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Combined Ratio South Carolina NCCI Advisory Forum Shocker

December 10, 2018 By JL Risk Management Consultants

US Combined Ratio Falls Even Further to Historic Lows

US Results

The US had its best Combined Ratio last year since the 1950s and is improving even more. The current Combined ratio is .89 nationwide.

Wikimedia Public License

I first heard about the incredibly low ratio at NCCI’s Virginia Advisory Meeting in September of this year. The Combined Ratio for 2016 was .94. The ratio remains under 100% for more than three years.

The last time that carriers experienced a Combined Ratio this low was .93 in 2006.

NCCI predicts the Combined Ration will be even lower for 2018 = .88. Usually, the Combined Ratio will “bottom out” with a low figure then increase to a higher level. Two years of incredibly low Combined Ratios looks great for any comp-only carrier or any carrier that writes WC coverage.

See the chart below for Combined Ratios over the last 20 years.

For many years, the other lines of coverages – think General Liability, Property, Errors and Omissions- contained enough profit to cover the terribly high combined ratios of 1.1 or higher.

Let’s stop and put that into perspective. The Combined Ratio is calculated by dividing losses by earned premium or

Losses + Expenses / Earned Premium

or in basic form

Funds Carriers Paid Out / Funds Carrier Took In

$40.1 Billion net written premium in first six months of 2018. State Fund’s share of written premium has shrunk. 0% change in net written premiums. Payroll is still the main driver in premium changes. Rates and Loss Costs = -10%. Claims frequency has fallen while being offset by a moderate increase in claims cost.

South Carolina Results

The South Carolina payroll figures are comparable to the US. South Carolina’s combined ratio was .97 for 2017.

This equates to an 11% profit on Workers Compensation nationwide or a 3% profit margin for South Carolina.

Carriers presently not able to provide more significant discounts as in the past due to their internal ROI is presently lower.

Loss reserve analysis – look this up online.

In 2016 – 2017 SC loss frequency fell by 6%. Indemnity claim severity increased 4%. Medical claim severity increased 4%.

Frequency decreased 2% for SC in 2015 and 2016.

SC does not have a burn center. There were three to four severe burn claims that experienced out-of-state fees that are not covered by a fee schedule as the injured employees had to be treated outside of SC.

SC NCCI recommended 9.2% decrease for 4-1-19 loss cost filing.

SC Change in Experience of 8.3% was responsible for most of the recommended loss cost decrease.

SC Legislative Issues – A few Opt Out bills were introduced by the Legislature but nothing happened with them. The bills were based on the Texas Opt Out Model

Other NCCI Information

US – 844 bills introduced that were WC related, 474 were NCCI states, 94 bills were enacted – 111 first responder bills.

NCCI also covered:

South Carolina and National Residual Marketplace
Marijuana
Opioids

One survey question that caught my eye at the end of the Advisory Forum consisted of asking whether or not an in-person Forum or a webinar would be preferable. This leaves one to think that NCCI may be heading to webinar-based Forums.

The November 29th NCCI State Advisory Forum slides are here. The file is a PDF. I recommend taking a few minutes and reading up on the US and South Carolina statistics including the Combined Ratio.

Workers Comp Technology Found At 2018 NWCDC Conference

December 6, 2018 By JL Risk Management Consultants Leave a Comment

Workers Comp Technology – Found 1.5 Vendors At The Big Brouhaha

Most Workers Comp Technology equates the proverbial needle in the haystack euphemism. Yesterday, I walked through all of the booths at the NWCDC Conference. Yes, it was eight hours of the same things that I saw at the first conference I attended 10+ years ago.

As with my search for Workers Comp apps (ouch!), workers comp technology or really anything new in the space is almost mythical. Usually what happens is I find some tech company that is branching out from health insurance.

My usual path takes me to the outside and back of the booths. There lie the newer companies putting their toes in the water before jumping in over their heads. As with most conferences, the last booth I come to are the ones that seem to have something to offer at the forefront of “new and improved.”

Yes, I realize that we all need bill review, a claims processing system, and similar companies. Many companies say that they save money, but then again how do you save on a pure expense?

I came across a company that offered a simple yet amazing use of virtual reality (VR) as a great addition to workers comp technology.

