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Workers Comp Reserve Redundancy – The Good, Bad, and Ugly

Workers Comp Reserve Redundancy – Industry Health Measure + Bane of Claims Staff What is a Workers Comp Reserve Redundancy?  Why does it keep Claims VPs up at night? Workers Comp Reserve Redundancy Definition Reserve Redundancy can be thought of as two-sided.   On a micro-level, an aggressive reserve by an

Workers Comp Allocated Expenses – Who Pays For Which Bills?

Workers Comp Allocated Expenses – The Hidden Premium Charges You May Not Owe A long-running debate still exists today on how workers comp allocated expenses are charged to employers’ accounts.  Let us cover the: Definition of the expenses Process of charging the allocated expenses to the employer’s Experience Mod Sources

Reopened Workers Comp Claims – Watch The Reserves

Reopened Workers Comp Claims – Big Problem When does a reopened Workers Comp claim cost more budget for insured and self-insured employers? I reviewed a file this morning that had one of the classics that cause agents, risk managers. underwriters, rating bureaus, and most importantly insureds to become very irritated

Workers Comp Reserve Reduction Strategy – Critical Last Step

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

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

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

What Are Workers Compensation Claim Reserves – Confusing Term

 Workers Compensation Claim Reserves Difference Among Carriers and TPAs Most Workers Compensation Claim Reserves begin when the data input division of a carrier sets the claim up and puts on an automatic reserve. The automatic reserve sets at usually a nominal amount for a medical only or lost time claim.

Workers Compensation Reserves Reduction Alternative Mini Guide

Workers Compensation Reserves – Lowering Them Can Be Difficult  The Workers Compensation reserves on a file naturally generate controversy.    Why is there so much discussion on them?   How can you have a great conversation with your claims adjusters?    A workers compensation claims adjuster’s daily activities include 12 more

When Are Final Claim Reserves Set – Is There Exact Date?

Final Claim Reserves Set Earlier Than Expected The final claim reserves are set much earlier than one might expect in the reserving process. Most adjusters set the final reserves at 60 days into a claim.   The exact timetable is: 14 days – initial reserve – usually made to the medical

Workers Compensation Reserves – Fee Schedule Hidden Benefit

Workers Compensation Reserves More Accurate With Fee Schedules Workers Compensation reserves (Total Incurred minus Paid) receive an accuracy boost with fee schedules.    Why? – Let us go into the mind of an adjuster getting ready to set permanent file reserves at 60 days. BTW, this articles stems from an

$250,000 Claim Reserve Level – Why Is that Number So Important?

$250,000 Claim Reserve Level Creates Many Critical Responsibilities The $250,000 claim reserve level causes many necessary actions.  Some of them are obvious.   The other not-so-obvious actions are just as important. Please note that the Reinsurer and Excess Insurer are the same for this article. Usually,  a claim that reaches this

Workers Compensation Reserve Increases – 10 Reasons For Huge Ones

Workers  Compensation Reserve Increases 10 Ways To Cause Huge Reserves Most Workers Compensation reserve increases can be controlled by employers.   Let us see how employers cause huge ones below.  Some of these come from the Six Keys To Saving On Workers Comp insurance that I wrote in the 1980’s. The

Workers Compensation Reserves – How Does Adjuster Set Them?

Workers Compensation Reserves – The Illusive Moving Target All Workers Compensation reserves have a common element.   Very few, if any, employers, actuaries, underwriters, agents, and any other players in this hybrid insurance understand how reserves are set – other than the adjusters themselves. By the way, that is a graphical

Work Comp Reserves And Twilight Zone Phone Call

How To Negatively Affect The Initial Work Comp Reserves The Work Comp reserves on a file are based on a more complicated formula than just an educated guess.   One of the quickest ways to have the claims staff set very high initial reserves is by starting the file with the

Best Way To Waste Time On Workers Comp in December

The Easiest Way To Waste Time On Workers Comp Before The New Year I have discovered the best way to waste time on Workers Comp in December.   Workers Compensation reserves do not directly apply to a policy that renews within 30 days.   We receive many emails and phone

Workers Compensation Predictive Modeling Will Never Work

Workers Compensation Predictive Modeling One of the more popular buzz phrases now is Workers Compensation predictive modeling.  If  one looks at any of the WC groups on LinkedIn,  there are many discussions on this very matter. There are many predictive models on WC.  Those models usually leave the observer with

