How are your Workers' Compensation premiums calculated? Your premiums are calculated from a formula that has no less than 34 steps to it. Let's first look at what is the driving force behind what you pay in Work Comp premiums. The reserves, better know as total incurred on the file, is the catalyst of the whole process.

As I have said many times before, WHAT YOU PAY IN PREMIUMS HAS NOTHING TO DO WITH WHAT IS PAID OUT ON THE WORKERS COMPENSATION FILE. The reserves are what the adjuster thinks you will pay out on the file for the life of the claim. As you read this, do you know what the total incurred is for each of your Workers Compensation files? If not, you may be in for a real shocker. Immediately ask for your loss runs from your insurance carrier that show all of the files that are open. Review them closely to see what you are paying for in your premiums. If the total incurred for a file looks high to you, ask the adjuster to explain their reserves.

If you feel like you need help with the loss runs, consult a Workers Comp claims consultant as soon as possible. Remember, you are charged for THREE years for the total incurred on a claim.

Tomorrow - More on the Premium Calculation

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