Rating Bureaus – How Do They Receive Claims Info – Reader’s Question
A readers question on how claims are reported to the Rating Bureaus. Loss runs are the Holy Grail for controlling your Workers Comp costs. A great blog readers question email came in last week. The question – paraphrased was –
We have our loss run, but the numbers on our Rate Bureau report do not match the numbers from last year. Is there a secret formula to figuring all of this out? How do we match the numbers?
The first area to cover is the loss runs. When were they dated? What is the valuation date for the loss runs? The end of your policy year loss run will seldom match your Rate Bureau report.
The loss run should be dated as close to six months after policy expiration as possible. There are many articles in this blog on loss run report timing. Use the search box and search for loss run. Many articles will show on the search results.
Claims adjusters change the reserves on the files very often. Most claims departments ask their adjusters to at a minimum review the reserves at 60, 180, and 360 days after the claim is initially opened. Tracking loss reserves is one of the reasons I am an advocate for full online claims access by employers. Ask your TPA, carrier, or agent to see if online claims access is possible with your current carrier. It is worth the extra expense.
The main amount to search for on the loss runs is the Total Incurred. The total incurred figure is what is reported to the Rate Bureau six months after policy expiration. Total incurred = Paid + Reserves . Some carriers and TPA’s have added to the confusion by renaming or switching the names of these important variables.
The reason for the six month delay is this gives the claims an 18 month time period to develop instead of just 12 months. This is the rule for almost all rate bureaus.
Some of the Rating Bureau Experience Modification sheets can be confusing to read over and compare to your loss runs. NCCI has many videos that explain how Mods are calculated overall.
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