How To Negatively Affect The Initial Work Comp Reserves
The Work Comp reserves on a file are based on a more complicated formula than just an educated guess. One of the quickest ways to have the claims staff set very high initial reserves is by starting the file with the term I coined a few years ago. The Twilight Zone phone call always has these frustrating characteristics:
- No first report of injury has been filed by the insured
- The Twilight Zone phone call is for some type of authorization
- The caller cannot figure out why the adjuster cannot provide an authorization on the spot
- The adjuster has to drop everything, call the employer and ask for a first report of injury
- The First Report of Injury has to be input quickly.
- Then the adjuster has to call back whomever was seeking a treatment authorization
- The adjuster is left with a conundrum of authorizing something without having fully investigated the file.
- This type of situation is usually a trend with some employers, not an isolated occurrence
Within 60 days, the adjuster will be tasked with setting reserves on the files. After the aforementioned occurrence, the natural reaction of the adjuster is to possibly set the reserves higher than normal.
This is a different type of reputational risk. If the adjuster or claims staff recognizes that a certain employer has a trend of providing them with Twilight Zone phone calls, the natural reaction to the reputational risk will be offset by the adjuster setting the reserves at a higher level than normal.
The 60 day work comp reserves are usually the ones that are on the file at its conclusion unless the injury worsens. The claims staff setting higher work comp reserve levels will result in the employer incurring a higher E-Mod (X-Mod) or LDF. This is just one example of how having a great working relationship with the adjuster will pay off handsomely in the long run.
The timely filing of the first reports of injury is one of my Six Keys To Cutting Work Comp Costs. With the ability to now input claims directly into the claims systems, there is little excuse for an extremely last first report of injury.
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