Lincoln Nguyen spoke to me at his booth about a great idea in Workers Comp technology – best one at the NWCDC Conference. The company’s byline is:

KARUNA – Rewire your brain. Unlearn your pain.

Lincoln’s company hails from San Francisco. He provided me with two websites on his business card. They are KarunaVR.com and chronicpain.io

Lincoln and his partner (woops do not have his name) transitioned over from the health market as many of the new worker’s comp technology company have over the past decade.

Using VR to teach an injured worker to not replicate any movements that would reinjure themselves would create a boon for a return to work program. The three areas that the Karuna website covers:

Detailed analytics to see how the worker progresses
Evidence-based and
Non-opioid – basically no drugs needed.

I am reading the company’s website as I write this for the first time. Check out the link to his website. Stop by Karuna’s booth in the back right corner of the vendor area.

I found another company that had no booth which was bringing back a prior workers comp technology – more on that company next week.

Filed Under: technology

NWCDC Conference 2018 – Looking For True Technology

December 5, 2018 By JL Risk Management Consultants Leave a Comment

The NWCDC conference 2018 is tomorrow. I plan to attend and go through the vendor area to see if there are any new technologies. The last few years have been a little disappointing as Workers Comp has been overall.

I thought I was not going to make it this year. Unfortunately, I had to miss the 2017 conference. Some of the more advanced we’re Proov Pharmaceutical testing and the beginning of Telemedicine

At the New Orleans Conference, a simple one crutch was a great low tech but yet highly useful Durable Medical equipment. Some things do not need a chip in them to be a cutting-edge tool.

Quite a few NWCDC conferences really had nothing to offer in the tech area. No blame can be placed with the conference. Most conferences trail health insurance greatly.

My annual searches for apps in Workers Compensation have not been that fruitful either. I am in the air typing this on my phone so this may be an unclean version.

If you see this article and want me to check out any vendor or class at the conference let me know. Text me at 919 495-1917 or comment below.

The conference features a robotics area. This should be in the vendor area. I am going into the conference “cold”. I have researched nothing.

I usually spend a few hours researching the vendors and the sessions. Due to a packed schedule that will not happen this year.

The Claims based sessions usually provide a few good ideas. If anyone reading this would like to meet up please text me on my above phone number.

Now that I think about it, going in cold may be an advantage. Winging it sometimes proves fruitful.

I have not even signed up yet. Nothing like doing a walk in. I will be in the vendor area Thursday. See you there at the NWCDC 2018 Conference.

Filed Under: Misc, NWCDC

Workers Comp Medical Cost Terms – Back To Basics

November 29, 2018 By JL Risk Management Consultants Leave a Comment

Workers Comp Medical Cost Terms – A Few That Have Caused Confusion

picture billboard workers comp medical cost term

Wikimedia Commons Tony Berkshire

Most Workers Comp medical cost terms are very easy to understand. However, there are a few that, in my recent conversations, have caused confusion and concern.

These terms are a little more specific than the general terms that you will see in a Workers Comp claim or medical network. Some of these workers comp medical cost terms are easily recognizable. Others may look new.

PPO

The health insurance industry first coined this term in the 1980s. A medical provider in a PPO or preferred provider organization will discount their services in some way to patients. These patients, their insurance company, and the medical provider have all operated under some discount agreement. The agreement stems from the medical provider receiving higher volumes of patients for a discount.

Workers Comp PPO networks flourished in the 1990s until today. However, many Work Comp insurance carriers and their insureds may only receive a PPO network discount as part of a drive-by arrangement where the employee just happens to use one of the PPO network providers.

The drive-by situation, of course, is not a good use of the PPO network. After all, most workers compensation adjusters have their set of physicians that they like to deal with in claims. If the adjusters’ preferred medical providers are on the PPO list, then the optimal situation has occurred for the injured employee’s treatment.

One of the large conundrums is matching up the claim department’s favorite industrial-minded medical providers with the PPO providers.

PPO Penetration Rate

If the situation in the previous passage caused the injured employee to treat at a non-PPO medical provider, the penetration rate to be much lower than what is optimal. Then again, if the employee is receiving adequate care outside of the PPO network, should her/his treatment be moved to a medical provider just to save 15% on some of the medical costs?

This workers comp medical term is another conundrum for claims departments and PPO’s.

