FACTORS INFLUENCING MODE OF CLAIMS SETTLEMENT IN WORKERS COMPENSATIONCASES

This paper examines the variables that influence the means by which 10 192 injured workers settled their compensation claims during 1990. Th e data on which this study is based come from a state in Australia whe re there are three means by which workers' compensation claims can be settled by lump sum payment: settlement following a specific injury pa yment, early settlement payment and settlement following a common law payment. This paper is specifically concerned with identifying the var iables that determine whether the claim will be settled by a lump sum payment and whether different modes of claims settlement by lump sum a re unique and predictable from a range of variables that include injur y characteristics and demographics. The results of logistic regression modelling revealed that those who received a lump sum settlement coul d be reliably distinguished from those who did not receive such a paym ent. Each mode of settlement varied in the extent to which it could be predicted. Contrary to expectations, the most difficult form of settl ement mode to predict was that of specific injury payments (4% accurat e) with the most predictive being early settlement payments (81% accur ate). Common law payments were also highly predictable (48% accurate). The form of lump sum payment received by injured workers was found to depend on a range of injury characteristics, indices of severity and for common law payments, gender and potential income loss. It is argue d that although injury characteristics play a part in the process of c laims settlement, personal circumstances and insurance company policie s are influential in dictating the form by which workers compensation cases are finalized.