Workers Comp Claim Reserve = Three Parts
This post could be a very long one as there are hundreds of variables that comprise a Workers Comp claim reserve. Each state is unto itself on the benefits that are provided under Workers Compensation. There is no one list that points out every reserve variable in every state.
There are three main areas of reserving:
- Indemnity
- Medical
- Expense
These three are defined in the Definitions page. Please check there for further clarification. The most important of the three would be the medical reserves. These are growing each year to become the largest percentage of Workers Comp payouts and reserves. Medical payments are approaching 60% of claims value nationwide.
The Expense figure the bullet points denotes Allocated Expenses or ALAE. The Allocated Expenses are rarely passed to your company’s Total Incurred figure. Total Incurred represents the exact figure one sees in their respective Experience Modification Factor Sheets.
I will cover each one of these three areas over the next few days. I will cover one of the most controversial areas which is what exactly is covered under the Expense Reserve and the Medical Reserve. There seems to be a large amount of confusion on those two reserves.
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