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May 2011

Premium Audits And Lesser Known Standard Exception Codes

The Lesser Known Standard Exception Codes Last week, I posted on the Standard Exception classification codes namely 8742 and 8810. The concern of a few of the blog readers and our clients is there were new classification codes on their premium audits such as Telecommuters. There are some very specialized

Captive Reserve Question From Our Readers – How To Calculate Mod

Captive Reserve Question Concerning LDF’s A good question about Captive reserve from readers. I am responding to a question from Wayne on this post. I will paraphrase the question. How do I calculate the reserves required if I have had a workers comp captive since 2005? This is a very

State Funds – Are They Really Worth It As Insurers Of Last Resort?

State Funds – Are They Losing Viability? The State Funds that cover just their headquarters state have begun to look elsewhere.  I read today where SCIF (State of California Insurance Fund) has requested legislation where they can expand their coverage into non-California states for their insureds. I was wondering if

State Mandated Maximum Benefit Rates – Are They Fair?

State Mandated Maximum Benefit Rates The general Workers Compensation formula for weekly benefit rates = Average Weekly Wage (AWW) * .6667. The weekly benefit rates usually have a maximum. I had been told in my career that the maximum benefited the employer two-fold: The high wage earning employee would have

Classification Codes 8810 and 8742 Again – Standard Exception Codes

Classification Codes 8810 and 8742 My posts on Classification Codes 8810 and 8742 seem to generate the most interest of the whole blog. I have posted on them often. They both are referred to as Standard Exception Codes. They differ greatly from your company’s Governing Class Code. I had posted

What is A Workers Comp Wage Statement – critical part of claim

Term Of The Day – Wage Statement A wage statement is a necessary yet tedious part of paying a WC claim properly.  The injured employee’s compensation rate is based on this integral part of processing a WC claim. It is usually filed by the employer. Each state has its own special

Great Premium Audit Follow Up Question From Yesterday

 A Great Premium Audit Classification Codes Changes Question – Be Careful Here Earlier this morning,  I received a great follow up question about great premium audit class codes.  Yesterday I posted on how changing classification codes can backfire in certain instances. I received two questions since that asked – Why

What Is The Minimum Compensation Rate – Why Is It Important

Term Of The Day – Minimum Compensation Rate Most states have a minimum threshold of Workers Comp benefits regardless of their wage rate. If the injured employee’s Workers Compensation rate falls below this figure, it is increased to the minimum. For instance, if an employee earns $ 8 per hour and

Premium Audit Question From One Of Our Readers

Premium Audit Question On Class Code Changes We received a Premium Audit question on classification codes last week.   We had worked on our own with our agent and got our classification codes changed which we thought would save us Workers comp premiums. That was not the case. Our Ex-Mod

Who Is A Public Adjuster for Workers Compensation?

Term Of The Day – Public Adjuster A Public Adjuster represents the insureds rather than the carrier during claims processing. In this way, insureds can be assured of their rights to insurance proceeds. These adjusters are normally paid on a percentage of the adjusted loss, or hourly, or on a per

What Is A Manuscript Policy?

Term Of The Day – Manuscript Policy A Manuscript Policy is an individually designed policy. It is negotiated by the insurer and the insured and is specific to the insured. The drafted terms and conditions of the policy are tailored to the needs of the insured.   ©J&L Risk Management Inc

Ethics Courses – Are They Really Worth Your Time?

Do Ethics Courses Waste Time? The Ethics courses for adjusters or other insurance personnel may seem really worth the time and expense. I recently received a newsletter from the AICPCU-IIA informing all new students that Ethics will be a required course on a large number of designations. The Institute’s heart

Independent Medical Exams (IME) For Workers Comp Claims – Are They Worth It?

Independent Medical Exams (IME) Independent Medical Exams (IME’s) are usually one-time exams requested by the insurance carrier, TPA, injured employee, attorneys or an Industrial Commission. They are akin to a surgical second opinion. The IME Dr. will likely never treat the injured employee. For many years IME’s seemed to hold

What Does Stair Step Reserving Mean?

