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Reduce Premiums – Fastest Way With Workers Comp Reserve Review


Fastest Way To Reduce Premiums Reserve Review

Performing a Workers Comp reserve review is the key to reducing premiums of your reserves very quickly.

Your Workers Comp premiums can be reduced very QUICKLY  in most situations. It is the reserve review.

Graphic of Money in clock Way To Reduce Premiums Fastest

The reserves are the engine of the premium charging process by insurance carriers.

I had written a post on this very subject a few weeks ago.  The loss run is the map, so to speak, to use for the reserve reviews.   Look for the column that is designated “outstanding reserves.”When is the critical date to start a reserve review? The answer is 9 months before the next policy date.

Why start so many months ahead of time? You have only 3 months, not nine.

Please note – (with few exceptions) that almost all policies lock in their E-Mods 6 months before the policy. No matter what policy provisions are in place if the reserves on the files are wrong, you are paying dearly for Workers Compensation coverage.

The three-month lead time is needed as many claims departments may have to go through many levels of supervisory and management personnel to have any reserves changed.

If you have a very large reserve, this process can easily take 60 – 90 days to complete.   Changes to reserves on large claims have to go across many desks or computer screens.

The usual route consists of:

  1. The adjuster recommends a reserve reduction or increase up to their level of authority
  2. If the file reserves are beyond the adjuster’s authority, the supervisor must approve them after discussing them with the adjuster.  Claims supervisors rarely approve a reduction without a protracted meeting with the adjuster.  If the claims supervisor agrees with a reserve reduction, then the reserves are reduced.
  3. If the claims supervisor does not have the authority to that level of reserves, then the supervisor passes it up the line to the claims manager.  The adjuster, supervisor, and claims manager have a long meeting if a request has been made to reduce the reserves by the adjuster and supervisor.
  4. If the claims manager does not have the level of reserve authority, then the file passes onto the Claims Vice-President.  Usually, VPs are consulted only if the file reserves are very large, over $350,000 for example.   Then, a meeting has to be scheduled for the claims adjuster, supervisor, manager, and VP to discuss the claim reduction.  Getting all four parties in an office or conference room at the same time is a very difficult task.
  5. So if a file has over $350,00 you are looking at 90 days to get approval for a reduction.  So you cannot wait until one month before your policy renews to send the adjuster an email on over-reserving with a specific file.

That is why you must start at the latest 9 months before your next policy expiry to see about lowering file reserves to reduce premiums.   

Next Up – How do you effectively do a worker’s comp reserve review?

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James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications


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