If You’re Not Measuring Claims Rate, You’re Guessing

“We had more claims this year.”

That statement means almost nothing.

If your company grew 40%, hired seasonal workers, or acquired new divisions, of course claim counts changed.

Raw numbers lie.

What tells the truth is your claims rate.

What Is Claims Rate?

Claims rate answers one question:

How many claims are we having relative to our workforce size?

The formula mirrors OSHA’s approach:

Number of claims × 200,000 ÷ total hours worked

Why 200,000?

Because it represents 100 full-time employees working 2,000 hours per year.

That normalization allows you to compare:

• Year over year

• Division to division

• Location to location

• Company to industry

It turns noise into meaning.

Why It’s So Powerful

Let’s say:

Year 1:

• 250 employees

• 10 claims

Year 5:

• 850 employees

• 25 claims

At first glance, it looks like things got worse.

But after normalization, you might discover:

• Year 1 claims rate: 20

• Year 5 claims rate: 12

You improved.

Without claims rate, leadership assumes growth caused cost.
With claims rate, you can show safety performance improved.

That’s a different conversation.

Connecting Safety to Financial Results

Remember the two macro levers:

• Frequency

• Severity

Claims rate measures frequency properly.

If claims rate declines, you are reducing one of the two cost drivers.

Now you can say:

“Our safety initiative reduced claims per 100 employees by 30%.”

That’s powerful.

It moves safety from “culture talk” to measurable financial impact.

Claims Rate vs. TRIR

TRIR (Total Recordable Incident Rate) is excellent for benchmarking against industry.

Claims rate is often easier operationally because it can be pulled directly from the loss run.

Both are useful.

The key is normalization.

If you aren’t adjusting for hours worked, you are guessing.

Where to Use It

Use claims rate to:

• Compare locations (worst to best)

• Evaluate new safety directors

• Measure initiative impact

• Validate acquisition performance

• Defend budget requests

If a location’s claims rate is double the company average, that’s where you focus.

Not where raw claim counts are highest.

Because large facilities will always have more raw claims.

Claims rate shows performance.

The Executive Story

When presenting to leadership:

1. Show cost per FTE.

2. Show total cost trend.

3. Then show claims rate trend.

If claims rate is improving, you’ve reduced one of the two levers.

That’s meaningful.

Safety becomes measurable.

And measurable performance gets funded.

Michael Stack, CEO of Amaxx LLC, is an expert in workers’ compensation cost containment systems and provides education, training, and consulting to help employers reduce their workers’ compensation costs by 20% to 50%. He is co-author of the #1 selling comprehensive training guide “Your Ultimate Guide to Mastering Workers’ Comp Costs: Reduce Costs 20% to 50%.” Stack is the creator of Injury Management Results (IMR) software and founder of Amaxx Workers’ Comp Training Center. WC Mastery Training teaching injury management best practices such as return to work, communication, claims best practices, medical management, and working with vendors. IMR software simplifies the implementation of these best practices for employers and ties results to a Critical Metrics Dashboard.

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

Injury Management Results (IMR) Software: https://imrsoftware.com/

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