Durable Medical Equipment

Durable medical equipment remains a highly concerning workers comp medical term – why? Most states do not fee schedule DME’s. DME’s costs can be extremely high in WC.

The PPO network mentioned previously should have access to DME providers. If a state does not have a fee schedule for DME’s then the cost savings would generate from the adjuster’s direct negotiation with a DME provider. The PPO penetration rate goal for DME’s should be set at 100%. That is if the PPO network used has a viable DME component.

Usual and Customary Rate

If no fee schedule exists in a state, then a Usual and Customary or U&C rate becomes the claims payor rates in a certain state. U&C rates are considered another frustrating workers comp medical term. U&C can be calculated by Zip Code, phone number, or a certain part of a city. The variation in these rates is extreme in a certain state.

When I was assisting in closing out a claims load for a defunct captive, the providers (often hospitals) would have attorneys sue the captive very quickly if the carrier questioned or tried to negotiate the U&C rate.

The PPO penetration rate becomes even more critical in a U&C state. How does an adjuster set medical reserves when they have no fixed rates to estimate what the medical cost of a claim will be over the life of a claim?

These are only a few of the workers comp medical cost terms that have caused confusion over the years.

Filed Under: medical networks

Workers Comp Rating Bureaus Make Mistakes – Who Is Really To Blame?

November 15, 2018 By JL Risk Management Consultants

Are Workers Comp Rating Bureaus Responsible For Rating Mistakes

Most Workers Comp Rating Bureaus are only as good as the data the organizations receive from the carriers.

Wikimedia Public License – KGBO

The data progression on final rates in uncomplicated terms is:

Workers Comp Rating Bureau (NCCI, WCIRB or State Independent) receives data from carriers and member organizations
The bureau’s actuaries compile that data – see Unit Statistical Date for more info
Rates are calculated from extrapolations of this data using current and previous filings by the carriers
Insurance carriers can deviate from those rates using loss cost multipliers for any classification code
Employers pay those carriers’ rates in the policy and at the premium audit.

Let us follow along using the numbers from the above inset to see how this occurred in the Keystone State.

Number 1

Very recently, the Pennsylvania Workers Comp Rating Bureau produced a press release that was covered extensively and exclusively by WorkCompCentral. One of the major carriers allegedly reported their Unit Stat wrong (it happens).

Number 2

The PCRB melded though numbers into their actuarial numbers when the data was compiled.

Number 3

Inflated rates were calculated from those numbers. The carrier was large enough to cause over a $250,000,000+ overcharge (wow) to the insureds in Pennsylvania.

Number 4

Insurers can deviate from those rates using Loss Cost Multipliers to decrease or usually increase the Loss Costs (pure premium rates). The loss costs are usually calculated internally by the carrier’s actuaries with recommendations from the underwriters. One can not be sure if the carriers adjusted the bureau’s erroneous lost costs or used the same Loss Cost Modifiers regardless.

Number 5

The insured employers take the brunt of the erroneous filings by overpaying their premiums based on the erroneous rates.

Questions

My question was and it was posed to the PCRB – why was this large error not caught when the data was reported. The rating bureau said that it was in the range of the allowable data as set by their actuaries. Followup question – were the ranges too large?

My next question would be – How will this Workers Compensation Rating Bureau data error be fixed so that the state’s insureds will see some relief from the overcharges. The PCRB decided to initiate a 10%+ loss cost rate reduction to offset the data error. Then again, what if the carriers adjusted their rates for the increased loss cost rates? Would the carriers then have to readjust their rates again and refile those loss cost multipliers with the Department of Insurance?

My next question is did the carrier (anonymously reported by PCRB) redo all of their prior filings? Yes, they did, so did the insured employers will receive refunds when these new filings occur?

Moral Of The Story

The moral of the article is to always question anything that does not look right with your workers compensation policy; any endorsements during the policy period; your premium audit and bill; loss runs; experience modification factor; or any part of not just your WC policies.

Sometimes even the wrong data comes from the workers compensation rating bureaus.

Filed Under: rate bureau

Workers Comp Investments World Buzzing Now – High Activity

November 8, 2018 By JL Risk Management Consultants

Workers Comp Investments Cycle Returns Anew

Most Workers Comp investments lie in my wheelhouse. Analyzing premiums as Workers Comp investments is why I obtained my ChFC instead of a CPCU. Mark Walls of OutFront ideas is the only other Workers Comp insurance person that examines/analyzes workers comp premiums from the same viewpoint.

picture of workers comp investments money yacht

Wikimedia Island Yacht Club

Many times through the last 20+ years the Workers Comp Investments cycle returns every 4 – 5 years. How do I know of such a period?

