How do settlements help manage your costs?

Settlements can help you manage costs and bring closure to your injured workers. A settlement is an agreement between you, the injured worker and BWC.

A settlement can include one or more claims. When a settlement becomes final, the injured worker receives a lump sum payment. Injured workers receive no additional compensation and/or benefits once their claim(s) has been settled.

There are two types of settlements, partial and full.

• Partial settlement means settling only certain conditions and/or benefits, either medical or indemnity (compensation). Although a claim may be partially settled a reserve still exists. A reserve is the estimated future value of a claim.
• Full settlement means settling all allowed conditions and benefits, both medical and indemnity (compensation).

Settlements also may reduce claims costs, which impact premiums. A settlement fixes the claim cost, which then allows the premium to reflect the settlement amount and possibly reduce the employer's premium. Settlements also reduce the number of claims BWC has to manage, thus, reducing the overall administrative costs.

The claims costs used in the experience following a settlement will be the actual payments made to date, both medical and indemnity (compensation), and will include the settlement amount. Once settled, BWC will no longer include a reserve in the employer's experience.