Understanding Workers Comp Claim Reserves
A claim reserve is the estimated total cost to resolve a claim. An initial reserve will be applied to a claim a few days after the adjuster receives it and has had a chance to conduct a preliminary investigation. A final reserve should be placed on a claim thirty days after the adjuster has completed a claim investigation.
A claim reserve is the sum of the best estimate of several claim components: medical payments, legal expenses and wage replacement payments.
Key Point: Claim reserves that are set too high initially, or that are improperly left hanging on an old claim, can have a materially adverse effect on your experience modifier. An inflated experience modifier costs you money!
Employers should look at the reserves established on all open claims to make certain that they are in line with the circumstances as the employer knows them. We are happy to make this review for you!
