More than 1 in 10 Small Businesses are Concerned Their Employees Would Commit Workers’ Compensation Insurance Fraud, Study Finds

RENO, Nev. — July 14, 2015— a new poll found that more than one in 10 small business owners (13 percent) are concerned that one of their employees would commit workers compensation fraud by faking an injury or illness in order to collect benefits. It also found that nearly one-quarter of small business owners (24 percent) have installed surveillance cameras to monitor employees on the job and that one in five (21 percent) business owners feel unprepared or unsure of their ability to identify workers compensation fraud.

Workers compensation insurance is designed to protect employers and employees should an on-the-job injury or illness occur. While rules and plans differ among states, in general, these benefits include weekly payments in place of wages and payment of related medical and rehabilitation expenses. Claim-related workers compensation fraud happens when an employee tries to gain workers compensation insurance benefit by falsely stating that an injury or illness occurred at work, or by exaggerating an existing injury or illness. Workers compensation fraud is a serious crime that can strain business operations, lead to higher insurance costs for businesses, and even undermine honest workers who are legitimately injured on the job, said Ranney Pageler, vice president of fraud investigations at EMPLOYERS. As part of its survey, EMPLOYERS asked small business owners to identify potential indicators of claim-related workers compensation insurance fraud. The activities cited by more than half of respondents included: The employee has a history of claims (58 percent); There were no witnesses to the incident (52 percent); The employee did not report the injury or illness in a timely manner (52 percent); The reported incident coincides with a change in employment status (51 percent). When we look at fraud cases that result in criminal convictions, about half of them are caught within the claims process itself and the other half are tip-offs from the co-workers, friends or family members, or from workplace surveillance video, Pageler explained. Within the claim examination process, common red flags he cited include an employee using a false social security number, having previously undisclosed injuries or medical conditions, or having a permanent total disability claim with total medical costs of less than $500 over a 12-month period. There is no silver bullet when it comes to identifying claim-related workers compensation insurance fraud, Pageler said. Instead, you’re looking for a pattern of events or multiple indicators that suggest something may be amiss.

Some of the warning signs that Pageler recommended small business owners look for include:

Pageler advises that employers who suspect an employee may be committing claim-related workers compensation insurance fraud should first alert the special investigations unit or fraud unit within their insurance company’s claims department. The appropriate law enforcement authorities will likely be brought into the investigation, as well. Workers compensation claim-related fraud can be a costly crime, but by knowing what signals to look for, policyholders can potentially minimize the costs or damage and protect their businesses.

EMPLOYERS facilitated a telephone survey of small business decision makers through the SSRS Small Business Omnibus Survey. Interviews were completed with a nationally representative sample of 501 small businesses that have fewer than 100 employees. Data were weighted by number of employees, region and industry to reflect the proportion of small businesses in the United States. The margin of error is +/-4.4%. Fieldwork was conducted from May 14 and 29, 2015.

Contact Information

Media Contact: Lauren Meckstroth, The Abbi Agency
(775) 446-4678 or

Company Contact: Mike Paquette
(775) 327-2562 or

Investor Relations Contact: Adam Prior, The Equity Group, Inc.
(212) 836-9606 or

About Employers Holdings, Inc.

EMPLOYERS® and America’s small business insurance specialist® are registered trademarks of EIG Services, Inc. Employers Holdings, Inc. is a holding company with subsidiaries that are specialty providers of workers’ compensation insurance and services focused on select, small businesses engaged in low-to-medium hazard industries. The Company operates throughout the United States, with the exception of four states that are served exclusively by their state funds. Insurance is offered through Employers Insurance Company of Nevada, Employers Compensation Insurance Company, Employers Preferred Insurance Company, Employers Assurance Company and Cerity Insurance Company, all rated A- (Excellent) by the A.M. Best Company. Not all companies do business in all jurisdictions. See and for coverage availability.