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Why Are Loss Runs Needed As Part Of Your Workers Comp Audits?

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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.

Picture Of Man Calculating Loss Runs With Pen On Hand
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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.

Picture Man Hand Calculating Loss Runs Using Calculator With Graph Icon
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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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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt 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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