Stairstepping Reserves – Two Edged Avoidable Poisonous Sword

Stairstepping Reserves Never Good For Workers Comp The two edged sword of Stairstepping reserves can be one of the most damaging developments to E-Mods or even worse for self insureds/large deductible plans. The basic Workers Comp claims formula is Total Incurred = Paid + Outstanding Reserves.   The Total Incurred

Workers Comp Reserve Reviews And Subrogation – Three Concerns

Workers Comp Reserve Reviews And Subrogation Our Workers Comp Reserve reviews uncover many concerns on claims handling.  Subrogation refers to an insurance company seeking reimbursement from the person or entity legally responsible for an accident after the insurer has paid out money on behalf of its insured. In Workers Compensation,

Self Insureds – Do You Know If Your Excess Insurer Has Been Notified?

Self Insureds Need To Monitor Excess or Reinsurer Notification Do you know if your self insureds has been notified? Workers Compensation excess insurance (reinsurance) can often go unnoticed in all the inner workings as a file progresses towards its conclusion.   A reinsurer denying coverage because they were never put

Outstanding Reserves Are Key to Comp Cost Reduction

The Outstanding Reserves Are The Key Outstanding reserves can make or break any company’s Workers Comp budget. I received two questions this week on the three parts of what is considered Total Incurred. Total Incurred is reported by your insurance carrier to the respective rating bureaus. The basic formula is Total

Workers Compensation Claim Reserves – The Skinny

WC Claim Reserves Indemnity From an article and a manual, I wrote many years ago. The main WC insurance variable this manual addresses is Claims Reserves (Reserves). THE MOST IMPORTANT THING TO REMEMBER IS THE CLAIMS RESERVES ARE THE UNREGULATED PART OF THE PREMIUM CALCULATION PROCESS. Insurers can set the level

Quick Workers Comp Reserving Analysis – Total Incurred Is Key

Workers Comp Reserving Is A Guesstimate The Workers Comp reserving on your files usually is based on no formulas.  This article is from another manual that I wrote many years ago. It is timeless information that is true for all states. Claim reserves are sometimes the ignored part of a

Premium Audit and Reserve Question – How Often Per Policy Year?

Reserve Question And Premium Audit = Not The Same Thing We received this reserve question earlier this week. I thought I would address it now as there seems to be some confusion on the premium audit and reserving process for Workers Compensation. The emailed question was – How often should

What Does Stair Step Reserving Mean?

Term Of The Day – Stair Step Reserving The stair step reserving of Workers Comp reserves is an age-old concern of any party to an insurance or TPA policy.   If loss reserves are raised by increments in order to cover the cost of claims expense as they happen, the

Your Reserve Review Action Plan – Have You Contacted Adjuster

Reserve Review Action Plan I had posted often over the last few weeks concerning claimx`s review for insureds with a January 1, 2011 renewal date. I even included a schedule of sorts on how to proceed on a Workers Comp reserve review. I used the 1/1/2011 policy renewal date as

Stair Stepping Reserves Bad Effect On Workers Compensation Budget

Stair Stepping Reserves Very Harmful In my last post, I noted the term stair-stepping. This can ruin any Workers Comp budget for a regular or self insured in Workers Compensation. Stair stepping is the total failure of a claims department and their administration – in other words NO EXCUSES. My

Lower Workers Comp Insurer Reserves Can Be Harmful

Lower Workers Comp Reserves Not Always Best The workers comp insurer reserves sometimes hide a reserve deficit.  AM Best released a report on May 2nd that was startling to me. Of the 11 insurance companies that failed, nine were due to inadequate reserves and pricing. The carriers were not necessarily

Workers Comp Reserve Reduction Review Plan For Dates Other Than January 1st

Reserve Reduction Plan For E-Mods Workers Comp reserve reduction review plans need to be on schedule.   I have devised a formula for calculating when your reserve or E-Mod reduction plan should begin overall. As I posted last week, you should start three months BEFORE your Unit Stat date. Sound

Workers Comp Reserve Reduction Plan – Is Yours In Place?

Reserve Reduction Plan And The Unistat Date I wrote last week on the timing and deadline for having your Workers Compensation reserve reduction plan in place. If your company has not begun with the plan, you are throwing away Workers Compensation Dollars. If your renewal date is January 1, you

Workers Comp File Reserves – You May Be Running Late

Workers Comp File Reserves Timing Important I try to post information on Workers Comp file reserves this time of year. Why? The majority of Worker Compensation policies renew on January 1st.  The Unit Stat date for those policies is 7/01/11. Your companies Unit Stat date will occur 6 months AFTER

Bulk Reserves Cover Large Number Of File Concerns

Term Of the Day – Bulk Reserves The term bulk reserves are one of the antiquated terms in insurance.   An accumulated amount determined to provide for future loss of payments for known claims. These include case reserve inadequacies, additional case reserves, and claims that may reopen or other reserves

What Are Allocated Loss Adjustment Expenses( ALAE)?