I am consulted in each of those cycles at least ten times to render my opinion on the current Work Comp environment, especially the ancillary services such as bill review and rehabilitation nurses<one of my favorite risk management techniques.

Over the last two weeks and likely until the first of the year, I will be speaking with certain investment advisors concerning which TPA’s and ancillary service providers provide the best services for the money they charge their clients.

Looking at my calendars, four years ago was the last time the workers’ comp investment cycle increased massively.

Outside of the cycle, advisors will consult with me on a particular company – now usually a merger or takeover/buyout. A few times it will be one company’s expansion plans.

I cannot comment on the investment advisor companies or the companies which they look to provide capital for various reasons. My ChFC bars me from disclosing information and so do the investment advisors.

One can easily see what companies contribute to a Workers Comp investment cycle by following any of the various publications out there. Feel free to search for them on this blog. I have written two or three articles on which companies provide the best information for my needs.

Beware of one warning now in the WC world. Publications and bloggers exist that may call themselves soothsayers on matters in this niche’. No one knows all about the subject. Trust me on that one.

I was going to write more. However, I have to take a phone call from an investment advisory group. The Workers Comp investments world is buzzing.

Filed Under: Investments

Midterm Elections Have Effect On Workers Compensation?

November 8, 2018 By JL Risk Management Consultants

Non-political Look at Midterm Elections and Workers Compensation

The Midterm elections proceeded through its course with the results coming close to what was expected with a few surprises. Should we worry about the Workers Compensation end of the spectrum? The answer is likely not, at least on the national level.

Public Use License Wikimedia

The midterm election provides very few instances of changing the course of workers compensation in any one state. The national midterms may have an influence, but not a direct result.

Very few law of rules in WC originate on the national level. The state Senate and House races, of course, will always have a direct and enormous effect on Work Comp in any one state.

National Effect

On a national level, the few areas that are changed by any Federal rules or laws would be:

Federal opioid control legislation and Presidential Order
Affordable Care Act and the debate on case-shifting<<Dr. Richard Victor’s analyses while at and post-WCRI
National adjusters license – still at the state level, not nationally recognized yet – it will be soon
Upcoming debate on Federal marijuana legislation – will Workers Comp Courts follow along or defy the Feds?
The battle over the ICC (Interstate Commerce Clause) <<page 59 and state agency laws – agents crossing state lines

State Effect

The state-level effect is undeniable. Workers comp laws, rules, and regulations are in a constant state of flux. Usually, the Democratic House Members House and Senate Members are seen as pro-employee. Likewise, the Republican House and Senate Members are possible more employer-oriented. Once again – as in the title – this is not a political assessment of any type.

Ballotpedia compared the Pre and Post government trifectas midterm elections. A trifecta is when the State House, State Senate, and Governor are all from the same political party. One can easily see that the Democrats gained quite a bit of ground in either turning a non-trifecta state government into a Democratic trifecta or flipping a trifecta from Republican to Democrat.

Conclusion

Can we draw a determination that the future Workers Comp laws, regulations, and rules will all be more pro-employee than the employer? I will leave that to your judgment on the midterm elections.

Filed Under: Political Tagged With: Ballotpedia, ICC, Interstate Commerce Clause

National Adjuster License For Workers Comp Quite Challenging

November 2, 2018 By JL Risk Management Consultants

National Adjuster License vs. Reciprocal Exchange Agreements

The subject of national adjuster licenses created quite a bit of buzz. WorkCompCentral published an article on this very subject a few weeks ago.

California was moving towards the national adjuster license standard. I then read on into the article.

map of striped national adjusters license usa

Wikimedia license

The national adjuster license seemed to be more of a certification process administered by an organization referred to as CLM (Claims and Litigation Management Alliance).

Five states signed onto the UCC (Universal Claims Certification) process: Florida, Texas, Georgia, Alabama and Mississippi. The licensing requirement of the UCC will be more stringent than a state-based licensing program.

