ADJUSTED
ADJUSTED
Reserving with Julie Greer
In this rebroadcast episode, ADJUSTED welcomes Julie Greer, Senior Catastrophic Resolution Specialist with Berkley Industrial Comp. Julie discusses some general best practices of reserving claims and the possible effects of poor claim reserving.
Season 8 is brought to you by Berkley Industrial Comp. This episode is hosted by Greg Hamlin and guest co-host Matt Yehling, Directory of Claims at Midwest Employers Casualty.
Visit the Berkley Industrial Comp blog for more!
Got questions? Send them to marketing@berkindcomp.com
For music inquiries, contact Cameron Runyan at camrunyan9@gmail.com
Hello everybody and welcome to Adjusted. I'm your host, greg Hamlin, coming at you from beautiful Birmingham, Alabama, and Berkeley Industrial Comp. And I'm excited to share with you this special rebroadcast.
Speaker 1:I find myself very fortunate to work with Julie Greer. She's an amazing, talented adjuster who has spent so much time in the industry, and one of the things that I wanted to tackle was the importance of the art of reserving. I really do believe reserving is an art. It takes years of experience to be good at reserving, and Julie has a skill of reserving some of our most complicated claims, and so obviously, every organization is going to have their own reserve philosophy, but Julie does a very nice job in this episode, breaking down why reservingerving is important and some of the steps to making sure that that philosophy is documented in a way for others to understand. So I definitely encourage this one for adjusters, no matter your experience, and also see it as a great training resource for new employees. So enjoy this one with Julie. Thanks everyone.
Speaker 1:Hello everybody and welcome to Adjusted. I'm your host, greg Hamlin, coming at you from beautiful Birmingham, alabama, where it is finally starting to get cold but I guess, having grown up in the Midwest, we wouldn't call it cold. And then with me today is my co-host, matt Yaling. Matt, if you want to introduce yourself.
Speaker 2:Good morning everyone. This is Matthew Yaling with Midwest Employers Casualty, and I'm coming from the banks of the mighty Mississippi up in St Louis.
Speaker 1:Missouri. Are you guys going to get snow anytime soon here, Matt?
Speaker 2:Well, we had some over the weekend actually, but it stuck around for about 30 minutes and then it's gone. So I like it when it does that personally.
Speaker 1:Yeah, well, I still got a couple of snow shovels in my garage that are just like relics, since we don't really see that down in Birmingham. I think we've had two dustings in four years and both were gone within two hours, so I guess the kids have seen it, but and I bet it shut down everything. Oh yeah, there's nothing happening. If that happens, the world ends so well with us. Today we've got a special guest, Julie Greer, who's our Senior Catastrophic Resolution Specialist for Berkeley Industrial Comp. So we're glad to have her with us. Julie, if you could say hello to everybody.
Speaker 3:Hello everybody. Everybody's talking about where they're from, and I sit here down in the great state of Texas, where typically it's very hot, but I've actually had some freezing weather here over the last week and I'm already over it, so I'm ready for the warm weather again.
Speaker 1:Now you're in the Dallas area, dallas-fort Worth area, is that?
Speaker 3:right Correct. Just north of Dallas, in the McKinney area, which is considered North Texas, suburb of Dallas.
Speaker 1:Excellent. Well, we're glad to have Julie with us. We're also glad to have her as a member of our team. Julie brings a lot of experience. For those who don't know, berkeley Industrial Comp is focused on high hazard workers' compensation insurance, which means we see very difficult injuries on a fairly regular basis, although we don't have a lot of frequency in our losses, and so Julie's part of our catastrophic team that helps us manage those challenging claims and has a lot of experience, so we're very fortunate to have her with us. The topic of the day is reserving claims reserving and we were actually chatting a little bit before this started. This is probably one of those claims 101 topics that we haven't covered in nearly two years of doing adjusted, so we felt like it was time. So Julie's going to be our expert on that today, because I think Matt and I are too far removed now to consider ourselves experts at reserving. I don't know about you, matt, but that's where I'm at now to consider ourselves experts at reserving.
Speaker 2:I don't know about you, matt, but that's where I'm at. I do want to add my own disclaimer. Everyone, every company, reserves a little differently. So anything we say or comment on, we're not giving away the secret sauce here, but I think there's some common best practices in the work comp industry that we're going to comment on reserving From an excess carrier, midwest Employers' excess work comp carrier that we're going to comment on reserving, but from an excess carrier. So Midwest Employers is an excess work comp carrier. I see the reserves on a lot of third-party administrators, a lot of our other insurance entities and account partners. So I see a lot of different reserve philosophies and different styles of reserving. So always interesting, and that's why I was telling Greg earlier I'm curious to see how this discussion pans out. It so always interesting and that's why I was telling Greg earlier, like I'm curious to see how this discussion pans out, it'll be interesting.
