Workers Comp Loss Run – Online Is Best
Your work comp loss run reviews are beyond critical in cutting your workers comp costs. Obtain a copy of your current Workers Comp loss run for all claims less than 5 years old. If you have online access, that will help greatly. If not, check with your current and past carriers to see if you can access your claims online.
Ask for access to all notes, reserve increases, status updates, documents, and adjuster action plans.
Having the adjuster’s name and email address will help if there are any questions. As I have mentioned often, use email to contact adjusters.
Calling the adjuster will mean they have to pull up the file and then review it and then call you back. I always contact the adjusters by email as this leaves them with an amount of flexibility they will appreciate.
Only use a phone call if there is emergency contact is required on the claim. You will be surprised at how quickly the adjuster returns your email.
Paper loss runs are OK to use for workers comp loss run review. You will usually find them out of date by the time they are received from the insurance carrier or TPA.
As I have often said, having online claims access is worth an additional 20% on premiums if you are comparing two different quotes from carriers.
2021 update – as loss runs and claims access is now more popular. the above 20% should be reduced to 10%. Most carriers and TPAs now offer free online claims access. If yours does not, then you should email your agent or carrier/TPA representative to find out why.
The main figures on the loss runs are Paid, Outstanding Reserve, and Total Incurred.
Total Incurred Figure on Workers Comp Loss Runs
The numbers that are reported to the Workers Comp Rating Bureaus – NCCI, WCIRB, etc.- come from the Total Incurred figure. The formula is Total Incurred = Paid + Outstanding Reserves.
Self-insureds, your actuary will use the same figures to produce a Loss Development Factor or LDF. You do have an LDF calculated each year. LDFs can be expensive, but worth it many times over.
Please do not think your company or organization is “outside the workers’ comp system” because you are self-insured.
Rule of 7’s(c)
If you have a massive amount of claims, such as in a large organization, you will want to use the claims review rule of 7’s(c) for the review of your claims. I coined and copyrighted that term as I adapted it from Charles Givens’s Rule of 7’s in his investment books.
In the massive claims reviews, we have performed, the rule of 7’s allows you to have a good idea of how your claims are being handled. Make sure that you use a random number generator to pick the claims you will review. You may find many of them online such as this one.
You can set the random number generators to generate random numbers any way you wish. Please make sure you have picked random claims, not every seventh one on the loss run. That is not randomness.
I have had long discussions with clients who wanted certain claims reviewed in a random claims audit. This may not bode well for another overlooked claim that should have been reviewed.
Why would you want randomness? – To make sure you did not center on certain claims, claims adjusters, or any other type of way the claims may have been organized.
Only use the rule of 7’s if your loss runs have 50 or more claims on it. You may wish to split medical-benefit-only claims and lost time claims apart for the rule of 7’s review.
