What do reserves represent in a workers' compensation claim?

Reserves in a workers' compensation claim represent an estimate of the total costs that may be incurred over the life of the claim. This includes anticipated medical expenses, wage loss benefits, rehabilitation costs, and any other expenses related to the claim. Setting reserves allows the insurance company to properly account for and allocate funds that may be needed as the claim progresses, ensuring that they remain financially prepared to meet their obligations.

This estimation is crucial for both the insurer and the employer, as it helps in understanding the potential financial impact of the claim and facilitates effective financial planning. By having an accurate reserve in place, the claims adjuster can effectively manage the claim and reassess the reserves as necessary based on new information or developments in the case.