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Loss Reserves – Where Do I Find Them For My Workers Comp Claims?


Loss Reserves Are An Adjuster’s Forecast

Loss reserves are the the dollar amount set aside or reserved to completely cover the expected cost of a claim or claims under the workers comp policy issued by the insurance company.

Calculating Loss Reserves a Money
Wikimedia commons – Harland Quarrington

This determined amount is set aside as of the annual statement date.Loss reserves become a factor in computation of premium.

These loss reserves – sometimes referred to as reserves –  should be monitored to ensure no over reserving or under reserving has been done.   The term causes much confusion with Total Incurred.  The Total Incurred figure equals the Paid plus loss reserves

The Formula is:

Reserves + Paid = Total Incurred

The figure can be negotiated with the carrier at certain points in the life of the claim.   Workers Comp adjusters pay attention mainly to the  reserves.  They do not want to over-reserve the file or run out of reserves.

Stairstepping happens when the claims adjuster increases the loss reserves just enough to cover medical bill payments or a few weeks of indemnity benefits.  Having inaccurate and artificially low reserves through staristeepping should be considered dangerous for an employer’s workers’ compensation program.

Loss runs contain all of these very critical figures.  Your company  should ask for the loss runs monthly at least.  Online access to loss runs makes the process much easier.  You can usually run your own ad hoc loss runs at will with online access.

Online access may cost more, but it is worth every penny if your company is going to track your losses and premiums more closely.

Related: What Does Stair Step Reserving Mean?

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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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