Having loss runs is not a privilege, but a right of the policyholder. 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 insurance carrier has a claim open from even 20 years ago, your company should be provided a loss run for that claim.
This may be a good time to pull out your company’s loss run and look at the numbers. Recently when reviewing one for a transportation company it was discovered their E-Mod (experience modification factor) increased from .9 to 1.6 in two years.
One of the main pieces of advice to give to an employer is that the E-Mod cannot be fixed in one year. It usually takes 2 – 5 years. Why? The E-Mod is calculated from claims that have been open for less than four years. That is not an exact statement, but an effort to keep this as straightforward as possible.
The main number to examine is the outstanding reserve, reserve, unpaid funds, etc. The outstanding reserves may be named with different terms. Regardless, it is the $ that has not yet been paid out on a workers’ compensation claim.
The outstanding reserves are the forecasted payouts by the adjuster for the lifetime of the file. And, as it is often said, even though the money has not been spent, it is charged off directly to your E-Mod, which in turn heavily affects your premium.
The basic formula is Paid Funds + Outstanding Reserves = Total Outstanding Reserves.
The total outstanding reserves are the figures your insurance carrier reports to the NCCI or the State Rating Board.
There is little you can do about what has already been paid. There are a few specialists who can review the paid funds to see if there were very many overpayments.
The quickest way to cover the claims affecting your company’s E-Mod is to look at claims that are five years old or less. The outstanding reserves for these claims need to be reviewed. If you look at any of these claims and the $ amount of the outstanding reserves seems too large for the injury, you may have found a way to cut your workers’ comp costs. (workersxzcompxzkit)
Author James J. Moore, AIC, MBA, ChFC, ARM is a national Workers’ Compensation premium and reserve expert. He is the founder and principal of J&L Risk Mgmt Consultants, Inc., a Workers’ Comp advisory company. http://www.cutcompcosts.com/www/blog.html. Mr. Moore has allowed WCK Blog to reprint the above blog with minor edits. Thanks, Jim.
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