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How J&L Reduced Workers Comp Reserves $300,000 In One Month

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Animal Rescue Loss Run Analysis Reduced Workers Comp Reserves – Short Deadline

We reduced Workers Comp reserves for an Animal Rescue and Veterinary in 30 days by 300,000 was one of our most recent successes.   How do we do it?   Follow along – maybe you can do it for your company or client.

pic of puppy sleeping reduced workers comp reserves
Wikimedia Commons License – Eugene0126jp

Making available more funds to help save kittens and puppies felt great – using the below semi-secret method.   An agent contacted me to help her with a large client where their Experience Mod was going to incur a sky-high spike.  Yikes!

Self-insureds can use the same techniques – the timing can be adjusted to whenever you have an LDF calculated for you.

The Method To The Madness – 10 Steps (Two Bonus)

  1. Obtaining the correct loss runs – the agent and I could not obtain the correct loss runs for many weeks.  Three different versions of the claims loss run existed with different claims on them.
  2. Online Access – I have been harping on having the claims reserves and notes access for over 25 years.   The agent and I were able to obtain an online account with the correct info.   You can print your own loss runs if you have an online account with the carrier.   We received this two weeks before the UNIT STAT date.
  3. Understand Your UNIT STAT Date.  You have to know what reserves peg to the Experience Mod and on what date.  Follow this link for an explanation of the UNIT STAT date.  So many end-of-year or end-of-policy-year reviews can be very worthless.
  4. Understanding What To Leave In – What To Leave Out – many claim loss run review requests from employers and agents say – “Hey, let’s review them all” – the wrong method.   As a claims person for many years, reserves increases were sometimes caused after having to review a set of claims for an insured and/or agent.  Let some sleeping dogs lie (no pun intended), but which ones to pick and which ones to pass over?
  5. These &^%$& Reserves Are Too High – the bane of many adjusters – the same as #4, but on an individual claims basis.  The comment will usually cause an adjuster to dig their heels in the ground and push back hard.   Threatening to bring up the reserving with their claims supervisor is not recommended.
  6. Look For The Algorithms- if you have claims notes and reserve access, many claims departments have some type of tracking algorithm (analytics) that may point out over-reserving.   You are not going to find this info on just a claims loss run.  J&L has its own algorithm – it is called workers comp claims experience.
  7.  Relationships, relationships, and relationships – the most important of these ten.   The agent had a working relationship of sorts with the claims adjuster.   Even though we were running out of time, the agent never challenged the claims adjuster.  <<very important point.
  8. Employers and agents, do you know who is working on what files – no, not the name on the loss run – have you spoken with that adjuster – best by email.  See #7 – do not come out of the blue and make the request.
  9.  Explain Your Goal – adjusters are goal setters and seekers – explain to them what you are doing by having the reserves reduced and the results you are seeking.
  10. Pick The Top Three – a huge insured may want to pick five.   Workers Comp claims adjusters are short on time.  Make sure that you do not ask for 10 – 15 claims to be reviewed for reserve reductions.   That request will go to the bottom of the pile and then the UNISTAT Date will pass and your efforts to have reduced workers comp reserves will all be in vain.
  11. Bonus – Show The Insured The Experience Mod Differences – calculate what the Mod would have looked like without the reduction.   This can be complicated – be careful.
  12. Bonus #2 – Try to start the process at least 90 days before the UNISTAT Date.  Reserve reductions may have to go through a Claims VP, Manager, and Supervisor to approve reduced workers comp reserves.  Start early.

The Results Of The Reduced Workers Comp Reserves

Sea Turtle reduced workers comp reserves under the sea
Wikimedia Commons – Brocken Inaglory

The final results will not be known until the UNIT STAT publish date.  The final results of the reduced workers comp reserves should be published in December of this year.

Make sure that you convert the differences in #11 above to premium dollars if possible. Reduced workers comp reserves are great. The final effect on the premiums is even better.

 

 

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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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