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Employers Cheat Themselves – Workers Comp Claims – 4 Ways


Employers Cheat Themselves  On Claims W/O Realizing It – Ways To Stop Now

The four ways that employers cheat themselves on Workers Comp claims cause many insureds and self-insureds to pay extra without realizing it.  Follow along as I cover each of them.

shell game employers cheat themselves
Wikimedia Commons License – FaceMePLS

In summary form, the four ways are:

  1. Adjusters time – a little secret revealed
  2. Claims review – the timing is crucial
  3. Ambiguous First Reports of Injury – making the adjuster scratch their heads
  4. Self-Insureds – we only need enough reserves to make the payments this week

Adjusters’ Time – Not An Infinite Commodity

All Workers Comp adjusters work off a diary system.  What does that mean to you – the employer?  An adjuster spends a budgeted amount of time on each claim in their claims load.

The squeaky wheel that gets the oil does not work here.  The more time you as the employer wrap the adjuster’s time up with endless questions and updates (especially the dreaded phone call for an update), the less time the adjuster can spend properly adjusting the file. 

No adjuster is an island.  All adjusters working a diary system move from claim to claim very quickly.    Workers Comp adjusters have 13 or more main tasks to perform every day.   Most adjusters work 50+ hour work weeks.

Email the adjuster any questions you have after you have looked up the claim online.   Ninety percent of the questions you have on your claims sit online in the adjusters’ action plans and progress notes.    Take a look online.  You may be surprised at what you are missing in the claims process.

Badly Timed Claim Reviews – Massive Time Waster – When Employers Cheat Themselves

No, not all claim reviews consist of an employer wasting their time.   However, many end-of-year claims reviews may end up in smoke due to the timing of the review.

I used to go on December journeys traveling to and also to welcome employers to the claims offices to perform reviews.   If the renewal was the next July 1st, then the December reviews may not be that timely.

The employer’s UNISTAT date (unless self-insured) should determine when the claims reviews should take place.  The outstanding reserves peg into the Experience Modification Factor (E-Mod) 180 days after policy expiration.   If your renewal date is March 1st and you are reviewing files with the claims staff in December, that may be a waste of time.

The Total Incurred would have already figured into your E-Mod on August 30th.   The file reserves in December are not going to be that helpful making employers cheat themselves out of accurate figures on the reserve timing. (Ouch!)

Ambiguous 1st Reports of Injuries – Another Way Employers Cheat Themselves

Most states’ First Reports of Injuries  (FROI) enable employers to accurately describe the injury to the claims staff.  Sending in an ambiguous FROI may make the adjusting staff have to overwork a workers comp investigation at the most critical time in the file – the first 48 hours after a claim occurrence.

Wise employers will attach any police reports (car accidents) or any initial medical treatment and witness statements or at least a list of the witnesses to the claim.

Employers cheat themselves by making the adjuster spend too much time correcting or discovering the specifics of the claim.   The clock is ticking.   An adjuster having to decipher an FROI wastes crucial time at the start of a claim.

Self-Insureds and Stair Stepping – Dangerous Way To Pay For Claims  – The Pain of IBENR

Over the years, I have received many requests from self-insured employers to increase the reserves just enough to cover the indemnity and medical payments for that week or month.

The small increases (stair-stepping) compare to using the map functions on your phone but only for five miles at a time.  If an employer does not know the complete directions at the start of the claim, increasing the reserves just enough to pay a bill may end up with the self-insured employer lost in the future of the claim.

IBENR (Incurred But Enough Not Reported) a cousin of IBNR (Incurred But Not Reported) exacts a heavy toll on a self-insured Workers Comp program.  A wise actuary recognizes a pattern of stair-stepping.   The actuary that sets your Loss Development Factor (similar to an E-Mod) usually ramps up the expected values to completely close out the claims.

Fixes For The Problems

  1.  Budget your contact time with your adjuster.  Use short and direct emailed questions if needed.  Calling will only cause the adjuster to have to review the file and then get back to you – Employers cheating themselves on their adjuster’s limited time.
  2. Find your UNISTAT date ASAP.  The UNISTAT date is usually 18o days after policy expiration.  Use that date as your guide to do file reviews with the adjusting staff.   I have written numerous articles on setting up a claims review diary in this blog.  Check out those suggestions.
  3. Completely fill out the FROI’s.  One unfinished blank can be costly.  Attach any initial medical treatment and list of witnesses to the accident.  Be extremely verbose.  The more info the adjusting staff has on hand at the first of the claim, the better the results for all,  including the injured employee.
  4. Self-insureds – set healthy and accurate reserves at the start of the claim.  Reserving just enough to pay bills means you are hunting for numbers in the dark.  Many analytic packages can help you with reserving.   Your Third Party Administrator (TPA) will usually not allow just enough reserves to cover bills.   The TPA’s and actuaries know how harmful severe under-reserving can be to a self-insurance program.


Employers cheating themselves could have been too strong of a statement.  Catching your attention was the goal.

How did I come up with these four?  I have been tasked with reviewing many claims this year.   One night I turned off the computer in disgust and said these employers are cheating themselves and may not know it.

Now you do.

©J&L Risk Management Inc Copyright Notice



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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