Speaker 1:No, I'm glad to have you. I think your perspective will be interesting, having seen so many different styles, and I think we've all worked actually in this group for different carriers, so we've all seen different ways of doing that, and so it should be a pretty interesting discussion. I know for myself I've been joking. We have a couple team members that moved on to new positions and so we're hiring and in that process I've been helping out with some claims tasks.
Speaker 1:Again, I'm a big Marvel fan and I kind of feel like Fat Thor right now. I can wield Mjolnir, but it's just not like how I used to. So I'm glad that we have somebody who's in the trenches that can talk about this topic. I definitely have my own thoughts and we'll be sharing them, but I think Julie's going to do a fantastic job today. I thought we'd start, julie, by you just telling us a little bit how you ended up in claims. We always like to start with this question, and I'm sure when you were young, this was your dream job to be an insurance as a claims person. So tell us, how did it happen?
Speaker 3:Well, like so many, it was quite by accident.
Speaker 3:I was just out of school and I started looking for work and I absolutely had no idea what I wanted to do.
Speaker 3:So I applied for a front desk job at what turned out to be an insurance company and the claim manager came out and brought me back to her office and said she had noticed that I had been to college and wanted to know if I'd be interested in being a claims adjuster. So and I remember telling her I had no idea what that was or whether I was qualified, and she just smiled and I think back it's probably an evil smile and said don't worry, you'll get the hang of it. And next thing I knew I was given a book of rules and regulations for the jurisdiction, 200 plus files, an assistant to help with the payments and state form filing. I didn't even know. I didn't know the difference between a defense attorney, a plaintiff attorney, and I distinctly remember asking the first attorney that called me if he was a good guy or a bad guy, and so I mean, and I I am horrified thinking back what he must've thought.
Speaker 3:He kind of laughed and said I'm the bad guy and, uh, you, you take this to your supervisor. And so from there, you know, it was truly a baptism of fire into the claim world of insurance. But in about six months I was already licensed and I was really good at what I was doing and I found I really loved the challenges of handling every aspect of the claim and eventually I went on to handle both work comp and liability claims, which has really served me well over my career in the insurance industry.
Speaker 2:That's awesome, julie, which has really served me well over my career in the insurance industry. That's awesome, julie, great yeah, thanks for sharing that. So when we talk about reserving, we can probably vacillate on just what that means. But to start at the beginning, what is a reserve from a claims perspective?
Speaker 3:Well, in the simplest sense. I mean it's the amount of money you set aside to cover the legal and financial obligations that are arising out of a claim, and it's much more complex than obviously. I mean we've got Sarbanes-Oxley and other regulations that require insurers to accurately account for their liabilities. Insurers are subject to quarterly and annually reporting, as well as audits, and if there's an indication of reserving issues, you know these will need to be satisfactorily addressed. And if we're insured to continue to do business in a state, you need to have accurate reserving. And the key is, you know the key word is accurately. You know from a claims perspective it's often a challenge. You know all the information that's needed is not necessarily available when that claim comes in. There's uncertainty what's the extent of the injuries? Is medical care? What's that going to look like over time? Is there a return to work possibility with our customer? Can they accommodate the return to work?
Speaker 3:All this can be difficult to predict and, depending on the reserving protocols or best practices of the insurer, initial reserves might be based on what they call a statistical reserve.
Speaker 3:So every new loss that comes in the door is automatically going to be assigned the same reserve.
Speaker 3:The second approach is literally a best guesstimate, and that's to allow for benefits to be paid while the necessary information is gathered and reserves can be more accurately established. Once you get that sufficient information, it's at that point that you're going to do your detailed evaluation, which is necessary to ensure again that we have appropriate funds that are being set aside to cover the anticipated future costs of that claim. You know, once that claim is established, that focus then shifts to monitoring the accuracy of the reserve as new information becomes available, and I think that piece is critical. I mean, once you get the reserve set, you can't just let it go. You need to be looking for those changes in condition. You know, what was thought of maybe as a simple back claim coming in the door now, for instance, is now progressing to surgical intervention. Conversely, though, you know, what we thought was a severe injury is not as significant. So we might look to lower reserve to more accurately reflect the exposure from what was initially determined.
Speaker 1:I think those are great points, julie. You know, for me I think about it a lot Like if you were going to go on vacation and you had somewhere fun I'm going to make it something more fun than somebody getting hurt. But you know you have to plan out. Well, what's it going to cost? What are the plane tickets going to be? What is it going to cost to do the activities? Is it all inclusive resort or do I need to be paying for all the activities we do?
Speaker 1:And then when you get there, you find out that some of the things you plan for either are less or more than what you thought. You find out that food was way cheaper than you thought or way more expensive, and you have to reassess your budget right and make some choices on okay, well, what does this look like? And claims that's really at a high level what we're doing, but we're doing it with the knowledge that we have that changes and I thought you did a nice job of highlighting that. I know, talking to our actuary, one of the things that would give him the most pain is if we are not being consistent on how we evaluate reserves, because and Matt hinted at this working with different TPAs, different companies everybody might have a slightly different way to go about reserving their claims, but if they're doing it exactly the same way, then it makes it easy to anticipate what could be out there From your perspective. Why is having a reserve philosophy within your company that's consistent important, julie, and you've worked a few places as well.