The UCC is not meant to replace an adjusters license. The UCC would streamline the process. Various versions of a Bill to advance a national adjuster license standard has died in Congress.

From the CLM website:

The process of licensing independent and staff insurance adjusters has been unnecessarily complex for decades. Most adjusters handle claims in multiple states and are burdened with maintaining multiple licenses and tracking the different renewal criteria for each license. The current system also limits the flexibility needed when a natural disaster occurs and a large number of adjusters are needed promptly in a specific state. Many qualified adjusters are unable to assist in these situations until they can go through that state’s licensing process.

This concept looks like a great idea. I am not sure if it would work for workers compensation adjusters. As an all lines adjuster in 12 states and a consultant in the other 38, some issues would have to be addressed with a workers compensation national adjuster license.

Specificity

Many lines of insurance adjusting do not change that much when a state line is crossed concerning a claim. An adjuster from Minnesota handled my loss from Hurricane Michael. He did a great job – very professional.

One of the main characteristics of multi-jurisdictional workers compensation claims is when adjusting a claim in another state, a whole new pile of laws and rules come into play.

A workers compensation adjuster always has two governing bodies over their claims, not just one. The Industrial Commission (Workers Comp Board) and the respective Department of Insurance in that state.

At one time I juggled 7 states in my adjusting career simultaneously. That was a challenging, yet at times, confusing task.

One Standard

What would one standard look like for all workers compensation adjusters in every state? Would 40 hours of education actually cover enough to update the adjuster’s knowledge to begin immediately adjusting claims in a new state overnight?

The ACORD Form 4 started to become a nationalized form for reporting injuries. The form covers most incident reporting situations very well. A few states still accept the form. This form was my first exposure to a nationalized workers compensation form of any type. The form came with five pages of instructions.

Reciprocal Exchange

The reciprocal exchange environment can be confusing. I count myself fortunate as all the states I have ever applied to as an out-of-state adjuster accepted the hours that I had earned for my resident state license as appropriate for their respective state.

A national adjuster license may save the confusion when it comes to the time of renewal. Remembering what license renewal was required on what date caused me to have to completely re-apply to one state. The only detriment was the extra fees when the license lapsed.

Final Thoughts

The idea of a national adjuster license remains a great idea. The Institutes (think CPCU, ARM, etc.) bought the website and program from its creator. This article was not to say the idea was unworkable. The task will be a challenge to administer a national adjuster license for workers compensation.

Filed Under: workers comp adjuster Tagged With: ACORD Form 4, CLM, UCC

Two Great Workers Compensation Guides WCRI – Benchmarks RXs

October 25, 2018 By JL Risk Management Consultants

WCRI Releases Two Great Workers Compensation Guides in October

Workers Compensation Guides by WCRI (Workers Compensation Research Institute) were released in October. The ones that caught my eye were the two below. The Benchmark study can be broken up by state if you do not wish to download the report for all 18 states.

picture ireland england workers compensation guide

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The second guide on state prescription rules and laws is very reasonably priced for what you receive in the download. The guide covers all 50 states as of January 1 of this year. It is to be considered a snapshot of the regulations at the first of 2018,

CompScope 19th Edition – The Venerable Guide to Workers Comp Medical Payment Statistics

The following are sample findings for some of the study states: “My comments are in quotes.”

California: The study shows a decrease in medical payments per claim, evaluated as of March 2017, as a result of the continuing impact of Senate Bill 863. “I had thought SB 863 would have no effects on medical costs. This is a great development for CA.”
Massachusetts: Medical payments per claim were the lowest of the 18 study states; many costs have been decreasing going back several years.
North Carolina: Decreases in medical payments per claim were the steepest of all study states (6 percent per year since 2013), likely reflecting the impact of recent fee schedule changes. “Fee schedules are one of the best ways that a state can reduce overall workers compensation costs without reducing the level of care for injured workers.”
Pennsylvania: Faster-than-typical growth in medical payments per claim was driven by faster growth in hospital outpatient payments per claim.
Texas: Medical payments per claim decreased from 2014 to 2016, following several years of increasing medical costs.
Wisconsin: In contrast to moderate to rapid growth in prior years, Wisconsin experienced little growth in medical payments per claim since 2014. “Without a fee schedule I still predict these costs will increase in the future. Usual and customary can only get you so far without a solid number to work with on medical costs/”

To download copies of the studies, visit https://www.wcrinet.org/reports/compscope-medical-benchmarks-19th-edition.

