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Workers Comp Indemnity Reserves Basic Definition


Workers Comp Indemnity Reserves Are One Of Three Reserve Categories

Graphic Of Disability Workers Comp Indemnity Reserves On Wheel Chair

The Workers Comp indemnity reserves on a claim represent the future payouts of benefits to the employee over the life of the claim.

The definitions for most of these terms can be found by clicking on the Definitions tab/button in the menu. I will not reiterate them here to keep the post at a readable length.

The indemnity part of claim reserves is the amount that is paid directly to an injured employee for:

  • Wage loss – Temporary Total, Temporary Partial, Permanent Total
  • Permanent reduction in function to a body part – Permanent Partial, Disfigurement
  • Other – Many state-specific indemnity payments

Unlike the medical reserves, the indemnity reserves are more easily forecast. This is not to say that they are easy to predict for the lifetime of a claim. They are usually easier than the medical reserves to estimate.

Crutches Workers Comp Indemnity Reserves Vector Images

One of the areas that can cause great unpredictability is if an injured employee is under consideration for a Permanent Total rating. If an adjuster has to consider the employee as being unable to return to work for the rest of his/her life the indemnity reserves can spike tremendously. If an employer can offer a return to work even with a different job function, this is very helpful in avoiding a huge reserve and may be very beneficial to the employee. Quite often, states will have “make-work” laws that prevent an employer from just making up a job for an employee to return to work. This is an area of very heavy litigation in certain states.

Using my Six Secrets/Keys to Cutting Workers Comp Costs will reduce the likelihood of extreme reserve increases and will benefit your employees. The Four Secrets tab will soon be Six Secrets. I will write a quick post after the other two are added to the list.

I may change this post as I write the ones for Medical and Expense Reserves. Check back on this post when you are reading the upcoming ones.

Article provided by James J Moore, AIC, MBA, ChFC, ARM. All articles are original content. Check out the full website at www.cutcompcosts.com.

Related: FREE Workers Compensation Insurance Definitions with Glossary



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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