Definition: The average lost time claim cost is the cost of all lost time claims divided by the number of all lost time claims during an injury year. The average medical only claim cost is the cost of all medical only claims divided by the number of all medical only claims. The average cost per claim is the total cost of all lost time AND medical only claims divided by the number of all lost time claims AND medical only claims. Formula: (Lost Time Claims Costs + Medical Only Claims Costs) / (# Lost Time Claims + # Medical Only Claims)

Importance: Measuring the average cost per claim is important in order to assess the change in value of average claim costs over time, comparing the current assessment period against the same periods of time in prior years or periods. If the average cost per claim is increasing over time, then either medical costs of claims or indemnity costs, or both, are increasing. Conversely, if the average cost per claim is decreasing over time, then either medical costs of claims or indemnity costs, or both, are decreasing. Average costs per claim that decrease over time are the target direction for costs to move.

The target for FY2017 is an Average Cost Per Claim of $1,672.00, which is a 10% reduction from the prior fiscal year’s average of $1,858.83. This new target is based on actual historical trend data for the past five fiscal years, which shows a decreasing trend in the average cost per claim.