Loss Runs – Important Part Of Claim and Premium Audits
We receive questions on loss runs often when we are obtaining the materials that we need to do the Workers Comp premium audits/reviews for employers. We also like to go more in-depth than the insurance company’s auditor.
The reason that most premium audit companies ask for loss runs is to make sure that the loss runs provided by your carrier resulted in the exact same numbers on your E-Mod/X-Mod sheets.
In the past, there were errors made when the insurance carriers and rating bureaus transferred the claims loss numbers from the insurance company loss runs to the rating bureau Experience Modification sheets. The Unit Stat Report is what the insurance carriers report to NCCI or the State Rating Bureaus. This type of error is not as prevalent as in the past. However, it does happen. The largest recent one was the NCCI rating sheets for New Hampshire employers five to seven years ago.
One of our services is to also review the claims loss runs to formulate a plan on how to reduce your claim reserves. It is very difficult for us to go back in time and try to negotiate down a Workers Compensation reserve figure. The reserving exists in the present only. If any company tells you that they can negotiate down PAST reserve figures, that should raise a few questions as no insurance carrier will allow a reduction in past reserves.
The best way to keep track of the reserving by the claims department is by having online access. As I have said before, the claims loss run is no different than any other type of financial statement and should be treated exactly the same as a bank statement. Please see the recent post on online access.
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