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Workers Comp Reserve Reduction Strategy – Critical Last Step

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Workers Comp Reserve Reduction Strategy – Do This Last Critical Step

Many articles in this blog center around formulating and enacting your workers comp reserve reduction strategy.   We have heard from many article/blog readers -where the anticipated reserve reductions did not tabulate properly.

picture steps to workers comp reserve reduction
Public Use License – Wikimedia – DanielZanetti

We heard from an agent today with the question – what happened – there was no movement in the workers comp reserves.   The time this hits the fan is when the Experience Modification Factor was published by the insureds respective rating bureau.

The insured or their agent then contacts us about what happened after the reserves were negotiated down but the Total Incurred (Paid + Reserves) did not reduce one penny.

Adjuster Relationship = Timely Workers Comp Reserve Reduction

My first out-of-the-box questions cover the article from last week on reserve reductions – click here.   The one question that I always add is – did you pull your Workers Comp reserves just before the UNISTAT Date?

Workers Comp adjusters are overloaded at the end of a month.  DO NOT expect them to drop everything if you request a reserve reduction two days before the UNIT STAT Date.

The working relationship with the adjuster becomes very important when you request a reserve reduction on a certain file or group of files.

Your Reduction Request is Ranked 13 out of 13 – OMG!

Blue Puzzle Workers Comp reserve reduction on the floor
Wikimedia Commons – Jared Tarbell

The reduction will not occur- trust me.  If you want to know what claims adjuster is doing – check out the 13 duties of a workers comp adjuster that I originally wrote in 1994.

Most TPAs and carriers want all the 15-and-60-day reserve increases cleared out by end of the month.

Your reserve reduction or closing request is ranked 13th out of 13.  It is similar to ESPN’s Bottom  10 College Football Poll. 

So – if you are reading this, go back to the reserve reduction article last week, and then follow all the links from there on getting your reserve reductions through and reported to the rating bureau.

For more info, please use the Search Box at the top right of any webpage – totally worth using it.

Self-Insureds – You Are In On This Too (A Little Secret)

Yes, you are not out of the Mod system, except you have a Loss Development Factor to contend with at comparably the same time as the UNITSTAT Date.

Most of the LDF’s use the same timing as the Rating Bureaus and the UNISTAT Date.  You are obtaining an independent LDF – right? (Hope so -if not Use The Contact Us page on the website).

Last Step to Your Workers Comp Reserve Reduction Strategy Is..

You must pull the Workers Comp Loss Run one more time to make sure the reductions you are anticipating are on the books before the UNIT STAT date kicks in.  Yes, self-insureds are included – obtain your TPAs loss run.

The reserve increases or decreases must work their way across many desks (now virtual).  If you are dealing with large reserves, the request may have hung up somewhere in the process.

As I have said repeatedly, online access to downloading your own loss runs is beyond important at this time in your Workers Comp reserve cycle.   Printing our on-demand loss runs helps insureds and self-insureds avoid having to request one and waiting for a response.

The last step should be done approximately a week before the UNISTAT Date.

Red Alert if.. (Star Trek reference)

Big Red Workers Comp reserve reduction Button
Wikimedia Commons – włodi

If the reserves are still at the same levels or the files did not close, you must drop everything and take care of the situation.   You have followed the reserves all year – push it over the finish line.   Email the adjuster with a follow-up call to see why no anticipated reserve reductions occurred on the files.

Remember that you are dealing with #13 out of 13 adjuster duties – and if it is the end of the month, adjusters are totally overloaded.

Do not wait until the last day of the month or the last day before the UNISTAT date.  You are going to be disappointed with the results.  Your Workers Comp reserve reduction strategy will be all for naught.

 

 

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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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