Speaker 3:Yeah, I mean, one thing everybody looks at is the overall outcome, making sure that we're reserved for that ultimate outcome. But I kind of look at the reserve philosophy as a roadmap of sorts. You know it provides what you were talking about, that more consistent approach. You know when and how reserves are calculated. You know it's also an insurer's best practice that will ensure compliance from a regulatory standpoint. And I think what's important for an adjuster in following these established guidelines with this reserving philosophy, it's going to ensure that consistency, like you said, across all claims. And that's the critical piece of it, along with the adherence to best practices. And since the insurance industry is such a heavily regulated industry, how well we manage our claims from a fiduciary standpoint can either have positive or negative long-term impacts on the ability to do business. Part of the auditing process is reviewing whether or not adjusters are following the best practices, operating within their specific authority and adhering to the insurer stated reserving philosophy, whatever that might be.
Speaker 2:I appreciate that summary and I like Greg's reference to actuarial walking over and you know asking that is this consistent with our reserving philosophy? It reminds me of you know going golfing with with actuarials. I don't know if you've ever golfed or golfed with actuarial, but the one one actuary will line up hit the ball dead to the right. The other one lines up, it's a dead to the left. They look at each other and say perfect.
Speaker 1:Yeah, no, that's exactly it, and I think what I've learned from them is they have a lot of pressure on them because they're basically being asked to be fortune tellers. They're being asked to look into the past and predict the future, and if our past is inconsistent, then they're going to have a hard time even getting in the ballpark of what's going to happen. So, being consistent in that philosophy, whatever that philosophy is within your company, I think that's really important. One of the things we hear about is under-reserving. I'm sure Matt has an opinion on this, being an excess carrier, they don't like surprises either. But, julie, what are your thoughts on the impacts of under-reserving?
Speaker 3:So you know, as mentioned previously, you know that reserving is setting aside that money, you know, to cover an insurer's financial obligations. And here's the part that gets complicated is it's not. You know, like you mentioned, personally I'm not setting aside, you know, $50 to do X here and now. You've got to do that here and now on the reserve on a claim file. But you've also got to project into the future, which is really difficult to do. You know, and we always joke about having crystal balls and you know voodoo magic and all that other thing to you know, to predict something. We don't really know what's going to happen, but we have to be as good as we possibly can in order to make sure there are sufficient funds out there on these claim files to make claim payments when they need to be made. So under-reserving has a number of negative downstream impacts and this is where you know, actuary, you know they're under the gun constantly to make sure that we're doing what we need to be doing on the front line.
Speaker 3:If an insurer is unable to meet its financial obligations, it's going to impact the financial stability and one of the things it leads to is a downgrade in financial stability and rating from firms such as AMBEST. So you see, an insurance company that's A-rated, a-plus rated, a-plus plus rated that's what you strive for as a financial institution. You want to be rated highly and if you're downgraded in the stability rating, it's going to result in fewer potential buyers of the insurance product, ultimately running the risk of insolvency. And as a customer, wouldn't you rather be with an A++ rated company? Even as an adjuster, I want to work for a company that's highly rated and this is usually a good indicator. The company is well managed from a financial aspect. The other impact is on future premiums. The reserves on open claims are part of the calculations an underwriter uses in establishing the loss experience of a company. So if the loss experience is understated because the reserves are insufficient, the insurer will be charging an inadequate premium, which is going to result in lower profits and again potentially pushing the company to insolvency.
Speaker 1:I think you hit on it perfectly there and I won't go into all the details, but I've worked for places that have been on both sides of that fence and there's nothing more stressful than when your AM best rating is either changed or the outlook has changed. That creates a lot of pressure and stress within a company. And you're right, people want to work for places where they know that they don't need to worry about those things, right? People want to work for places where they know that they don't need to worry about those things. Matt, I'm curious from your perspective you mentioned this as an excess carrier what keeps you up at night when there's under-reserving by somebody that you're doing business?
Speaker 2:with Quite honestly. So if it's an excess level claim, we do look at the TPA's reserves, but we have enough statistical data that we primarily will ignore the underlying reserve on the account.
Speaker 2:If we're having a claim open and we're tracking it ourselves, we set our own independent reserve and from an excess perspective, we're doing that independent because this goes back to some previous conversations TPAs and carriers are set up for frequency claims and they're not generally set up for the big bad ugly claims that make up 100% of an excess carrier's caseload. So we set our reserves independent of whatever the TPA or whatever the underlying carrier. Self-administered partners reserves would be so it's a little different. Self-administered partners reserves would be so it's a little different. You know, in each GPA, you know I can tell you reserves differently and we see different, you know different best practices and I get to, I get to see a lot of those best practices. So the philosophies are generally very similar but you can definitely see different trends in different places.
