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January 2011

Bulk Reserves Cover Large Number Of File Concerns

Term Of the Day – Bulk Reserves The term bulk reserves are one of the antiquated terms in insurance.   An accumulated amount determined to provide for future loss of payments for known claims. These include case reserve inadequacies, additional case reserves, and claims that may reopen or other reserves

Regression Analysis

Term Of The Day – Regression Analysis A long standing debate has been occurring between myself and actuaries over whether or not that Regression Analysis is the best predictor for setting future reserves. Actuaries will usually say Regression does not give enough credence to the recent development of claims. I

Records Retention

Term Of The Day – Records Retention The length of time that closed Workers Compensation claims file material should be retained by the insurance carrier, employer, or TPA. Most states have a minimum records retention law such as seven years after the file is closed. I do not recommend ever

Captives for Workers Comp – One Overlooked Area

Captives for Workers Comp – Who Adjusts Your Claims Most Captives for Workers Comp should not overlook the claims administrator which will handle your claims. Over the last four years, captive insurance arrangements have become more prevalent in our business. That is not to say that captives have not existed

Earned Surplus

Term Of The Day – Earned Surplus Earned surplus for Workers Compensation insurance carriers, mutuals, captives, self-insureds, risk retention groups and captives, comes from the basic formula Assets = Liabilities + Capital. Once all claims and expenses are paid (liabilities) then the surplus can be paid out to shareholders as

Workers Comp Policy Dictates Right To Review Claim Files

Workers Comp Policy Allows Claim File Audits The Workers Comp policy allows an employer to review files or perform claims audits. I have recently received a large number of questions on the employer’s wish to do a Workers Comp claims file review. The carrier or TPA was less than enthusiastic

When Is My Anniversary Rating Date?

Term Of The Day – Anniversary Rating Date This is also referred to as the ARD. In the experience rating process, the anniversary rating date is normally the effective date of the policy. This is not to be confused with the date that the rating bureau actually produces an E-Mod/Ex-Mod/X-Mod.

Acquisition Costs

Term Of The Day – Acquisition Costs Workers Comp policy acquisition costs (in most states) are broken down into four areas: Agent Commissions Premium tax Second Injury fund tax Other costs They are considered as pro-rata on the current and future company balance sheets centered around the anticipated investment income.

Stop Loss Reinsurance

Term Of The Day – Stop Loss Reinsurance Protects a cedent against an aggregate amount of claims over a period, in excess of a specified percentage of the earned premium income. Stop loss reinsurance: Does not cover individual claims therefore it is bulk insurance. The reinsuer’s liability is limited to

What Are Allocated Loss Adjustment Expenses( ALAE)?

Term Of The Day – Allocated Loss Adjustment Expenses The Loss Adjustment expenses (ALAE)  can be allocated to the adjustment of a certain claim. Often, you will see this on Workers Compensation claims in the Expense Total Incurred figure. There has been much debate concerning what to include in the

Multi-Jurisdictions Best Test Is WALSH For Workers Compensation Claims

WALSH Best Test When Multi-Jurisdictions Involved WALSH is best test for multi-jurisdictions of workers comp. I have posted on this subject in the past. I thought it would be good to revisit the subject after I read about a Tennessee employer that tried to have North Carolina apply Tennessee subrogation

Test Mods Great For Budgeting Workers Comp Premiums

Test Mods Are Difficult Due To Correct Inputs Required We often calculate Test Mods for employers of all types so that they can properly budget for their next few years Workers Comp expenditures. There are many software packages that will calculate them such as ModMaster. There is an infinite number

Where Do I Find Workers Compensation State Medical Fee Schedule?

A State Medical Fee Schedule Usually Saves Funds States without  a Workers Compensation medical fee schedule become more rare every year. At last count, there are approximately 42 states with fee schedules.  They basically allow a maximum charge for a medical provider (physician, hospital, physical therapist, etc.) per CPT code.

How Many Courses For Associate in Risk Management (ARM?)

Associate in Risk Management Designation Courses = 3 The Three Associate in Risk Management courses is listed below. This is a professional designation that I possess. It is awarded by the Insurance Institute of America (IIA). There are three somewhat difficult tests that need to be passed to complete the

What Is An Experience Period?

Experience Modification Factor Calculated The experience period is the time frame from which the Experience Modification Factor (Ex-Mod, or X-Mod, or E-Mod) is calculated. The usual period is from the policies four years ago to two years ago. For instance if you have a policy that starts on 1/1/2010, your

Certified Risk Manager (CRM)

Certified Risk Manager Term Of The Day The CRM program is sponsored by the National Alliance for Insurance Education and research. From their website www.scic.com – The Certified Risk Manager International (CRM) designation demonstrates that you are knowledgeable in all areas of managing risks, hazards, and exposures. The five courses

Workers Comp Policy Just Renewed – Cut Your Work Comp Costs Now

Cutting Cost Of Workers Comp Policy Just Renewed Your workers comp policy just renewed recently.  This is a critical time in the cost cutting. This can apply to all Workers Compensation policies. I am now mentioning it as most policies renew on January 1st. Now is the time to start

Death of Workers Comp – CMS Now Runs FIO

CMS Now Runs FIO The CMS runs FIO – should this be death of Workers Comp?   OK, so the title is meant to catch your attention. The second part is actually a reality as of last week. The federalization of Workers Comp remains an issue. Yes, the CMS –

Return To Work Program (RTWP) Great Risk Management Tool

Return To Work Program (RTWP) Term Of The Day A Return To Work Program (RTWP) is one of my Five Keys To Cutting Your Workers Compensation Costs. An RTWP program is a great long term risk management technique to reduce Workers Comp costs. The RTWP cuts the period of Temporary

How Do I Find Outside Adjuster Job

Term Of The Day – Outside Adjuster An adjuster who usually spends 3.5 days or more on the road handling claims. Workers Comp claims department evolved in the 1980’s to all but eliminate this type of adjusting. Most companies now use telephone adjusters to handle Workers Comp claims. I think


Term Of The Day – Disclaimer A Disclaimer flags an incomplete audit.  An accountant or auditor’s statement which says the required audit was not complete. The statement may have been issued because the auditor has not received all the pertinent information to do all of the required audit work. Because

Payroll Limitation

Term Of The Day – Payroll Limitation   For Workers Compensation, this limitation applies to executive officers and classifications with notes that indicate payroll limitation. The payroll on which premium is based shall exclude that part of the employee’s average weekly pay in excess of the applicable weekly limitation. The

New York Policyholders – Should They Receive Excess Surcharges

New York Policyholders Workers Comp Premiums Should the excess surcharges be returned to New York policyholders?  I was reading this article in a few of the online insurance publications. Some of the posted replies asked if New York should have returned the premiums to the policyholders and not the state.

Small Workers Compensation Claim Does Not Exist – Risk Is Risk

A Small Workers Compensation Claim Is A Misnomer A small Workers Compensation claim can grow to a large one in the blink of an eye. The following was taken from a manual that I first wrote in 2000. It is timeless Workers Comp policy and claims info. Yes, this may not



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