Term Of The Day – Allocated Loss Adjustment Expenses The Loss Adjustment expenses (ALAE)  can be allocated to the adjustment of a certain claim. Often, you will see this on Workers Compensation claims in the Expense Total Incurred figure. There has been much debate concerning what to include in the

ALAE Allocated Loss Adjustment Expense Definition

Term Of The Day – ALAE ALAE is the acronym for  Allocated Loss Adjustment Expense . In Workers Compensation, there are three areas of reserves and loss payments. They are indemnity, medical, and Allocated Loss Adjustment Expenses or just expenses.   Indemnity benefits are defined very specifically.  The lines between medical and

When To Start Your Workers Comp Reserve Reduction Program

Workers Comp Reserve Reduction Program I was going to construct a chart on when your company’s Workers Comp reserve reduction program would need to begin overall. I think that a formula would be easier. For a quick date calculator, try this one. There are two assumptions that have to be

Workers Comp Claim Reserving – Follow It Closely

Workers Comp Claim Reserving Workers Comp Claim Reserving should be followed closely as part of your workers compensation premium reduction program. One of the most mystifying areas of Workers Comp is in the area of reserving. I have written often on reserves, as believe it or not, they are just

Loss Reserves – Where Do I Find Them For My Workers Comp Claims?

Loss Reserves Are An Adjuster’s Forecast  Loss reserves are the the dollar amount set aside or reserved to completely cover the expected cost of a claim or claims under the workers comp policy issued by the insurance company. This determined amount is set aside as of the annual statement date.Loss

Allocated Expenses – Very Important and Confusing Definition

 Allocated Expenses-Workers Comp Term of The Day Allocated Expenses (also known as ALAE)  are expenses charged to a Workers Comp term file that are not indemnity or medical benefits. They are associated with the adjusting of the file. Expenses for defending claims such as attorney fees, private investigators, independent medical

Over-reserving Workers Comp Claims – How To Tell

Over-reserving on WC Claims WC claims Over-reserving analyses are difficult.I usually try to post every two days. I have not posted for four days as this area was too complicated to fit into one post. The bottom line is that it is very difficult if not impossible to identify reserves

Workers Compensation Loss Run Most Important Information

Workers Compensation Loss Run Information Critical The Workers Compensation Loss Run contains very important information. I have posted almost ten times concerning online claims access. If your company is unable to have online access to your claims, at least the loss run will contain some very pertinent information. If any

Automated Workers Compensation Reserves Concerns

Automated Workers Compensation Reserves Area Of Concern The Automated Workers Compensation reserves by carriers and TPA’s cause me much concern. Automated reserving is an area of Workers Compensation reserving with certain insurance carriers or TPA that causes me great concern. I have actually been told more than once by a

Travel and Expense Charges to Reserves (T&E) – Area To Check On

Travel and Expense Charges to Reserves – Controversial Subject Travel and expense charges to reserves creates many questions on how to handle these in the files. There is one set of charges to reserves that employers should be aware of whether self-insured or not. Travel and Expense charges should always

Workers Compensation Expense Reserves Are Often Ignored

Expense Reserves vs. Medical Reserves The third and final reserve figures are the Expense Reserves. These reserves have caused quite a large amount of confusion ever since I started my career in Workers Compensation. The confusion always centered on what should be included in the Expense Reserves vs. Medical Reserves.

Medical Reserves and CPT Codes In Workers Comp Claims

Medical Reserves – CPT Codes Workers Comp medical reserves are the most complicated of the three reserves to estimate. Can you imagine trying to predict all of the medical treatment that will occur over the lifetime of a file? There are as many medical treatments as there are CPT codes.

Workers Comp Indemnity Reserves Basic Definition

Workers Comp  Indemnity Reserves Are One Of Three Reserve Categories The Workers Comp indemnity reserves on a claim represent the future payouts of benefits to the employee over the life of the claim. The definitions for most of these terms can be found by clicking on the Definitions tab/button in

Workers Comp Claim Reserve Contains Three Parts

Workers Comp Claim Reserve = Three Parts This post could be a very long one as there are hundreds of variables that comprise a Workers Comp claim reserve. Each state is unto itself on the benefits that are provided under Workers Compensation. There is no one list that points out

How and When Are Reserves Set For Each Claim?

