What is a Claim Reserve?
For each Workers Compensation claim, an adjuster will open a file for the injured worker and set aside money specifically for the estimated cost of the claim.
Over the life of the file some money is spent and the remaining amount set aside is in “reserve”. This reserve amount should represent the remaining cost of that claim.
The dollars sitting in open reserves for your WC claims impact your Experience Modification. It is critical that these reserves be reviewed prior to the data being reported to the WC Rating Bureau.
If the actual cost of the claim will be less than the initial “estimated” cost, then the adjuster should lower the reserve. Lowering the reserve will help your Experience Modification.
When is the data reported?
Your WC carriers for the prior three years will report claim data to the WC Rating Bureau six months before your insurance renews. Open claim reserves should be verified prior to that date.