Speaker 2:And, and you know, reserving is a tough topic because in some states you know you're reserving totally different because and we're going to get into some of these examples but you know like in this part of the state, you know, a carpal tunnel claim is worth this. If I go 300 miles north of St Louis, the carpal tunnel claim is maybe twice as expensive, you know, in Chicago, illinois, versus what it would be in Carbondale Illinois, what it would be in Carbondale Illinois, and that's probably not 300 miles. But the point is, you know, you have to know where you are, what the circumstances of the claims are, and we always joke. You know, not joke, but you know reserving is more of a soft science, right, it's not always hard and fast rules.
Speaker 2:And then we talk a little bit about, like stair-stepping, and there's a question for Julie is where do you see stair-stepping? And you talked a little bit about and I mentioned it even too the dynamics of a claim changing. What's the difference between recognizing the changing dynamics or something's changed in this claim? That's an accepted claim versus stair-stepping, like, maybe you know, can you talk to both of those points, because I see this all day where you know a condition worsens, but you know, stair-stepping, I think, is a totally different thing than, hey, there's a worsening of the condition.
Speaker 3:Yeah, well, at stair-stepping. I mean I look at stair-stepping as kin to the under-reserving. I mean not to sound hokey, but it's kind of like the stepsister of under-reserving, you know, these small incremental increases to cover just enough of what needs to be paid at any given time and it's just as detrimental as under-reserving, you know. In effect, you know it is under-reserving, I mean, and I think this can be symptomatic perhaps of an adjuster not understanding the context of the claim or not utilizing resources to accurately assess the exposure over an appropriate period of time. So you're in the file and they're going in for surgery and you only have a few weeks of indemnity. So they pop up a little bit of indemnity and they have to pay for. They say, oh, surgery, so they put that in, but then they don't think beyond, like there might be physical therapy. Maybe now I need to assign a nurse case manager. I haven't seen any bills come in and I'm already down and I only have X number of dollars left in medical. Perhaps my original assessment wasn't accurate at all. But they never take the time to actually look at where the case is, look at the medical reports and look at the prognosis, and look at the prognosis and look at what the treatment plan might be to project out accurately. And I adjust reserves all the time, so it doesn't necessarily mean you have to know every dollar it's going to be spent. But if you have the information there in front of you, that's the point in time that you need to be doing it, not when you've run out of money and then now you're popping up a little bit more and a little bit more and it kind of goes back to what we were talking about with Actuary. They've already reported out for the quarter and now the next quarter. Now they're having to report this big bump in reserves because somebody finally recognized that we were under-reserved on a file. And the question is, why wasn't this done last quarter or last policy period? And you're left there standing like well, because I really didn't look at anything, and now I'm being forced to put the money up that should have been put up.
Speaker 3:You know, six, eight months ago the change in conditions a little bit different, and that kind of goes back to what I was talking to you about. Under reserving is, if you have a strain can make it easy. Have a strain come in back strain. You know there's typical treatment, conservative care, that happens. But now all of a sudden, the complaints go on and now they have an MRI or a CAT scan and it shows they have a herniated disc and the doctor is now recommending surgery. So now we know that the disability is going to be much longer, there might be permanency. We have to account for surgery and recovery, and you know some of the things that go along with the cost of surgery. So that's a changing condition that you did not have available to you when you reserved the file previously. So now you go through the same process of looking at what does that exposure look like over time, short term as well as long term?
Speaker 2:Right, yeah, I appreciate that. I think just to add on to that comment you know, and we you know I work with a lot of different TPAs comment you know I work with a lot of different TPAs. One of the things that you know if we see consistent, like this adjuster is setting the reserve at $5,000, a bill comes in and it's a $5,000 bill and then they're not recognizing the difference in that development. And then you know they're adjusting the reserve every time a new bill comes in. So they're not really recognizing the changes.
Speaker 2:And you know we all are very busy right in claims and claims handling and that you know there's maybe a file that flips through the cracks. But when you're auditing these files and you see like hey, it's always with you know, bob the builder and it's, you know it's on every one of his claims, that's when it becomes an issue and it's probably a performance thing when the reserving is not consistent with the claims handling reserving philosophy for the organization. So that's different. But one bad one adjuster that's not recognizing that I don't want to say bad, but one adjuster that's not being proactive with setting the reserves for whatever reason, may be impacting the whole organization in a very negative way. I mean reserving is very critical. I always preach to my staff it's reserving, mitigation and settlement. If you're not doing those three things right and if you're not doing the reserving, reserving the critical part you can have a claims organization that doesn't mitigate and doesn't settle.
Speaker 2:If you have to reserve set appropriately, but anyway.
Speaker 1:No, you're right, Matt. It's going to be reflected in your rates when you're trying to renew. So hopefully we're doing those other things because we want to have positive outcomes, but at the end of the day, if your reserves are off, everything could be off, and no one wants a $20 million or $30 million surprise where we find out oh, it turns out all these files have not been where they needed to be. That creates a lot of heartburn when that happens.
