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OH BWC Approves Plan To Ensure Premium Equity For All Employers
23 Mar, 2009 WorkersCompensation.com
Columbus, OH (CompNewsNetwork) - The Ohio Bureau of Workers' Compensation (BWC) Board of Directors today approved a plan that provides a solution to the long-term challenge of ensuring premium equity for all state-fund employers. The plan is expected to reduce the average premium rate for non-group employers by 25.3 percent. The plan will be effective July 1, 2009.
"This is outstanding news for Ohio's private employers," said BWC Administrator Marsha Ryan. "Ohio's non group-rated employers will now be paying the appropriate rate for their workers' compensation coverage, one that matches the risk they bring to the system."
This decrease will be directed to non group-rated employers. The average premium rate decrease will result in actuarially sound rates for non group-rated private employers, and will result in lower base rates. Group-rated employers will have an average increase of 9.6 percent in their rate, which they have expected for nearly a year. This increase for group-rated employers is a direct result of last year's decision to lower the credibility table and the resulting maximum discount from 85 percent to 77 percent. Group-rated employers will still have rates that are lower, on average, than non-group employers, but with a better match to the costs they present to the system.
For nearly two years, Administrator Ryan and the board of directors have taken steps to reduce the credibility table and the resulting maximum discount in hopes of creating greater equity for both group and non group-rated employers. While those changes are important to overall equity, the past credibility table changes had not made a significant impact in reaching appropriate premiums for group-rated employers. This led to BWC looking at more innovative solutions to this long-term challenge.
BWC's annual actuarial analysis to determine rates for private sector employers found claims cost projections provided latitude for a significant decrease in base rates, between five and 18 percent. Based on this data, BWC actuaries recommended a base rate reduction of 12 percent for the 2009 policy year, beginning July 1, 2009. With the rate for group-rated employers already determined, the decrease of 25.3 percent directed to the non group-rated employers, results in an overall 12-percent rate reduction that is expected to bring significant premiums savings to most non group-rated private employers.
"This action not only makes Ohio's workers' compensation pricing system more in line with those of other states, but it puts us on a level playing field when it comes to future economic development and job creation," added Ryan.
Ryan also commended the cooperation of group sponsors who were integral in providing feedback to staff as they worked through the details of this plan. "The employers who qualify for the group discount take great efforts when it comes to the safety of their work force. It is our intent to ensure all Ohio employers are paying the right rate for the right risk."
Another element of the plan eliminates the opportunity for group-rated employers to stack discounts. Beginning July 1, employers that elect to participate in group rating will be unable to receive additional discounts associated with the Drug-Free Workplace Program. Both group-rated and non-group rated employers will be eligible to receive discounts associated with participating in the new deductible program, approved by the board last month.
The board also made modifications to a premium cap approved in January designed to reduce volatility in costs by limiting increases in a business' experience modifier (EM) to no more than 100 percent. The board approved changes that define employers' eligibility for the cap, including:
* Only employers with an individual EM at 1.01 or higher will qualify;
* Businesses not in good standing with BWC are ineligible;
* All qualifying employers must complete a plan to incorporate safety measures in their operations with the assistance of either a sponsoring association or BWC-staff member.
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