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4 Ways To Prevent Workers’ Compensation Fraud

4 Ways To Prevent Workers’ Compensation FraudThough ideally fraudulent claims would not exist, exaggerated or falsified workers’ compensation claims occur more frequently than they should. Though statistics from PBS show that only 1-2% of workers’ compensation claims are fraudulent, any dishonest compensation claim can be very costly for a company, and will be especially damaging for smaller businesses. In order to prevent a false claim from damaging your company, it is important to have Workers’ Compensation insurance coverage, and you can take preemptive measures in order to prevent claims.


One of the best ways to prevent workers’ compensation fraud is identifying possible red flags and warning signs before they happen. Memic recommends screening all potential employees during the hiring process and running thorough background checks to identify potential problems with prospective hires. In addition, there are certain red flags to keep an eye out for during the hiring process. A candidate who has a criminal history, has frequent “job-hopping” on their resume, exaggerates, and does not have very good recommendations from former coworkers could be a potential trouble source.

Prevention and Training

As Leavitt Group states, studies have shown that educating employees on the details and consequences of the workers’ compensation system will help to decrease fraudulent accusations. If you ensure that your employees completely understand that they are welcome to seek workers’ compensation for legitimate injuries while emphasizing the consequences for fraudulent claims, your employees will have a better awareness of the potential aftermath of committing fraud. In addition, many experts recommend an anonymous fraud-reporting system in order to further investigate potential trouble sources.

Accident Response

Preventing workplace accidents is a good method to reduce workers’ compensation suits, but it is impossible to completely prevent accidents, and thus it is crucial that you implement an effective workplace safety policy and accident response plan. Documenting all of the accident’s details will also prove to be beneficial in the event of a compensation claim.

Working with Your Employees

In addition to communicating with employees about the details of workers’ compensation, you can work with your employees in order to improve morale and to find out about potential trouble before it occurs. If an accident does occur, it is important to communicate with the injured party and the rest of your employees; communicating with the injured employee will help them to feel more valued, and paying attention to the office grapevine could clue you in to potential fraud. According to the Coalition Against Insurance Fraud, “the strongest predictor of fraud is a chronically disgruntled workforce.” Maintaining good working conditions and encouraging a positive work environment will lessen the chances of fraudulent claims.

About ASIA

Associated Specialty Insurance Agency, Inc. has been “The Workers’ Compensation Specialist for Brokers and Agents” for two decades, and is committed to providing brokers and insurance agents across the East Coast with expertise and services to develop a Workers’ Compensation policy. For more information about how we can assist you with claims management, anti-fraud measures, and more, call 610-543-5510 to speak with one of our professionals.


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