


  • The company is paying about $57,000 a year in workers’ compensation premium
  • Their current mod value is 0.77
  • The cost to pay the injured worker for those 30 – 60 days is approximately $1,300 a week or $5,200 to $10,400
  • The current medical-only reserves were $11,300

In this state in the experience mod calculation Medical Only claims have their loss value reduced by 70% whereas Medical/Indemnity Claims do not.  Even though the mod value will not change until 2024, the actions taken today will affect that.

When the information was entered into Mod Advisor Analytics, it was projected that the Medical only claim would increase the mod value from .79 to a .89.  If the claim was converted to a temporary indemnity claim and the value of the claim increased to $20,700 ($11,300 + $10,400) and the mod value increased to 1.04.  So the difference in the mod value from a medical-only claim to a medical/indemnity claim is 15 points.   

To calculate the premium impact we’ll take the annual premium multiplied by the increase in the mod value.  $57,000 x .15 = $8,500.  Over 3 years this would be $25,650.


In this situation, it would be advantageous for the business to pay the continued wages directly to the employee.  If the business spent $10,400 in wages they would be saving $15,250 in increased premium. A discussion helped this company save when it came to their workers compensation cost.

Are you discussing claims with your broker?