ECONOMIC-EFFECTS OF WORKERS COMPENSATION IN THE UNITED-STATES - PRIVATE INSURANCE AND THE ADMINISTRATION OF COMPENSATION CLAIMS

Using a sample of workers' compensation claims from New York, this art icle investigates the probability that the claimant and insurer will n egotiate a settlement rather than adjudicate the claim; (2) the size o f the settlement, if settlement occurs; (3) the size of the award if t he claim is adjudicated; and (4) factors determining the extent of the insurers claim adjustment efforts. The findings show that insurer adj ustment activities increase settlement probability and that a 24%-25% discount rate is required to equate lump sum settlements with the bene fit stream paid by an adjudicated award.