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Workers Comp Claim Reserve Contains Three Parts

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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.

Insurance benefits drawing concept Workers Comp Claim Reserve On Table Graphic
123RF

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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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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