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Workers Comp Reserve Schedule – Are You On Time?


Workers Comp Reserve Schedule – Questions Answered On When To Review

In last week’s newsletter, I included an old viral classic article link on when to start on your Workers Comp reserve schedule to review your loss runs and discuss your company’s reserves with the claims staff.    I received a few questions on the timetable for starting a review. Let us look at why you must start nine months before your next policy renewal at the latest.

pic man looking over workers comp review schedule reserves
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Do You Use The Same Schedule for Self-Insureds and Regular Voluntary Market Policies?

Answer – Yes and No.   I have written often concerning the difference between workers comp in the two different worlds of self-insureds and voluntary market policies.  However, for today’s purpose, let us use the same schedule for example purposes.  For self-insureds, actuaries use Loss Development Factors (LDFs) which are similar to Experience Modification Factors for regular voluntary market policies.

Large deductible policies should follow the same schedule as the regular voluntary market policies.  Your Experience Mod is reported to the rating bureaus on the same time schedule.

So Many Articles on Your Website Keep Saying That Workers Comp Looks Backwards, But Why Are You Referring To The Future?

It is the UNIT STAT date when your insurance carrier tallies your Total Incurred and reports those figures to the rating bureaus that lead to the eventual calculation and publishing of your Experience Modification Factor.   That date is exactly 180 days or six months after your policy expires to give time for full claims development figures to develop.

You can look at it as 90 days after your policy expires or 9 months before your next policy.   The next question will answer why waiting until the last minute will not work to reduce your reserves.  Check out this article on why reviewing your reserves with the claims department just before policy expiration is almost a complete waste of time.  The only saving grace here is that you are reviewing the reserves six months before your UNIT STAT date.  So much can change in six months’ time.  Three months before the UNIT STAT date is the deadline to start on your company’s workers comp reserve schedule.

Why Can’t We Wait Until 30 Days Before the UNIT STAT Date to Review The Claim Reserves?  We Are Too Busy To Keep A Workers Comp Reserve Schedule

The simple answer is getting a claims department to lower reserves on a rush basis goes over like a lead balloon with any claims staff.   Think of a claim as a paper file, even though that is a rarity nowadays.  This article on reserve authority shows why a paper file has to cross many desks before any reserve reductions.   For instance, a file with a $300,000 reserve level has to go through the adjuster, supervisor, manager, and then the VP of Claims.

That process alone may take up to 45 – 60 days at a minimum.  On top of that time, your company will need to review the claims loss run and the online file if you have access.  A workers comp reserve schedule should be part of your risk management diary system.

What Is The Number One Wrong Thing To Do In This Process?

I have mentioned this many times on this website.  DO NOT just call up the adjuster or supervisor and complain that “These reserves are too damned high” with no justification on which files should have the reserves reduced.

Think of the workers’ comp claims process as a team effort between the adjusting staff and your company.  I have had this happen to me in my claims career many times.   Agents and Risk Managers would call or email without any justification and be upset that the claims department could not just cut 15- 20% or more on the total reserves.    An ongoing team approach makes this much easier in the long run.  Being confrontational will not reduce the reserves.  I guarantee it.

A well-placed and well-timed email may work if your company has followed the reserves and the claim since day one.   The Six Keys that I wrote 35 years ago will also help your reserves – especially with a well-established industrial medical treatment network.

Do not have the claims staff look like the person in this picture as part of your workers comp reserve review schedule.

Also Read: What Is A Guaranteed Cost Program In Workers Compensation?



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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