Claims reserves are more than accounting figures—they directly influence how insurers price your risk. As December approaches, the reserve values set on open claims often become the numbers that carry forward into renewal discussions and experience calculations for the next year. For many insureds, these figures quietly shape 2026 premiums long before policies renew.
Understanding why December reserves matter gives businesses an opportunity to protect pricing instead of reacting to increases later.
What Claims Reserves Represent
A claims reserve is the insurer’s estimate of the total cost to resolve a claim, including medical expenses, indemnity payments, legal costs, and settlement. Reserves are set early and adjusted as a claim develops.
Even if the final cost ends up lower, inflated reserves can negatively affect pricing, experience modifiers, and carrier perception in the meantime.
Open Claims Drive Underwriting Decisions
Underwriters focus heavily on open claims during renewal reviews. Open files signal uncertainty, and uncertainty leads to conservative pricing. A claim that remains open at year-end—even a relatively small one—can disproportionately affect how risk is viewed.
December is often the snapshot month carriers use when evaluating loss experience heading into 2026.
Why December Is a Critical Review Window
At year-end, insurers finalize loss data used in renewal analysis, experience rating, and actuarial forecasting. Reserves that remain overstated in December are likely to influence pricing discussions well into the next policy term.
Once the calendar turns, correcting reserve issues becomes more difficult and less impactful.
Over-Reserved Claims Inflate Premiums
Reserves that are higher than necessary make losses appear worse than they are. This can lead to increased premiums, higher experience modifiers, or reduced carrier appetite—even if the claim ultimately closes for much less.
Regular reserve review helps ensure numbers reflect reality, not worst-case assumptions.
Delayed Medical and Legal Updates Create Distortion
Many reserve issues stem from delayed information. When adjusters lack updated medical reports, return-to-work status, or settlement discussions, they often hold conservative reserves.
Providing timely documentation and clarity before year-end can support reserve reductions and improve how claims are evaluated.
Small Claims Can Have a Big Impact
Even modest claims can affect pricing if they remain open with reserves attached. Closing low-dollar claims before year-end can meaningfully improve loss runs and underwriting perception.
Focus should not only be on large losses but also on cleaning up smaller open files.
Experience Modifiers and Reserve Timing
For Workers Compensation, reserves play a significant role in experience modifier calculations. Open claims with high reserves can elevate mods, increasing premiums across multiple years.
December is often the last meaningful opportunity to influence how these numbers feed into future mod calculations.
Communication With Adjusters Is Key
Claims do not manage themselves. Active communication with adjusters—especially in November and December—helps ensure reserves reflect current information.
Clear discussion around medical progress, liability, and expected closure timelines can lead to more accurate reserving.
How Skyscraper Insurance Advocates on Reserves
Skyscraper Insurance takes an advocacy-driven approach to claims management. We review open claims, identify reserve concerns, and coordinate with carriers and adjusters to ensure reserves are appropriate.
Our focus is on accuracy, transparency, and positioning clients favorably for renewal.
Reserve Reviews Are Strategic, Not Reactive
Reserve reviews should be part of a broader strategy, not a last-minute reaction. December provides a unique opportunity to influence outcomes before pricing and underwriting decisions are finalized.
Taking action now can lead to measurable savings in 2026.
Set the Right Foundation for 2026 Pricing
Claims reserves set in December often shape the year ahead. Ensuring they accurately reflect exposure protects your premiums and strengthens renewal negotiations.
If you have open claims, now is the time to review reserves and address issues before they carry forward.
