The Ohio Bureau of Workers’ Compensation (BWC) has lowered the discount available to employers who participate in a group-rating system. Beginning July 1, 2010, the maximum available discount for businesses in a group will be 65 percent, down from the current from 77 percent rate.
Additionally, the minimum qualification for experience adjustments has been reduced, which the BWC says will positively impact the rates of smaller employers with strong safety records.
The move was part of ongoing rate changes as the agency seeks to bring more parity between businesses that are part of a group and those that are not, the Associated Press reported.
The BWC’s Board of Directors has developed a multi-year plan to bring stability, fairness and equity to all employers, according to an announcement released by the BWC.
The actions further “our efforts to bring equity to what each Ohio employer pays for their workers’ compensation insurance coverage,” stated BWC Administrator Marsha Ryan.
BWC’s rate reform efforts were set in motion by changes enacted by the 127th General Assembly’s House Bill 100, passed in June 2007. The legislation required a comprehensive study of BWC’s rate setting methods, including the group rating program.
The board has also approved modifications to the break even factor (BEF), which was established in April. The BEF adjusts the discount level based on the overall risk of the group to ensure its premiums reflect their risk. The BEF brings the premium paid by group-rated employers more in line with their claim costs while still allowing BWC to continue offering significant group discounts.
The BWC noted that changes in the maximum discount are not enough to make the group rating program actuarially sound. All studies on group rating indicate that groups should maintain the same membership for many years to establish a solid experience history.
They should also bring together more similar businesses with common safety needs. This homogeneity of group membership will bring more stability to group rates in the future. BWC is currently exploring rules designed to maintain continuity in group membership and to increase homogeneity within the groups.
The BWC also anticipates approving one more change in the rates, possibly in the next six months, the AP reported.
Two independent actuarial studies have found that the group discount should be between 52 percent and 58 percent.
Roughly 95,000 Ohio businesses are part of a group while there are about 115,000 non-group employers.
Sources: Associated Press, Ohio Bureau of Workers’ Compensation
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