Workers Compensation Loss Run Information Critical
The Workers Compensation Loss Run contains very important information. I have posted almost ten times concerning online claims access. If your company is unable to have online access to your claims, at least the loss run will contain some very pertinent information. If any insurance carrier has a claim open from even 20 years ago, your company should be provided a loss run for that claim. Having loss runs is not a privilege, but a right of the policyholder.
This may be a good time to pull out your company’s loss run and look at the numbers. As I write this, I am reviewing one for a transportation company. Their E-Mod increased from .9 to 1.6 in two years. One of the main pieces of advice that I can give to an employer is that the E-Mod cannot be fixed in one year. It usually takes 2 – 5 years. Why? The E-Mod is calculated from claims that have been open for less than four years. That is not an exact statement, but I want to keep this as straightforward as possible.
The main number to examine is the outstanding reserve, reserve, unpaid funds, etc. The outstanding reserves may be named with different terms. Regardless, it is the $ that has not yet been paid out on a Workers Comp claim. The outstanding reserves are the forecasted payouts by the adjuster for the lifetime of the file. As I have said often, even though the money has not been spent, it is charged off directly to your E-Mod, which in turn heavily affects your premium.
The basic formula is Paid Funds + Outstanding Reserves = Total Outstanding Reserves. The total outstanding reserves are the figures that your insurance carrier reports to the NCCI or the State Rating Board. There is little that you can do about what has already been paid. There are a few specialists that we work with that can review the paid funds to see if there were very many overpayments.
The quickest way to cover the claims that may affect your company’s E-Mod is to look at claims that are five years old or less. The outstanding reserves for these claims need to be reviewed. If you look at any of these claims and the $ amount of the outstanding reserves seems too large for the injury, you may have found a way to cut your Workers’ Comp costs.
I could post well over 50 pages of what to look for in the outstanding reserves. These estimations can be complicated. I will cover outstanding reserves in your workers compensation loss run further in the next post.
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