Workers Comp Recession Proofing – Another Angle
The Recession proofing program centers this times on reserves. I have received quite a few emailed comments and questions about the current recession. Quite a few forward-thinking employers have asked about the quickest method or methods to reduce Workers Comp premiums in 2009.
The first thing to remember is that Workers Compensation is a delayed-effect type of expenditure. Trying to reduce the Workers Comp premiums for 2010 should now be a company’s goal. The 2009 policy is already in place unless your renewal date is after 7/1/09. The Workers Comp reserves that are set on files are usually set in stone six months before the policy renewal. If you are renewing on 1/1/09, all of the variables for your Experience Modification Factor (E-Mod or XMod) were in place on 7/1/08. Please look at my recent posts on how your time is being wasted by end-of-year claim reviews.
One question we are asked concerns going back in the past and arguing with the insurance carriers over past high reserve levels on certain files. We and any other consultant usually cannot audit old reserve figures.
Reserve levels apply to the present only. That is why it is so important to monitor the reserves set by the adjuster on each Workers Comp file. A question to your Workers Comp carrier on a reserve level from 2007 will do no good in most circumstances.
Quite a few of our clients have us monitor all reserve changes on their files. Why? Changes to the Workers Comp reserves have to be questioned or corrected very quickly.
The longer an excessive reserves figure exists on a file, the more difficult it is to have it changed. The one thing to remember is NOT QUESTIONING the reserves on every file. You have to pick your battles on the right files.
We will revisit the ways to cut premiums next time.
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