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Why Is The Total Incurred Value So Important For Premiums?


Total Incurred Value Most Important Number

The total incurred value is one of the more confusing areas of Worker’s Compensation.  The terms are different on almost every insurance carrier’s loss runs. The term Total Incurred is the sum of the funds Spent added to the Reserves.

Picture of Piggy Bank Total Incurred On Money

In other words:  Total Incurred = Spent + Reserves. The easiest way to locate the Total Incurred is to find the largest of the reserving amounts on each claim. The Total Incurred will always be the largest number.

Paid or Reserves Is Only Part Of Total Incurred

The reason that the Total Incurred figure is so important is the amount used by insurance carriers to report your insurance loss history to NCCI or your State Rating Bureau.  The amount spent is not what is used to calculate your E-Mod. It is the Total Incurred value. 

For instance, if you have a Workers Comp claim that has only $300 spent but there are $13,000 in reserves, then the claim is valued at $13,300, not $300.  We just received a call today from a company in California that had this very question.  The Workers Comp file was left open for three years and they paid premiums off the $13,300 not the $300.  A few claims such as this can wreck a Workers Comp program.

This is a very important point when you look over your company’s Workers Comp loss runs.  It is a great idea to make sure the claims adjuster has provided you with an updated status on the Work Comp claim.  Workers Comp adjusters are very overloaded with claims, especially with the downsizing occurring due to the recession.

Businesswoman Total Incurred With Employees Against Gray Backgroud

They may not have time to look at reducing reserves. That is the lowest priority in an adjuster’s busy day.  The adjuster has about thirteen main tasks and reducing reserves is #13.  It is not the individual adjuster’s fault.  It is the way Workers Comp claims systems have been operating for many years.

Online Access Fastest Way To Review

Online claims access remains worth its weight in gold when keeping your Workers Comp program in check.   Knowing your up-to-date claims statuses including the associated financial figures helps you monitor your claims much more easily.

If you feel that your files are over-reserved, it may be time to call in a claims professional or a Workers Comp consultant to keep your Workers Compensation premiums in check. We always recommend not calling an adjuster and saying that all your Workers Comp reserves are too high. Emailing an adjuster with specific questions is the best way to follow your claims.


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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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