Implications of the Frequency and Duration Estimates

HR practice Impact on claim frequency (%) Impact on claim duration (%) Overall impact on indemnity costs (%) Indemnity cost change per employee ( ) (per std. dev. change) 

NOTE Based on 1996 average lost-time workers compensation costs per employee of 175.50 in our sample (12 percent of claims were still open). 

As an example, if a firm were to go from using two to using three financial returns programs (Employee Participation in Financial Returns went from 2 to 3), then claim frequency would fall by 23 percent and claim duration would fall by 13 percent. Lost work-time benefit eosts 

It is worthwhile to reemphasize that our estimate of the reduction in workers compensation costs from engaging in these HRM practices is probably a lower bound estimate of the potential benefits. To the extent that the workplace is safer, either because physical risks have been reduced or because workers are taking more appropriate safety precautions, then some other accident costs are likely to be reduced as well. Uncompensated wage loss and pain and suffering associated with 

EPDEG does appear to be associated with greater claim severity (the significant EPDEG coefficients in the center and right colunms). An increase in epdeg also is estimated to increase claim duration in the individual claimant analysis in Table 3.4, as we will show shortly. 

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