By Jared Perkoski
As winter winds down, chances are that you had one or more insurance claims arise during the season. Maybe it was a slip and fall, or a plow truck accidentally hitting a curb, or maybe one of your employees was injured on the job. This is why you have insurance. But how are these new claims viewed by your insurance carrier? How will they affect your premium?
Managing your reserves
When an insurance claim gets processed, the carrier will attach a reserve amount to it. A reserve is the amount of money the insurance company estimates the claim will cost. This number could include medical bills, lost wages, property damage or others. This is only an estimate and often the claim will close at a lower dollar amount. Typically, the insurance company is going to err on the side of caution. This practice, however, can be detrimental to the insured.
Claim reserves need to be monitored on a regular basis. There is a direct relation between reserves and insurance premiums. When you renew your insurance policies, the carrier will view all claim reserves as claims paid. They assume their estimates are going to be close to the number they will end up paying out. This is why it is extremely important to review all of your open claims and get them closed out as soon as possible for as little as possible. There are things you and your insurance agent can do to help keep claim reserves down and, in return, help keep insurance premiums down.
The first, most obvious step is to review all claims with your agent when they happen. After the claim gets processed and a reserve is attached, review it again. The claim may have incorrect information, which could lead to an inflated reserve dollar amount. In some instances you can speak with the adjuster, and they will lower the reserve if you can present a valid reason. This is important, especially leading up to your insurance renewal. It is crucial to have accurate reserves so you are not overcharged by the insurance company. Monitoring these claim reserves should be ongoing. Some insurance claims are processed and paid quickly. However, claims that involve bodily injury such as slip and falls can last years. This is why it is critical to update the insurance carriers on any new information that may allow them to lower the reserve amount.
Should you settle?
Settling an insurance claim can sometimes be the best option and can prevent your insurance premiums from spiking. We have all seen the rapid rise of slip and fall claims in the United States. Whether legitimate or not, they tend to be expensive. When an insurance carrier sees a slip and fall, they typically attach high reserves to them. The unknown cost of medical bills is usually a large factor. In some instances it can be cheaper to settle a claim for tens of thousands of dollars than have a claim reserve of hundreds of thousands of dollars on your loss history. Discuss your options with your agent and the insurance carrier.
You should be receiving loss runs every year from your insurance carriers. Loss runs show all of your claims history for a determined amount of time. This is valuable information and should not be discarded without reviewing. Everyone wants to save money on insurance. Reducing and closing claims are ways you can accomplish that.
Jump start solutions
- Review your claims: Review all claims with your agent when they happen, and monitor them closely until they are resolved.
- Review loss runs: Loss runs show your claims history for a determined amount of time. Make sure they are accurate.
- Settling an option? Slip and falls have higher reserves attached to them. Settling may protect your premiums from spiking.
Jared Perkoski is a risk advisor for FB Insure. Contact him at 508-695-1441 or email firstname.lastname@example.org.