The Determinants of Injury Compensation Claims in a Universal Claims Environment

Abstract

Injury compensation claims data are frequently used to measure injury trends; however other factors can influence claiming behaviour, such as the financial incentives within the insurance setting. Previous studies have looked at the determinants of claims within a workers’ compensation claims environment. I make a unique contribution by looking at the determinants of claims within the universal no-fault accident compensation environment in New Zealand. The determinants are expected to differ from previous studies due to the different claiming incentives in a universal environment.

Chapter 2 provides some background on the legislative settings and chapter 3 reviews what is known in the literature about the determinants of injury claims. Chapter 4 describes the economic theory used to consider incentives in a universal claims environment and contrasts it with a workers’ compensation environment. I describe the data used for this research in chapter 5. The source is the Statistics New Zealand Integrated Data Infrastructure, an anonymised longitudinal linked unit record dataset.

In chapter 6 I use data on self-reported injury to look at how many injured people have an accepted compensation claim. I find that a third of people with a self-reported injury at work did not have an ACC claim. There is no significant difference in claiming rates between work and non-work injuries. Propensity to claim varies by age and ethnicity, most likely reflecting attitudes and access to healthcare treatment. The findings indicate that access to healthcare may be a stronger determinant for claiming work-related injury under workers’ compensation than the requirement for proof that the injury is work-related.

In chapter 7, I investigate a policy intervention, experience rating, which aims to incentivise employers to improve safety but may inadvertently result in underreporting of injury claims. I find that experience rating is associated with a small, but not statistically significant, decrease in work claims, with some possible spillover effects in reducing off-the-job injury. This suggests that, on average, any decrease in work claims was not achieved through shifting claims from the work account to the earners’ account.

Having studied underreporting of claims, chapter 8 looks at a section of the literature on overreporting of claims. Research in a workers’ compensation environment consistently finds a higher number of injuries on a Monday (Campolieti & Hyatt, 2006; Card & McCall, 1996). One theory is that workers claim off-the-job weekend injuries as occurring on the Monday at work to receive workers’ compensation. I test this within the New Zealand environment in which compensation is identical for both types of injuries. I find excess claims for work and off-the-job injury on Mondays. I also find excess claims on a Tuesday. This indicates that incentives in a workers’ compensation environment to fraudulently claim weekend injuries as happening at work on the Monday is likely to only be part of the explanation for excess claims at the start of the week.

Claims data provide a powerful source of information about the injury environment. The findings in this thesis indicate that a universal claims environment generally promotes lodgement of injury claims and discourages misreporting to a greater extent than that found under workers’ compensation schemes.