Workers Comp Claims Reserves Set At 60 Days When are  indemnity,medical expense reserves set on your claims?  This subject is one of the most confusing and frustrating budget areas for insureds. Workers Comp reserves are very important to companies with a regular commercial insurance policy or self-insureds. Quite often, I

WC Loss Run Claim Reserve Analysis – Steps to Cut Comp Costs

Loss Run Claim Reserve Analysis A loss run claim reserve analysis is one of the most important steps in  reducing your workers compensation budget.   Are the Workers Compensation reserves correct on the file you are examining? I have posted on this subject previously.  As it is a very popular question

More on Recession proofing Your Workers Comp Policies

Workers Comp Recession Proofing – Another Angle The Recession proofing program centers this times on reserves. I have received quite a few emailed comments and questions about the current recession. Quite a few forward-thinking employers have asked about the quickest method or methods to reduce Workers Comp premiums in 2009.

Self Insured File Reserve Reviews Important Part of Budget Process

Self Insured File Reserves Need To Be Monitored Reserve reviews for Self insured Files are just as important as ones for companies in the regular voluntary insurance marketplace. We often hear from Self Insureds that the reserves on a file do not matter that much, as it is paid funds

One Thing Not To Do With File Reserves on Loss Runs

One Thing Not To Do On Your File Reserves Working in a Claims Dept for many years, I had seen one thing that would totally backfire on an employer that had questions on their Workers Comp file reserves. If you have established a working relationship with your Workers Comp claims

Workers Compensation Reserves- Silent Budget Killer

Workers Compensation Reserves – The Ever-Silent Budget Killer Workers Compensation reserves can be critical when trying to lower your company’s premiums.  The silent budget killer for most company’s Workers comp program revolves around the claim reserves. I have posted very often about the process for calculating Workers Comp premiums. The

File Premium Reserve Reviews – Differences

Workers Comp File Premium Reserve Reviews Yes, they are all different.  Workers Comp file premium reserve reviews are three very different reviews that we perform for employers I have posted on this issue more than a few times. This is most of what we do for a business. I felt

Now You Have Loss Run Online Access-What Do You Do Now

Loss Run Online Access Is Just The Beginning  You have online access or you have all of the loss runs – what do you do now? You will mainly be concerned with just the reserving part of the claim for now. One of the important points to remember is that with a

Worst Case Scenario Workers Compensation Definition

Workers Comp Claims Worst Case Scenario The worst case scenario on your Workers Comp claims. These words send chills through me like no others in anything that deals with Workers’ Comp. I did not like to say them when I was an adjuster long ago, and I do not like to

Workers Comp Reserve Reviews Loss Run Best Reduction Strategy

Workers Comp Reserve Reviews Start With Current Loss Run The start to effective Workers Comp reserve reviews begins with a current loss run – hopefully online.  This is the area that seems to be the most misunderstood. We often have employers contact us about a loss run they had just

Reduce Premiums – Fastest Way With Workers Comp Reserve Review

Fastest Way To Reduce Premiums Reserve Review Performing a Workers Comp reserve review is the key to reduce premiums of your reserves very quickly. Your Workers Comp premiums can be reduced very QUICKLY  in most situations.. It is the reserve review. The reserves are the engine of the premium charging

Reserve Reviews – Hidden Way to Save Workers Comp Funds

Workers Comp Reserve Reviews Can Be Complicated  Reserve Reviews – the hidden way to save $ on your Workers Comp premiums – Reserve reviews are not something that most of our competition cares to address. However, reserve reviews are just as important as premium reviews. Once again, we try to

Premium and Reserve Reviews Are Very Different Tasks

Work Comp Premium and Reserve Review Differences The difference between Workers Compensation premium and reserve reviews comes up often during one of our presentations or in speaking with current or potential clients. To keep from boring you to tears, we will cover Premium Reviews today and Reserve Reviews next time.

Automated Reserving Programs Work Better Than Claims Adjusters?

Automated Reserving Programs For Workers Comp – Better Than An Adjuster? I received this question on automated reserving in response to yesterday’s post. You had said there are no guidelines for a Workers Compensation Adjuster to set the Workers Comp reserves on a file – How about the automated reserving

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