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Work Comp Reserves And Twilight Zone Phone Call


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:

graphic of clouds work comp reserves emblem from website
Wikimedia Commons – fir0002
  • 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.

Twilight Zone Work Comp Reserves View

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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James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

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