Speaker 3:I think also companies do themselves a great disservice by not educating the adjusters.
Speaker 3:I mean, you think of an adjuster, you think, well, they just adjust claims, they process payments or they manage return to work and they litigate.
Speaker 3:But they are the financial back of the company and if you don't understand as an adjuster what the impact is to the company and then the downstream effects so if we're writing business but yet we're spending more than we're bringing in, it affects not only the financial stability but from a personal standpoint, my ability to maintain a job with the company bonuses raises. If there's none of this surplus from the profits we make because we're managing everything really well. You make it real for them and make them understand, provide them that education from an actuarial and underwriting standpoint, then you know that every time I pick up a file, it's not just this file that I'm impacting, it's my teammates, it's myself, it's other departments and the company as a whole and I think that piece of it. Once you make it more personal like that and they really understand the impact, then I think people tend to get better at what they do, because then they understand how much control they have over that part of their jobs and their success in the role of an adjuster.
Speaker 2:I love that.
Speaker 2:I 100% agree. Thanks for bringing that up, because I think we're going through that here at Midwest where the claims and the underwriting and the marketing and sales. We need to know what our impact in claims is for the underwriting and the actuarial piece. I'm not saying everyone needs to be an actuary or everyone needs to be an underwriter. I'm saying you need to know and understand when we do this it impacts how we sell. You know how we sell our business and when you do this it impacts underwriting and actuarial.
Speaker 2:So having that relationship, you know I think we all came from a similar organization where, you know a lot of those people were all siloed and apart from each other and that's one of the things I really appreciate with our organization. I know Greg's is the same way at Berkeley Industrial Comp is. You know, actuarial is right down the hall or maybe in the next room or the next office or cube, and so it's important to have that stuff close by and have an understanding of your impact in the organization and what that means for all those other steps. So thanks for doing that, john.
Speaker 1:No, I couldn't agree more and I think you know, understanding the 5,000-foot view makes it easier when you zoom back in to know how what I'm doing impacts the company and what things I can do that move the needle. Julie, as you think about reserving, I want to zoom in on that a little bit and talk about some of the things, some of the details that make an impact on the reserves. That, if you were a claims adjuster, specialist examiner, whatever the word title is for your company, what are some of the things that you should be mindful of when you're thinking about a reserve?
Speaker 3:Well, I think, breaking it down. One of the first things I look at is you know, the age, education, taking it down. One of the first things I look at is you know, the age, education, maybe transferable skills of an injured worker. Also, the mindset of the injured worker. You know you have an individual who's suffering a work-related injury. That can be very impactful. You know, here they are working, earning a living for themselves, for their families, and all of a sudden now they've been injured and that's been taken away from them, along with any sense of control. So not only is an injured worker, you know, trying to recover from an injury, they're also financially impacted and it can be incredibly stressful for them. So it's important you just partner with the injured worker, you know, to ensure the recovery process is as stress-free as possible. You know, and with a positive experience, it can have such a great impact on the best possible outcome of the recovery process and then the overall financial outcome of the claim. So I already get my mindset and you know what am I working with, who am I working with and what potentially can I do with this injured worker to make sure they have the best outcome possible. And then then, how does that translate out into the overall exposure on the claim? You know you're looking at comorbids. It's important you know, determine what impact the comorbid might have on recovery. You know, as well as any long-term impact from an overall health standpoint.
Speaker 3:Working with the customer is also important. You know what is their ability to bring the injured worker back to work If there are limitations. And is this just a short-term fix or would they have a long-term perspective as well? Because if they can accommodate maybe a short term, but what if those limitations are there permanently? Do I have a resource with the customer? Because if not, it's going to impact indemnity and potentially the medical, because you get all of the factors of not being able to return to work. It just exponentially impacts the overall financial expense of the claim file.
Speaker 3:And is the medical care quality in alignment with goals of recovery to return to work and if not, what steps can be taken to make sure the best care possible is being provided?
Speaker 3:So if you're not getting what you need out of the doctor and the recovery is not progressing and the necessary tests aren't being done and there's really no focus of the doctor on the prognosis and outcome and a treatment plan with timeframes built in, then maybe it's time to get another doctor and maybe get a second opinion or see if we can get better medical care. And, of course, litigation what impact will a litigated claim have on management of the exposure and long-term impact on cost to bring it to resolution? Sometimes, no matter how well you work with an insure worker, for whatever reason, they still may get an attorney and that process has to be thought about and brought into the impact it'll have on the exposure over a long-term basis and as you look to either settle the claim or bring it to some form of resolution. Those are just some of the key elements that will impact how we look at the overall exposure, but I think those are some of the key that I look at when I'm looking at how I want to reserve long term.
Speaker 2:You just said a lot of things and you've had a lot of experience and expertise in the industry, but for a newer adjuster or somebody that's maybe putting together a reserving best practice guideline, what resources are you aware of or what resources do you know that maybe we could point some people to and say, hey, you know, consider doing this. Or can you have a list or some examples of resources?
