Workers Compensation Predictive Modeling Will Never Work

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Workers Compensation Predictive Modeling

One of the more popular buzz phrases now is Workers Compensation predictive modeling.  If  one looks at any of the WC groups on LinkedIn,  there are many discussions on this very matter.

Graphic Workers Compensation Predictive Modeling In Excel
Wikimedia – Jaberi-Douraki M

There are many predictive models on WC.  Those models usually leave the observer with an empty feeling.  Yes, you can forecast the Indemnity and Expenses almost to the penny.  There are many modeling programs that will suffice in this case.

The inherent problem is valuing and forecasting medical benefits on any file.  A health profile and background of the injured employee may shed some light on the subject.  However, we are all very genetically unique individuals.

Woman Workers Compensation Predictive Modeling Carrying Files
StockUnlimited

A ruptured spinal disc can vary in treatment from two months to two years or longer.Predictive modeling requires some sort of stability in the variables.  As any adjuster will tell you, it is hellish to try to predict medical treatment at the outset of the file.  There are medical outcome determining factors that are not known for many months.Workers compensation claims adjusters walk a very fine line with medical forecasting.  Sixty days into the file development, the adjuster is supposed to make a medical reserve determination for the life of the file.  This is not possible.  Reserving files is an art, not a science. We analyze many reserves on files on a daily basis.  Reviewing reserves is a complete exercise of hindsight which is usually 20-20.  Discussing what reserves were placed on a file one or two years ago is an easy task.  The reverse of discussing what the reserves should be on a file in one or two years is difficult at best.Communicating with the claims adjusters about the status of an employee can reap large dividends, but as they happen, not three months later.  Emails work best for claims departments.

Bottom line – a well-trained experienced adjuster is the best predictive modeler in Workers Compensation. 

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt 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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