The all-important valuation date is that Kodak moment where the insurance company sends the records of an employer’s payroll and employee injuries (both paid and reserved) for inclusion on the experience mod. They can report this information any time during the 18th month after inception of the policy and annually thereafter, so we recommend targeting the 1st of that 18th month to be sure you finish your work in time. This means that if an employer renews on January 1 or January 28, you're considering the valuation date to be June 1.
We begin preparing for the valuation date 90-120 days before that happens. First, we pull the currently valued loss runs from the policies that will be included on the next experience mod. Are there any unresolved (open) injuries? If there are, we continue the process.
The next step is to communicate with the adjuster to find out what the status of the unresolved injuries is. You can phrase it as, "I'm meeting with my client about their unresolved injuries and I was hoping you could help me out by giving me an update on each of them."
We will then take this information to the client. The purpose of doing this is two-fold: One, you have the opportunity to let your client know what the plan is to resolve their injuries and, two, you may find out that the adjuster does not have all the most current information. If there’s a third, it’s that all this reinforces the employer’s sense that you are looking out for them, which solidifies your own position.
If you discover information the adjuster can use, report it back to them. This is also when you would have conversations about possibly reducing the reserves on any of the unresolved injuries. The reason is that those reserves count on the experience mod just as if they’ve been paid. Therefore, reducing those reserves can result in a positive impact on the experience mod.
This takes us full-circle back to that important 90-120 days out period, so designated because it can often require that much time to complete all the discussions that are needed and you can’t be late in completing your work. In almost all cases, once the insurance company submits the information to the rating bureau, it is locked in and the best you can hope for is to reduce your clients experience mod in subsequent years.
Kevin Ring is the Lead Analyst for the Institute of WorkComp Professionals, which trains insurance agents to help employers reduce Workers’ Compensation expenses. A licensed property and casualty insurance agent, he is the co-developer of a new Workers’ Comp software suite that will help insurance professionals working with employers. He can be contacted at 828-274-0959 or [email protected].