Speaker 3:Yeah. So the indemnity and I think everybody can agree medical is the most difficult part. I mean the indemnity is relatively easy to evaluate compared to the medical. Your jurisdiction is going to provide guidelines that spell out the limitations, along with other factors like return to work potential. You know whether or not there's impairment other things that each jurisdiction has that's unique. That'll aid in reserving for the indemnity.
Speaker 3:The real challenge is estimating accurate medical. Some of the resources I rely on first and foremost are medical records. The different components of a medical record will really help you spell out not only what the injury is but what kind of treatment is going to be anticipated. And then again the treatment plan and then prognosis, and that goes a long way into helping guide you into the number of weeks and the other costs that you need to factor in pharmacy, physical therapy, nurse, case manager. So that's a good roadmap to start with. If the physician isn't addressing these two key factors, then you need to ask for it. I mean, it's as simple as that. You need to have good medical reports and a good rapport with the doctor's office to get that information so that you're both on the same path to get this person either back to work or getting the right care they need. I also rely on the ODG. These guidelines are a good resource and a standard reference for evidence-based medicine you can get, and they're not the end-all and the be-all. I mean carpal tunnel may only be X number of weeks that you can expect disability, but then you've got to factor in the other things as far as return to work options and if there's comorbids and other things. But it's a really good guideline to give you an indication of how long somebody might be out and what kind of care is involved in that type of injury and or surgery, et cetera.
Speaker 3:I use the National Vital Statistics to address life expectancy and one of the things. I don't know if it's underutilized, but it should be utilized. I use it on all my claims. But a reserve worksheet. It's a great tool to calculate exposures. The components of a reserving worksheet can act as a mind jogger to make sure all aspects of the care have been considered. I don't know how many times I've kind of hand jotted down all the things that I'm thinking and then when I go to put it in the worksheet, I totally forgot. You know a DME or pharmacy or even my nurse case manager who I've been working with, I totally forgot to account for those expenses. So the worksheet helps me break down those different and then and think, well, do I need that? And if not, fine. But if I do need it, I didn't think about it. There it is right in front of me and when you have those different, like I said, care components listed on a worksheet you're not going to miss addressing, like you might if you're manually trying to capture each aspect of the care provided.
Speaker 3:Most companies have resources. They have resource tools for pulling data at the claim level. These tools are really great to see the actual cost in a claim. That can be replicated when calculating out over time. And to give you an example, I estimate physical therapy each session 175. Yet when I pulled the claim data on that same claim file, I realized that I'm being charged for something and then with the fee scheduling I'm actually paying 325. So I'm almost 50% off on my calculation on PT. So pulling that data and really looking at the actual costs that are coming in helped me replicate that out when calculating out over the future.
Speaker 3:I've been in claims for many years and I'm still learning something new all the time. If I can't readily find information. I'll Google it. I mean, there's an amazing amount of information out there that helps me understand injuries recovery time costs Matt, you mentioned that something might cost $5,000 down here in Chicago, but up in Carbondale it might be less expensive. I did it the other day looking at life care, the flights it's. Down here in Philadelphia it might have been $25,000, but up in upstate Pennsylvania it's only between $9,000 and $12,000. So I simply Googled it and I can find that information that might help me factor in what I need to set aside to cover that cost.
Speaker 3:And last but not least, your experienced coworkers and team managers. I mean, what better place to start than the people you work with every day? I mean most people. You have a variety of people with different experiences, and I'm chatting constantly, not only with my manager but my teammates, like hey, have you ever seen this before? What should I expect? Your nurse case managers they're a wealth of information as well, and they can help guide you on things that you might not have thought about. So those are some of the key things that I look at that help me every day and even with all my experience, I still utilize these things religiously.
Speaker 1:I think you hit on so many good resources there, so hopefully people will rewind and listen again, because I think there really is a lot there and you're not out on your own. That's the biggest thing I've learned and you are limited by your experience. I remember being a new adjuster and I had a claim where the injured worker had a knee injury and was 400 pounds and five foot one and he has a new adjuster, you know, and had diabetes and a number of other health issues. This was years and years ago but I remember, you know, not understanding I went into OGG guidelines and saw, well, what's a meniscal tear cost, you know? And it gave me some guidelines. And I remember the senior on my team saying, well, wait's a meniscal tear cost. And it gave me some guidelines. And I remember the senior on my team saying, well, wait a minute, he's going to have to be weight bearing on this knee. He's very heavy. That's going to cause a lot of problems with his recovery. You need to be thinking about that. These guidelines aren't going to tell you all that.
Speaker 1:So in that case I went to a resource, but I still needed help from somebody with more experience that could kind of point me in the right direction and say, hey, have you thought about this? And she wasn't wrong. I mean, that was a difficult claim and we were able to identify that pretty early that there were some challenges there. So I think you made some great points on what's out there as far as resources go and you talked about this a little bit. But when you talk about documentation, so we know like in a perfect world every claim would live with the person who had it from the day they got it. And I think we all know that we don't live in that world, that files get moved around, people have new opportunities, people retire, people get promoted, people leave the company and when somebody is taking over a file for somebody else, that can be really challenging. So talk a little bit about documentation and from your opinion, julie, and some of the roles you've been in and why that's important.
