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 Workers Compensation insurers.
Reserves that are too low on your Workers Comp claims can be as harmful to your Workers Comp budget as reserves that are too excessive. I have dedicated a portion of this blog on how to lower your company’s Workers Comp reserves.
There is nothing wrong with making every effort possible to lower your workers compensation reserves with risk management techniques such as a return to work program, etc. Having deficient reserves on certain claims can cause a huge unexpected reserve increase. This can cause a very large increase in your E-Mod that your company was not expecting.
Low reserves in a self insured or a large deductible will kill the program. If the reserves are deficient, then a self insured company may be under the impression that all is fine with their Workers Compensation budget.