Section 031-440-IV-4 - Reserving PracticesA. Performance Standards: (1) Servicing carriers shall establish timely, and to the fullest extent possible accurate, medical and indemnity loss cost estimates commensurate with all factors known and developed;(2) Estimates of reserves shall be revised whenever payments are made or developments occur that cause changes to the ultimate loss projections;(3) In reporting estimates on fatal and permanent total cases, servicing carriers shall use tables authorized by the Superintendent of Insurance;(4) Reserve estimates shall reasonably consider all contingencies involved in a claim, including but not limited to survival and mortality, recovery and morbidity, remarriage, return to work, escalation, and the time value of money.(5) Reserving of Pool cases shall use consistent methodologies. Servicing carriers shall ensure that these practices are followed consistently within their internal organizations among claims adjusters, supervisors, and managers. Carriers shall have their reserving practices documented in a way that will ensure they are consistently applied, and shall make these documents available for review by the Pool at the Board's request.(6) Servicing carriers shall keep the Pool apprised of changes in methodologies on an ongoing basis.B. Annual Report of Servicing Carrier Practices. The Board shall conduct an annual review of servicing carrier reserving practices and procedures, and issue a report which shall be submitted to the Superintendent of Insurance and to the Pool on or before April 1 of each year. The report shall include a review of actual claim files and comparison of actual and projected incurred costs. Appropriate sampling procedures may be used in conducting the claim file review. The review shall include the following areas:(1) Conformity with performance standards. Servicing carriers shall make their reserving practices available for review by the Pool at the Board's request.(2) Consistency of reserving practices, (i) applied to individual cases, and(ii) among servicing carriers;(3) A review and evaluation of case reserves established by each servicing carrier in relation to the information that was known or should have been known at the time of the filing of the reserve;(4) The timeliness of case review and the payment of claims;(5) Subrogation practice;(6) Overall claim management and cost control measures;(7) Consultation with the Pool's auditor(s) and actuary(ies);(8) Other relevant areas selected by the Board.C. The Board shall require its auditor(s) to report on servicing carrier reserving practices to the Pool after the completion of each annual audit cycle and in support of the Annual Report of Servicing Carrier Practices.D. The Pool's actuary(ies) shall be required to meet with servicing carrier claims managers at least annually to review reserving practices as they relate to: (1) the preparation of the Annual Report of Servicing Carrier Practices, and(2) the Pool's annual actuarial projection;02-031 C.M.R. ch. 440, § IV-4