Reserve
A reserve is the carrier's current estimate of what a claim will ultimately cost, medical and indemnity combined, whether or not that amount has actually been paid out yet. For your workers' comp EMR (experience modification rate), what matters is the reserve, not the amount paid. If a claim is still open on the valuation date your rating uses, the reserve is the number that goes into your mod. An overstated reserve, one set early based on limited information and never revisited, inflates your mod for as long as the claim stays open at that value. This is why an open claim deserves more attention than a closed one: a closed claim's cost is settled, but an open claim's reserve can be wrong in either direction until someone checks it against how the claim is actually progressing. Asking your agent or carrier to confirm and, if needed, update the reserve on every open claim is one of the highest-value single requests you can make when checking your worksheet, since a stale reserve is one of the most common and most correctable errors.
Common questions
Does paying off a claim lower my mod right away?
No. What counts is the reserve on the valuation date your rating uses, not what's actually been paid. The reserve only changes when someone updates it.
See also
Source
Is your mod right?
Most contractors have never had the worksheet compared to the loss runs and payroll behind it. See what your mod is costing you, or get on the list for a full verification.