Term Of The Day – Stair Step Reserving The stair step reserving of Workers Comp reserves is an age-old concern of any party to an insurance or TPA policy.   If loss reserves are raised by increments in order to cover the cost of claims expense as they happen, the

Fentanyl Shocker – Popular Pain Med?

Popular Pain Med Fentanyl The popular pain med fentanyl CWI California was shock.This very dangerous medication hit the Workers Comp airwaves late last week. An article was published by the California Workers Compensation Institute which indicated that Fentanyl was being prescribed more regularly by certain California physicians as a pain

Is the Average Value Method Good Claims Estimation?

Term Of The Day – Average Value Method Average Value Method has a requirement for estimates of loss reserves that are made on an aggregate basis for a group or even a category of claims. Typically, this method is used to set a temporary average value. An individual case estimate can be

Your Reserve Review Action Plan – Have You Contacted Adjuster

Reserve Review Action Plan I had posted often over the last few weeks concerning claimx`s review for insureds with a January 1, 2011 renewal date. I even included a schedule of sorts on how to proceed on a Workers Comp reserve review. I used the 1/1/2011 policy renewal date as

Administrative Law Judge (ALJ) Hears Workers Comp Cases

Term Of The Day – Administrative Law Judge An Administrative Law Judge is a legal representative employed by the Workers’ Compensation Board. This representative reviews appealed administrative orders, holds impartial hearings, and issues legal opinions. Formerly called a hearings referee.   ©J&L Risk Management Inc Copyright Notice

What is Misclassification in Workers’ Compensation?

Term Of The Day – Misclassification An error by the rating bureau or insurer that places an employer is the wrong class code, causing an incorrect premium to be charged. Misclassifications can also occur when an employer misrepresents the scope of business in order to be classified in a class code

Maximum Medical Improvement (MMI) – Doctor Says

Term Of The Day – Maximum Medical Improvement In most cases, Maximum Medical Improvement (MMI) is assigned by a treating physician when an injured employee’s condition has stabilized to the point that no major change is expected in his medical condition, despite continuing medical treatment. After MMI is assigned, the payment

Stair Stepping Reserves Bad Effect On Workers Compensation Budget

Stair Stepping Reserves Very Harmful In my last post, I noted the term stair-stepping. This can ruin any Workers Comp budget for a regular or self insured in Workers Compensation. Stair stepping is the total failure of a claims department and their administration – in other words NO EXCUSES. My

How Does Impairment Rating (IR) Affect Workers Comp Claim?

Impairment Rating Measures Permanent Reduced Abilities An Impairment Rating (IR), which is also called a physical impairment rating, is a medical assessment of a claimant’s injury represented by a percentage value. A physician may assign an IR to the body as a whole or to a specific body part. The

How Are Future Medicals (Future Meds) Calculated?

Term Of The Day – Future Medicals Workers comp future medicals demand accurate calculations from claims adjusters.   The medical part of the total incurred and reserves requires many more calculations than the indemnity part of the reserves.  Indemnity reserving possesses much more structure than any medical forecasting.  Each human body

Lower Workers Comp Insurer Reserves Can Be Harmful

Lower Workers Comp Reserves Not Always Best The workers comp insurer reserves sometimes hide a reserve deficit.  AM Best released a report on May 2nd that was startling to me. Of the 11 insurance companies that failed, nine were due to inadequate reserves and pricing. The carriers were not necessarily

Should We Hold Benefit Review Conference (BRC)?

Term Of The Day – Benefit Review Conference Various states offer Benefit Review Conference in order to help resolve issues and disputes resulting from on-the-job injuries. BRCs vary by state but typically involve an informal mediation conference administered by a neutral hearing officer or ombudsman. If a dispute is resolved at



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