A Workers Comp question from one of our blog readers - This is a question that we are asked quite often at presentations and at client meetings.

What is the difference between paid, total incurred, and reserves on our Work Comp loss runs? The way that most carriers and TPA's define the terms are as follows:

• Paid - what was paid on the Workers Compensation file to the date of the loss run. If any large bill or payment was in a pending status, Paid does not include the bill until a check has been cut. THIS IS ONLY PART OF WHAT YOUR EMOD IS CALCULATED FROM ON YOUR UNISTAT DATE.
• Total Incurred - this is what was paid + the Work Comp reserves on the file. THIS IS WHAT YOUR EMOD IS CALCULATED FROM ON YOUR UNISTAT DATE. The Total Incurred on the file include the reserves.
• Reserves - This is the estimated amount the Workers Comp adjuster thinks will be spent on the claim OVER AND ABOVE WHAT HAS BEEN PAID ON THE CLAIM.
• PAID + RESERVES = TOTAL INCURRED

If you have not heard of some of the terms in this blog, check out http://www.cutcompcosts.com/ and click on the Definitions Tab.

Check out our next installment - Some misconceptions about Emods and Loss Runs

Our main website is www.cutcompcosts.com