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.
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!
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)
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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