Reduce Your Workers Comp Claims And Next NCCI Experience Modification Rate Through Reserve Auditing

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Perform A Reserve Audit On Your Open Workers Comp Claims To Reduce Your Next EMR Rate

There’s a good reason I send this reminder to clients early in the year — more on that in a moment. But first, if you’re not already familiar with reserve auditing, here’s what you need to know:

It’s one of the only proactive levers you have to reduce your upcoming Experience Modification Rate (EMR) — aside from identifying errors through a premium audit.

Reserve auditing is the process of reviewing the reserve values on open workers comp claims to:

1. Identify reserves that are suspiciously high, and

2. Negotiate more favorable reserve values with the adjuster.

Why does this matter? Because your next Experience Mod will be directly impacted by the reserve values on your open claims.

Get Online Work Comp Claims Access

If you don’t already have online claims access, request it from your carrier — or at the very least, ask for currently valued loss runs for the three most recently expired workers comp policies.

Those three policy periods — not your current one — are the ones used in your next Experience Rating Worksheet.

Then, start a conversation with your broker’s Claims Advocate or a third-party consultancy about reviewing open claims. Today, there are Evidence-Based Medicine (EBM) tools that help identify overvalued claims and support negotiation.

Why This Matters: The Valuation Date

Every policy has a Valuation Date, and it’s the cutoff date for reporting claim values to NCCI (or your independent rating bureau) for your next EMR.

That Valuation Date is exactly six months after your policy renewal. So, if you renew on 1/1, your Valuation Date is 7/1. If you’re one of the 70% of companies that renew on 1/1 or 12/31 — that deadline is closer than you think.

Here’s the catch: Even if a claim reserve is reduced after the Valuation Date — say it drops from $50,000 to $20,000 — your Experience Mod will still reflect $50,000. The reserve is locked.

That’s why starting early matters.

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See Also:

The Zero Cost, Easiest Way To Reduce Your Experience Modification Rate & Work Comp Claims

3 Simple Ways To Reduce Your Experience Modification Factor

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When to Start a Reserve Audit

Start immediately after you renew. Don’t wait until 60 or 90 days before your Valuation Date — you’ll run out of time to act.

Even six months can move quickly. Start by identifying any open claims with unusually high reserves, then work with the adjuster (or your claims consultant) to challenge those figures where appropriate.

A successful reserve audit can:

• Lower your upcoming EMR

• Reduce your renewal premium

• Help you qualify for more business — especially in construction or competitive bidding environments

Bottom Line

Keeping your Experience Mod as close to your minimum mod as possible is a competitive advantage. A reserve audit is one of the few tools available to manage your mod before it’s set in stone.

If you have any questions about reserve auditing, your Experience Modification Rate, or your workers comp program overall, I’d be happy to help.

Let’s review your claims before your reserves are locked in.

Stuart Cytron, MBA has been published in trade journals such Construction Forum St. Louis and St. Louis Business Journal among others. You can read more about Stuart and how he developed a passion for helping businesses reduce work comp expenses on his website.