Claim Reserves

What are reserves?

Reserves are an estimate of the total amount a claim is expected to cost. In some workers' compensation claims, reserves may be difficult to calculate due to the lifetime medical component of a compensable injury.

How does Texas Mutual calculate its reserves?

We review each claim on its own merits. We consider the relevant information and any mitigating circumstances before we evaluate the company's exposure and establish the appropriate reserves to meet indemnity, medical, legal and other expenses related to a claim.

Who performs the calculations?

We use a multi-tiered approach, beginning with our team of experienced licensed adjusters. We also consult industry-recognized software to assist in determining reserves. If a claim's reserves exceed the adjuster's reserving authority, a claim manager or higher ranking officer must approve the reserves.

When are reserves established?

The adjuster establishes reserves within 15 days after we receive notice of a claim or by the first payment due date, whichever is earlier.

Can reserves estimates change over the life of a claim?

Yes. The adjuster increases or decreases a file's reserves within 10 days of receiving information that warrants a change in the reserve estimates. If the revised estimate exceeds the adjuster's level of authority, a claim manager or higher ranking officer must approve the change.

How do we maintain quality control of reserves?

Our team leaders conduct claim audits to ensure adjusters follow our reserve policy. We also conduct reserve reviews using our in-house actuary, independent auditors, and independent auditor actuaries. The Texas Department of Insurance also reviews insurance companies' reserve setting practices.

Do we establish reserves for all incidents?

We encourage policyholders to report all incidents; however, we do not establish reserves or report incidents to NCCI if there are no costs associated with the incident.