Workers' compensation insurance

Workers' compensation insurance pays medical costs and lost wages for employees hurt on the job, regardless of who was at fault. It is compulsory for most employers and administered under separate rules in each jurisdiction.

An employer buys a policy, or in some jurisdictions self-insures, with the premium set by payroll and the riskiness of the work performed. When a worker is injured or falls ill because of the job, the claim goes to the insurer or fund rather than to court, and it pays for medical treatment, a share of lost wages while the worker recovers, and compensation for any lasting impairment.

The arrangement is often called the grand bargain: an injured worker gets benefits without having to prove the employer was negligent, and in exchange gives up the right to sue the employer over the injury. The friction sits in the edges the trade-off does not settle cleanly: whether an injury or illness is really work-related, how a job should be classified for pricing, and how long a partial disability should be paid for.

In insurance technology the work clusters around classifying employers into the correct risk category, pricing and issuing policies for small businesses that a large carrier would otherwise find too costly to underwrite individually, and moving claims through medical treatment and back to work with less paperwork and fewer disputes along the way.

Written by Insurtech Daily.