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Retro Policies and Lookback Period Blog Reader Question


Retro Policies Blog Readers Question

A Great Retro Policies Question From One of Our Blog Readers – My company has a 5-year Retro Policy.

Graphic of Lady had question Retro Policies Workers Comp policy

For 3 years of our Workers Comp policy, the rates seemed reasonable. Now, our premiums have skyrocketed. How could this have happened when the premiums were very reasonable for the first few years?

A Retro is a hybrid type of a Loss Sensitive policy. The main term to consider is LOSS SENSITIVE, which means if the reserves are increased by more than a small amount, the premiums will increase exponentially.

In the Retro policies we have reviewed, there seems to be a trend that the reserves on the open files increased sharply over a short amount of time later in the life of the Workers Comp files. The look-back period is so much longer in a five-year retro when compared to a regular Workers Comp claim.  A five-year retro requires vigilance for approximately seven years.

Drawing Question Mark on White Wall Retro Policies Blog Readers

Retro policies have to be followed very closely as the reserves have much more of an effect on premiums. Unspent reserves can be very detrimental to your current and future Workers Comp policies.

Online access to your claims is critical. Almost all carriers will allow access to the claims files on at least a limited basis. We recommend online claims access whether or not the policy is retro. Reviewing the reserves on the loss runs even quarterly may not be often enough to keep the reserves in check.

We recommend an agreement in the policy where you are notified by email if there is an increase in any of your Workers Comp files over a certain amount such as $5,000. This will cut out any surprises at renewal. Trying to negotiate file reserves at the time of policy renewal can be an exercise in futility.

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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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