Workers Comp Reserves – The Skinny
An article this week on Workers Comp reserves generated a huge response. I was going to post on Class Codes 8810 and 8742. This blog had the largest one-day total of visitors ever earlier this week.
I will cover more material on reserving in this post. Thanks to all of our new visitors, daily readers, and newsletter readers. If you are reading this and want to receive our weekly newsletter of blog posts, the signup button is down the page on the right side.
Reserving is an art of sorts. As I told three different reporters this week, we all heal much differently. Our healing and return to work abilities vary as much as our DNA varies – a great amount.
I received a large number of inquiries from employers on how to reduce or control the reserves on a single file or group of files. This is very difficult without at least 5 years of Workers Comp adjusting experience. Each state has its guidelines on Workers Compensation, so how does an adjuster keep up with multiple states? It is very difficult at best.
I am going to let you in on a little secret. There is a person who has COMPLETE control over your Workers Comp budget. Is it the actuary, agent, underwriter, or loss prevention rep? It is your workers comp adjuster. If you do not have a working relationship with your Workers Comp adjuster, you are burning through cash quickly. Why?
The only unregulated part of the Workers Comp insurance premium process is the reserves that an adjuster sets on the files. I have dealt with laws and regulations in over 30 different states. I have yet to see rules on how an adjuster sets reserves on a file. There are volumes on how the claims adjusting staff is to handle claims, but nothing is on the books for reserves. I have seen many lawsuits on how claims have been handled but only a very few on how the claims were reserved.
How do you establish a working relationship with your Workers Comp adjuster? This post is getting long. I will leave that for the next one. Class Codes 8810 and 8742 will have to wait.
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