What type of discount is applied to claim values for medical-only claims?

Medical-only claims typically involve lower overall costs compared to claims that include lost wages or other types of indemnity payments. The rationale behind applying a specific discount in these claims is to account for the expected reduced risk and administrative costs associated with handling medical-only cases as opposed to full indemnity claims.

In this scenario, a discount of 70% is applied to claim values for medical-only claims. This significant discount reflects the reduced complexity and expenses involved in these types of claims, recognizing that they generally involve just medical treatment without the additional costs tied to lost income or other damages. By establishing such a discount, insurers are able to manage risk more effectively while also ensuring that appropriate reserves are maintained for more complex cases.

This approach is particularly aimed at incentivizing faster resolutions of medical-only claims and reflects industry practices aimed at streamlining claims administration and reducing overall claim costs.