Speaker 3:Documentation. I mean it tells the story and it sets the roadmap for where the claim is going. I mean, when you're looking at reserves in particular, you want to have a detailed rationale spelling out the basis for the reserve and the duration. What are your short-term goals? What are the long-term goals? And when I'm looking at my files I look at short-term and I look at long-term each and every time. Are there key milestones to consider? I reference my reserve rationale every time I'm in a file to see if what I had planned is still on track or if I need to make adjustments based on new information, detailed documentation. It actually forces you to think about how that claim is developing and what the plan is to mitigate the loss and bring the claim to resolution. So if you're really thinking about all the components and you're thinking about your claim and you're kind of just putting out that story, I do my rationale first, because then that helps me, then level set on what I want to set aside in the way of funding for all of those and do a rationale. It's the rationale first and then it dictates what my breakdown is going to be and the documentation. Like you have to look at the mitigation of loss and how you're going to bring it to resolution. So that's part of your plan.
Speaker 3:Within your rationale and I know all of us have heard this a million times the file should speak for itself and this is definitely important from a reserving standpoint. I don't know how many times I've picked up a file and it has a couple of items in there about the indemnity breakdown and there's permanency, but I have no idea how they came up with that permanency number. I have to then go back and do research to figure out. We handle a lot of jurisdictions in my current role, so I'm not an expert in every jurisdiction, but I have no idea how this is calculated and where those numbers come from. What is it based on? And there's not enough information in the rationale. There is even a rationale there that helps guide me to understand what the adjuster was thinking. Same thing if my manager picks up my file and is reviewing my file, she should be, or he should be able to go in and look at my rationale and see if it makes sense for what I'm calculating out over the life of the claim at that particular point in time.
Speaker 2:Yeah, thanks for sharing that, and I think you're hitting on something that maybe it's a question for both you and Greg is looking into different partners at the TPA level and carrier level. I do see a tendency and I'm not trying to say this is bad or that it's a trend wide in the industry but most adjusters have some level of authority right. So you're going to broaden that authority based on their experience and their comfortability and maybe the account or the account specific service instructions and so. But sometimes you'll see, hey, I've given them $50,000 in authority and all of a sudden a lot of their claims bought up right against you know $50,000, you know $49,000. Yeah, it's like well, you know, this is kind of odd. So you know, and you go back and you're like you start questioning that practice and what you hear is like, oh well, I didn't want to have to fill out the form or I didn't want to have to do the documentation to get to take it to the next level of management. So how do you address that? You know, for your organization, greg and or Julie, like what have you seen? Like how do organizations like tear down that wall and simplify that process? You seen, how do organizations tear down that wall and simplify that process.
Speaker 2:So adjusters are willing to bring up the reserve. And my president of the organization which I loved it when he said this he said, hey, bad news doesn't age well and to me an adverse reserve development is bad news. So I want to be on top of those. And how do we encourage the industry as a whole to be more forthcoming and be forthcoming not more forthcoming but be forthcoming on reserving, because I don't know that it's a huge problem. I definitely see it, but maybe some best practices around that. So a little bit of a loaded question, I apologize.
Speaker 1:No great questions and I think these are real challenges. Obviously, I think part of it is talking about it all the time and I think you kind of hit on that. Like in our department meetings we talk about all the time, you know, let's get those reserves up, let's make sure we got them to where they need to be, let's make sure they're well-documented. So if you're not here tomorrow cause you won the lottery, we'll go with a positive, a positive outcome that, uh, you know the next person can pick that up and you're not putting pain on them. And I think there's no silver bullet to this, but I think training, auditing, reviewing files and being involved all those things matter.
Speaker 1:One thing we do that I think is helpful is we do catastrophic claim roundtables every two weeks. We talk about these claims from a reserving perspective, from an injury perspective, and we invite everybody in on those because we feel like everybody can learn together and somebody might have an idea that somebody else hasn't thought of. So those are some of the things I think you know. I know in a past life Julie managed an examining team and had to probably look at some of these things from that perspective. Julie, what are your thoughts?