The 18 study states are Arkansas, California, Florida, Georgia, Illinois, Indiana, Iowa, Louisiana, Massachusetts, Michigan, Minnesota, New Jersey, North Carolina, Pennsylvania, Tennessee, Texas, Virginia, and Wisconsin. There are individual reports for every state except Arkansas and Iowa.

Prescriptions Drug Regulations All 50 States

Doctor Hand workers compensation guides Writing Prescription

By StockUnlimited

In early October, the WCRI released a new report that gathers in one place the numerous state regulations affecting prescription drugs in all 50 states, including those for injured workers.

The report, Workers’ Compensation Prescription Drug Regulations: A National Inventory, 2018, also provides information on some of the most prominent prescription drug issues stakeholders are concerned about in 2018, such as the following:

Rules for Limiting and Monitoring Opioid Prescriptions
Medical Marijuana Regulations
Workers’ Compensation Drug Formularies
Prescription Drug Monitoring Programs
Price Regulations for Pharmacy- and Physician-Dispensed Drugs
Drug Testing Regulations

The tables in this report were compiled from completed surveys of two agencies for each of the 50 states and the District of Columbia. S

The report was authored by Karen Rothkin. For more information about this inventory or to purchase a copy, visit https://www.wcrinet.org/reports/workers-compensation-prescription-drug-regulations-a-national-inventory-201.

Please note that we receive no monies from WCRI to mention their publications. We publish them in the newsletter as they are superior workers compensation guides.

Filed Under: WCRI, Workers Compensation Research Institute

Workers Compensation Reserves Reduction Alternative Mini Guide

October 25, 2018 By JL Risk Management Consultants

Workers Compensation Reserves – Lowering Them Can Be Difficult

The Workers Compensation reserves on a file naturally generate controversy. Why is there so much discussion on them? How can you have a great conversation with your claims adjusters?

numbers moving workers compensation reserves

Wikimedia Public Use License Devit Meniem

A workers compensation claims adjuster’s daily activities include 12 more important tasks than lowering reserves. It is the nature of the system, not the individual adjuster’s fault.

Establishing A Business Relationship

By the way, if you are the person at your company who was given the responsibility of the Workers Compensation reserves and program, do you know who the adjusters are on your files?

If you do not know your claims adjusters names, please find that out quickly. After all, these are the persons that are putting up reserves on your file. A caveat comes from the sometimes heavy turnover in the industry.

One of the most common complaints we hear from employers and the claim staffs centers on the change of adjuster multiple times on a file. Regardless, keeping up with who is the adjuster on a certain file is critical. You may actually know more about the file than the adjuster that has been on a 5 year old file for two months.

Email communications are the best way to communicate with your adjuster. That way you and the adjuster both have an easy way to track the communications on the file even if you have to copy and paste them into a file. Trust me on this one. It will make your adjuster very happy.

Do not forget the ever critical medical only claims adjuster – they are putting up workers compensation reserves on your files even though the amounts may not be large. Check out these two articles on medical only claims – they can cost your company dearly if not monitored.

Woman Doctor workers compensation reserves Doing Report

By StockUnlimited

Let All The Adjusters Know Your Injury Reporting, Dr. Network and Return to Work Programs

Many claims adjusters will use the background of the insured as one of their reserving factors. In fact, it was the most important to me when I worked a claims desk. I still today advise on reserving to employers. If you do not have programs for the three areas mentioned in the previous heading, the reserves will be higher than the company that has them in place.

The Six Keys To Saving On Workers Comp claims cover other areas to reduce workers compensation reserves.

Data Access

Online claims access remains a critical factor. I have mentioned this subject for over 10 years. Receiving a paper loss run report quarterly or even monthly just will not do if you want to control your workers compensation reserves. You need to know your reserves up the minute, not from a three week old report.

Zombie Reserve Phone Call

I just coined that term thanks to coffee. A zombie reserve phone call starts with the claims adjuster receiving a call from the employer, agent, etc that consist of “the #$^$& reserves are too high. You are killing me. Bring them down. The adjusters reading this are shaking their heads up and down while smiling.

