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When Are Final Claim Reserves Set – Is There Exact Date?


Final Claim Reserves Set Earlier Than Expected

The final claim reserves are set much earlier than one might expect in the reserving process.

picture final claim reserves hourglass
Public License Auckland Public Museum

Most adjusters set the final reserves at 60 days into a claim.

The exact timetable is:

  • 14 days – initial reserve – usually made to the medical bills for first treatment and to start any indemnity benefits (if required).  These reserves may not be accurate when examining a loss run
  • 60 days- final claim reserves – regardless of claim severity the reserves are set “for the life of the claim.”  The adjuster reviews the reserves every 30 days to make sure of adequacy to pay benefits, medical bills, and expenses.    The 30-day reserve review can be very difficult to accomplish with the other 13 daily adjuster tasks.   The claims supervisor usually has a diary at 50 days to analyze the reserves and ask the adjuster questions on the reserves.  The review date for denied claims may be longer.
  • 6 months – locked in reserves – any adjustment to the 60-day final claim reserves is analyzed at this point in the claims.  At 6 months, the claims staff has sufficient knowledge of claim seriousness.  The Claims Manager usually has a 6-month diary for any larger claims.   For the very large claims, a diary for the  Claims VP/Examiner may kick in at this point.
  • Repetitive diary -(Every)
    • 30 days for claims adjuster
    • 60 – 90 days for claims supervisor
    • 6 months for Claims VP or Examiner
  • AdHoc – As needed – reserves are increased when:
    • Reserves not sufficient to pay benefits or medical/expense bills
    • Claim risk changes – usually an increase in severity
  • Varied Timetable – not all insurance carrier and Third Party Administrator claim reserve timetables match the above exactly.  The overall idea is to have the employers participate in the process.   The final claim reserves should have input from the employer before setting them.

Employer Responsibilities With Final Claim Reserves 

Man final claim reserves holding a bag of Money
by StockUnlimited

The employer responsibilities to keep claim reserves in check are:

  • Establishing a business relationship with your adjusters – one of the quiet cost savers on claims.   Adjusters who know their employer and vice-versa will always have lower reserves on those claims.   Do not forget the critical medical only claims adjusters – another quiet cost saver.
  • Information flow – make sure the claims staff has all the information you receive on the claim ASAP.   Investigate the claim occurrence onsite if possible.  The more great info an employer can provide the adjuster before the 60 days Final Claim Reserves, the better the outcome.  Do not make the adjuster go into protection mode on the reserves.
  • Avoid Twilight Zone phone calls from medical providers and the injured employee.  These will result in tremendous reserves.  Trust me on that one.   I can remember those phone calls from the 1980’s.
  • Make sure the adjuster knows (overall and on the specific claim) that you have followed my Six Keys To Cut Workers Comp Costs.
  • Negotiate at policy renewal (if possible) a contact from the claims department is reserves are increased by X amount ($25,000 recommended).  Many TPA’s have this built right into their systems.
  • Online claims access – you can check the progression of the claim without having to contact the claims adjuster.   Do this – it will pay off in the long run.  A knowledgeable employer always has lower reserves.


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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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