Speaker 3:I think probably one of the key things that might prevent adjusters from diving in and really looking at reserving as the medical and understanding medical. It's intimidating and if you don't have a medical background which I would probably say 80% of our industry does not that are actually claims adjusters. Now you're having to think like a doctor and you have to understand medical terminology and now figure out how does that impact a claim. And many years ago there used to be a requirement that you took medical terminology so you understood what medical terms mean. Now you're kind of on your own. You've got to, like I said, google it, you know and look at and try to understand it and learn and as you get more experience you feel more comfortable with those things. I think the other thing is intimidating is just the value. I don't know how many times I've seen people not reserve something because it's more than their authority or it's not necessarily because they want to avoid reserving over the authority. It's intimidating to come and say I want to put on a million dollars in a reserve. That's kind of whoa and to me, years of experience, a million is nothing. It's like oh, seven, five, eight, doesn't matter, it is what it is and I think that concept of how you reserve a file for $20,000 and the process that you use at reserving that claim for $20,000 is absolutely no different than how you reserve a file for $10 million. Now, understanding all the different components is obviously based on experience and your level of understanding, but the philosophy and the process and the resources and tools is identical, no matter what stage of that claim you're in financially. And I think if you can remove that fear factor and that you know you said draw the curtains back and adjusters understand that, I think they'll be a little less fearful and more fearless in going in and tackling a reserve. Secondarily, I mean it's also it takes time. I mean it takes time to sit down and actually reserve a file and it doesn't matter what level it is.
Speaker 3:And I think, as organizations look at their financial health and how well we're doing in reserving is get to the key. You know the key drivers as to why we might not reserving. Is it an educational level? Is it? You know we're understaffed. You know, are we allowing our adjusters enough time to thoroughly evaluate? And it goes back to the old adage penny wise, pound foolish. If you just add one adjuster, that one adjuster salary and all the benefits associated are taken care of by one mistake in reserving. So if you can avoid it, it makes more sense to hire an adjuster than it is to lose hundreds of thousands of dollars in a claim that wasn't reserved properly. So you've got to think holistically about reserving and really understand what's driving our inability to get reserves done correctly, whether it's as a whole or individuals, and then from there start building that person's capabilities by looking at the different resources available to help them achieve those kinds of goals that they need to achieve to be successful in the role I thought that was fantastic, julie, you've said it better than me.
Speaker 1:I thought you explained that very well. Well, first of all, I just want to say I appreciate all of the information you shared today. I felt like we tackled a pretty tough topic that could be pretty company specific and did it in a way that I almost feel like, no matter where you work, you could gain something from this that could help you be a little bit better at what you do. One of the things, julie, we're doing this season is I'm trying to put some good vibes out in the universe. I felt like there's plenty of negativity, and so I decided to end each episode talking to whoever our guest was and asking them this question what is the favorite part of what you do each day? So, of all the things that you do, what gets you going in the morning or what gets you excited about what you do?
Speaker 3:Well, obviously I enjoy the claim process and, if you can't tell, I'm passionate about reserving. I love the claim process and the challenges that are faced with each claim. I learn something new all the time, which definitely keeps things interesting. And since we've been focused on reserving, I'll add that reserving, while it's difficult at times, is a challenge I really like to tackle and it's really satisfying to see a file that's been managed well and the reserves were accurate throughout the life of the claim, were accurate throughout the life of the claim Aside from my team and the people I work with, which is it always makes the job that much more doable and fun.
Speaker 3:But really, one of the things that just really gets me going is the satisfaction I get from seeing an injured worker recover enough to return to work or find that resolution to their claim that works well for them, and I know that I've been a part of that journey. There's something innately satisfactory about that and you know, kind of in that empathy factor. You know that I haven't gone through it, but I have empathy for what they're going through and regardless of it's a litigated claim or not, it doesn't matter. You know, I try to think of these people. It's like how would I want to be treated, and I try to live by that every day. And then when I see that we've had some kind of satisfaction, satisfactory conclusion to a claim where they're made as whole as they possibly can be made, it's really quite a perk of the job.
Speaker 1:And it's fantastic. I feel like that's what we're in the business of. Sometimes we forget we're in the business of helping people get back to work and get back to life, and those are the best moments, when you know that you've made, you've done the right thing and everybody benefited from the right thing that was done.
Speaker 3:Yeah, and I and I feel supported by the company. So it's nice, you know, it's nice to have that support that you're, you're being supported to do the right thing thing regardless of the cost, and to have that is it says a lot about where I work and the satisfaction I get out of my job every day.
Speaker 2:That's awesome and it's a mind shift right, because I mean I know your organization is big on the Home for the Holidays team and I think if that's promoted through the whole organization it promotes the mentality with the different departments and underwriting and sales and claims. You know it's like we're all here to do a different piece but it's all for that injured employee and how do we get them back to a gain pool situation? Make the wrong right kind of mentality, appreciate it. Thanks for the time, greg and.
Speaker 1:Julie. Oh no, it's been fantastic, and I want to thank Matt and Julie also. In the background, not everybody gets to hear, but we've got Natalie Dangles who does our blog each week, so I encourage people to. If you didn't have time to listen and you want to read, you can do that, or if you just want to go back and use it as a reference of what went on in the episode. She does those every other week. And then a special thanks to Jacob Holmes, who's also hiding in the background. I always say he's my. I've got teenagers and they have filters on their phone. He's our filter. He makes us look amazing. So we all come out of everything looking like rock stars. So thank you, jacob, for that, and I just remind our audience to do right, think differently and don't forget to care. And that's it for this episode. Thanks everybody. We'll catch you next time.