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.
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:
- The adjuster recommends a reserve reduction or increase up to their level of authority
- 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.
- 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.
- 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.
- 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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