Adjusters are the most independent-minded people just behind oilmen and truck drivers. Receiving a call like that can only ruin the business relationship (see the first heading) that you have established with your claims adjusters. Do not do it. Just don’t. Your workers compensation reserves will thank you later.

BE A MASSIVE INFORMATION PROVIDER

Man workers compensation reserves Speaker

By StockUnlimited

The heading is in all caps as this is so important. Send in every piece of information that you can to the adjuster. Scanning and emailing is the best way. Everything is the motto here. The more information provided the lower the reserves on files. Once again, trust me on this one.

Do you have a designated person in your company for the adjuster to speak with concerning your Workers Compensation claims? See the first heading again – establishing a business relationship.

Avoid the rumor mill on this one. Do not email the adjuster that the someone heard that someone heard the employee was mowing their lawn. Now, if they hear that the injured employee works at another employer while being out on workers compensation benefits, that needs to be reported to the adjuster ASAP.

Understanding The Workers Compensation Reserve Authority Levels

Bill Zachary recently wrote an article on how reserve levels can cause delays. He was correct in the article to say that claims adjusters may not have the proper authority level even at meditations to settle a file.

The other side of the coin is that large reserves pass through many hands/desks. The adjuster alone may not have been responsible for the reserve level on the file. Excoriating them on a very high reserve may not be the best tactic. Below are synthetic reserve levels in a claims department:

Medical Only Adjuster – $2,500
Adjuster trainee – $10,000
Adjuster – $25,000 to $40,000
Senior Adjuster – $40,000 to $ 60,000
Supervisor – $50,000 to $80,000
Manager – $75,000 to $135,000
Vice President/Examiner -Unlimited
Big meeting with all parties – Mega-claims

In those numbers exists one big key. When mega-reserves are sitting on a claim and they need to be reduced, the same people have to approve the lessening of reserves.

I had a claims VP tell me approximately five years ago that my client’s reserves were too high, but he was not going to reduce them. Every party up to his level agreed the reserves should be reduced – the file has $540,000 in reserves at the time. It closed within $10,000 of my recommended $145,754 reserve recommendation. The bottom line – the adjuster may not be the one responsible for the reserves. Do not ruin your relationship with them. Once again, see subheading #1.

Why Should You Care?

Department Of Insurance workers compensation reserves Building in Texas

Public Domain License

Voluntary Market Insureds

The key for employers with a regular workers compensation insurance policy is the E-Mod (sometimes call X-Mod). The mechanics of the E-Mod calculation will not be covered here. There are many articles already written on the subject in this website.

Keeping up with your claims and paying attention to the loss adjusting will usually lower your workers compensation reserves. Some companies consider workers comp as just a tax of doing business, which can be a large mistake.

One caveat here is to think that only the last four years of claims go into the E-Mod, so the old claims do not make any difference. That thought causes many companies to not be able to find lower cost policies. Carriers examine ALL claims now as far back as a company’s loss history can be traced.

Data analytics are here to stay. All claims now count.

Self Insureds And Other Similar Programs

Self insureds, very large deductibles, most captives, and alternative risk programs fit into this category. As posted very often in these articles, I have heard self insureds say ” We are outside of the Workers Compensation system.”

Actually, self insureds and other similar programs are more in the workers compensation system than another group. The voluntary market insureds have a buffer of the E-Mod. If they have a $540,000 loss, there premiums are not going to increase by that amount. If you are a self insured, then it comes directly from your budget – write the check.

Self insured must work very closely with their TPA to make sure that the reserves are appropriate. Under-reserving can cause a budget shortfall. Over-reserving can cause the budget to be too inflated. Either situation can wreak havoc on an insurance budget.

Notice No Technical Advice

Men Talking workers compensation reserves In Office

By StockUnlimited

Why was there no technical advice given in this article? Many times we are called into a situation where the insured employer has caused an increase in their reserves, not a reduction after reviewing their losses and workers compensation reserves with the claims staff.

How can this happen? Sometimes a reserve review can serve as a reminder to an adjuster to recommend a reserve increase on a certain file. Knowing which files to address is critical.

To avoid the situation – unless you have a claims background of seven to ten years, use the alternative this mini guide to help lower your workers compensation reserves.

Filed Under: Workers Comp Reserve Review, Workers Comp Reserving Tagged With: adjuster trainee, Bill Zachary, mega-claims, Zombie Reserve Call