Workers' Compensation (WC) claims filed within 24 hours of an injury cost 30% to 50% less than those reported after a week, according to Dr. Claire Muselman, professor at Drake University. Muselman is a Human Behavior Scientist at Drake University. Her research integrates neuroscience with claims management through the Kelley Center for Insurance Innovation, advancing transformative approaches across the industry.
During her presentation, Muselman shared how delayed claims reporting creates a cascade of problems that drive up costs and damage employee trust.
Continue reading for an overview of Muselman’s presentation.
Muselman defines lag time as the duration between when a workplace injury occurs to when it is reported to the claims team. Lag time stems from several factors, including employee fear of consequences, unclear processes, and organizational barriers. Many workers worry about job security or blame, while supervisors often lack clear protocols for handling incidents.
"The longer it takes to report a claim, the harder it's going to be to mitigate the risk that is associated with it," said Muselman.
One of the most significant cost drivers is attorney involvement, which Muselman said typically increases claim reserves by at least one-third.
"If you don't have a clear, outlined plan, they will go find someone who has these answers, and it tends to be somebody who can represent their legal interests," she explained.
Basic attorney involvement can cost employers $7,500 to $10,000 per claim, even for routine cases.
Beyond financial implications, delayed reporting erodes employee trust and engagement. Studies show that employees who don't feel supported after an injury are 60% more likely to disengage from work. In comparison, those who perceive employer support have a 70% lower chance of developing anxiety or depression symptoms.
"You're either adding value to relationships or you're not," Muselman said. "When someone gets injured, they're automatically [getting into a] vulnerable state. This is one of the most optimal times to build trust with your employees."
Early return-to-work programs can reduce claims costs by 50% to 70%, with employees who receive immediate supervisor support returning to work an average of 21 days sooner than those who don't.
The psychological benefits extend beyond the injured worker. Muselman noted that workplace relationships suffer when clear guidelines aren't established, as colleagues and supervisors often don't know how to interact with injured employees.
Delayed reporting also affects physical recovery. When employees experience prolonged stress about their injury status, their bodies release cortisol and other chemicals that increase inflammation and slow tissue healing.
"Our tissue does not heal when the body is in an inflamed state and can prolong our recovery," Muselman said.
Muselman recommends employers create detailed incident reporting checklists, train leadership teams on their roles, and develop return-to-work toolkits. She emphasized that clear communication and immediate action are essential.
"Everything is figure-out-able," she said. "We just need to be better at dealing with them when they do arise."
Organizations that implement comprehensive reporting systems have seen dramatic results. Some have reduced overall WC spending by $500,000 annually while improving employee engagement scores by 30%.
This presentation was part of Captive Resources’ Risk Control Webinar Series — regular installments of webinars to educate the group captive members we work with on topics like workplace safety, organizational leadership, and company performance. The thoughts and opinions expressed in these webinars are those of the presenters and do not necessarily reflect Captive Resources’ positions on any of the above topics.
