Workers Comp Claims Reserves Set At 60 Days
When are indemnity, medical expense reserves set on your claims? This subject is one of the most confusing and frustrating budget areas for insureds. Workers Comp reserves are very important to companies with a regular commercial insurance policy or self-insureds. Quite often, I hear self-insureds say that reserves are not as important as they are “out of the Workers Compensation system.” Nothing could further from the truth. I will cover this subject in a post later this week.
How do insurance company adjusters set reserves on a Workers Compensation file? It is actually an educated guess at best. Trying to estimate the lifetime payouts on a claim is very difficult, if not impossible. The healing period from an injury varies from person to person greatly.
The reserving is broken down into indemnity, medical, and expenses. The claims adjuster will almost always have online access to a reserving sheet. These sheets are usually not shared with the employers. In fact, in the next post I will go over what the major variables in the indemnity, medical, and expense reserves. Going over that now will make too long of a post to read.
An adjuster’s experience level will usually aid them with making accurate reserve estimates. The adjuster’s caseload will determine if they have enough time to calculate exact reserves. Always ask your adjuster for their background and caseload the first time that you talk to them. Adjusters have an authority level to reserve files as they see fit. If the file reserves exceeds the authority level, the supervisor must approve the reserves.
The most inaccurate reserving that I have seen is when an automated reserve is set by some type of software. As I said before, each individual heals differently, so an automated reserve is never accurate unless the adjuster can override the system reserves.
I will cover the variables in each reserve in the next post.
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