CNC Insurance Delaware Business Insurance Review - Claims Reserve Fairness

I guess when it comes to claims reserves and their fairness, it depends on your prospective? If your the insurance company, setting a higher reserve may be indeed justified if a business's claims history indicates higher risk. On the other hand, should the business have to pay higher rates if the insurance company sets a high reserve? This back and forth goes on every day in the commercial insurance world. In theory, the reserve amount should be enough to cover claims. The insurance company gets the benefit of setting aside earnings and investing them, as claims are rarely paid immediately. In actuality my experience is that most reserves are over exaggerated. Insurance companies every year continue to release reserves back into earnings to bump up their income statements. From the business owners perspective, this just does not make sense. They are charged higher rates on the anticipation of the reserves being paid out, and the insurance companies drop the reserves and put them back into earnings. Unfortunately the insurance company does not retroactively credit premium back to the business owner because they "actuarily guessed" wrong on the reserve. Thus, the practice of reserving claims continues to add to the complexities of the business and brings up the fairness question every time. Until next time be careful out there and know your risks.

G. Kevin Nemith
President CNC Insurance Associates, Small Business Insurance Center
Proudly serving De, Md, VA, PA, & NJ
www.cncinsurance.com
www.bizinsurancetv.org

Popular posts from this blog

Delaware Business Insurance Update from CNC Insurance Associates, " Personalization of Auto Insurance Could Reduce Rates !" 12-25-18

Insurance rates may go down in the future because of "auto personalization". What is this you ask? Imagine being charged insurance rates based on your personalized use of your auto. If you drive very little next week, then your rates go down. If you drive the speed limit most of the time, your rates go down. If you avoid hard braking and tailgating, your rates go down. Get the picture?  The use of telematics has given the insurance industry a chance to personalize insurance costs directly to the users' driving habits. Gone may be the days of surcharging a male driver under the age of 24 just because they are young. If the telematics show that he can drive as safe and responsible as a 40 year old, then his insurance premiums should be comparable. If you go on vacation and park the car for two weeks, telematics will inform the insurance company that there has been no risk, and your insurance premiums will reflect that. Now as good as this sounds it will work the other wa
Read more

Get employees back to work quickly to keep work comp costs down

Image
In the past I have spoken to clients regarding a particular workers compensation claim affecting them and have asked if they have brought the employee back to work yet. Too many times the answer is no, they have nothing for that employee to do since said employee is not 100% and unable to perform their specific job prior to their workers compensation injury/claim. The problem with this is that too often employers miss the point that even though an employee can't perform in the position they were in prior to their injury, it behooves the employer to create some type of alternative task/job the employee can do until such time they are able to resume their normal duties. Bringing that employee back to work means that work comp benefits /payments in that particular claim are being curtailed, thereby saving the employer potentially more being paid out, while adding to their experience mod and driving their overall work comp expenses up.
Read more

Delaware Business Insurance Update from CNC Insurance Associates. " Mental Health Issues in the Workplace Needs Risk Management" 12-2-18

Employees with depression and severe anxiety are very common in the work place today. Studies have shown that close to 50% of all who suffer mental health issues at work are not being treated effectively. Mental health disorders do not discriminate, as it affects all employees even in the C Suite. So what is the employers' responsibility for dealing with this issue? It definitely requires risk management.  Employers can begin by making sure the health insurance that is offered to employees has mental health coverage. Many plans do not carry this coverage even though the ACA requires it. More importantly employers should create a culture of conversation which can allow employees to openly discuss their mental issues. Employee Assistant Programs set up by employers can offer education and services to help employees improve their wellness and sleep. Also employees abuse of prescription medications , need employers attention to make sure doctors and counselors are part of the assistant
Read more