This service offering shows data used in the calculation of experience premium rates. The rates are displayed per manual
classification and any participating rating plans and/or discount plans. The rating
plans and programs are designed as a means for the employer to take a more active approach in controlling their
workers' compensation premiums.
BWC is obligated to collect a sufficient amount of money each year to pay the
ultimate cost of all injuries occurring during that year. Some injured workers
will receive compensation for many years. Thus, the rate-making process
is complicated, because there is no simple way to predict future costs of injuries.
Rate making is accomplished by taking the experience of the past and projecting it
into the future.
Policy rating information
The Ohio workers compensation system is founded upon the insurance principle
of shared liability. As a first step toward developing a system of equitable sharing
of liability, Section 35 of Article II of the Constitution requires that industries
be classified according to hazard. The more hazardous industries produce more accidents
and higher costs.
Approximately 540 classifications of hazard have been established, and into each of
these classifications are placed employers who have a similar degree of hazard in
their operations. (An employer may assign more than one manual number when operations
require it). Comparisons cannot be made with mathematical certainty, and this fact,
together with the constantly changing methods of operation, makes it necessary for
periodic review of assignments of employers into the various classifications.
For convenience, each classification is assigned a manual number. This number,
together with the policy number that identifies the employer, appears on all
orders to pay benefits to facilitate charging the cost to the proper
employer and proper classification.
Under the Ohio workers compensation system, each classification determines
its own rate. The total losses of each classification, when compared to the total
payroll of the classification, produce the rate of contribution from the employers
within that classification. There are some costs, fortuitous in nature, such as
catastrophe loss, which are not related to the normal hazard of the industry.
These losses are spread over all of the classifications of an industry group.
However, since these losses make up only a small percentage of the total losses,
they are not sufficient to distort significantly the principle that each
classification makes its own rate.
The pure insurance principle of sharing liability, as reflected in the basic rate,
does not reward or penalize individual employers. Experience rating is a departure
from the pure insurance concept of sharing liability. It is an incentive system
designed to promote safety practices.
An employer who has a better than average loss experience receives a credit
against the basic rate for its classification, and conversely, an employer who has
a bad loss experience is penalized and has to pay a rate higher than the basic rate.
Experience rating is a compromise between self-insurance and the pure insurance
principle involved with the basic rate. While it can never relieve an employer
who has no accidents from paying premium, it can reduce an employer's premium
compared with fellow employers within the same classification. To the cost-conscious
employer, this is an important factor. A single chance accident could result
in a severe penalty rating for four years.
In constructing the base rate for a particular classification, we begin
with actual awards of compensation and medical benefits. These awards are made
to injured workers of employers within that classification on claims with
injury dates during the oldest four of the last five calendar injury years.
For example, for rates effective July 1, 2006, we use awards made
on claims involving injury dates from 2001 through 2004. For the July 1, 2007,
rating period, the oldest injury year (2001) drops out of the experience,
and a new injury year (2005) is added, affecting the experience for the first time.
This screen allows you to view up to 10 different rating periods.
When you select a new period, you'll see information only for that period.
- Experience modifier - Total percentage applied to the base rate
to determine the modified premium rate.
- EM cap - To minimize the effects of a significant premium increase,
non-group employers may qualify for a cap. The EM cap will equal 100 percent
of the previous year's published group or individual EM. The cap will apply
if the employer's current EM is above 1.01. YES or NO will indicate whether
or not the most recently calculated experience modifier is capped.
An active manual represents the classification of job duties we have on file
for that particular position within your industry. There are two types of
manual classifications, the National Council on Compensation Insurance (NCCI)
and BWC manual classifications.
We have discontinued these manual classifications on your policy.
Manual classifications in which we transferred the entire payroll from one or
more specific manual classifications to another. The replaced manual classification
is the successor manual classification.
Experience modifier (EM) history
This screen allows you to view and/or download your experience modifier data by
policy period for the last five years. The EM is the percentage applied to the base
rate to determine your premium. Additionally, you can see specific rating and/or
discount programs for your policy for each period listed.
Note: Beginning July 1, 2009, you also can see whether or not your policy
qualifies for the EM cap.
Experience period data
This service offering encompasses nine different screens, showing
information such as premium rate calculations, experience modifier calculations,
payroll and claims data, and an administrative cost breakdown. The rates are
displayed per manual classification and any participating rating plans
and/or discount plans. Additionally, you can view and/or download the rate letter
and accompanying experience exhibit you receive each year.
- Modified premium rate - Rate that experience-rated employers
pay as a percentage of their payroll. It's the Base rate X the employer's
EM factor (minimum premium percentage for individual-retrospective employers).
This rate is used to calculate the premium for an experience-,
group- or retro-rated employer by multiplying the rate times reported payroll.
- Blended rate - Rate that employers see on their payroll reports by
manual classification. It consists of the base rate or modified premium rate,
discounted premium rate, the administrative cost (AC) assessment, the disabled
workers relief fund (DWRF) and additional disabled workers
relief fund (DWRF2) assessments, and the Deductible Program discount
(after June 30, 2009, if applicable).
- Discount premium rate - Modified premium rate X
the Drug-Free Workplace Program discount, if applicable
- Deductible Program discount - Discount received
for participating in the Deductible Program.
Rating adjustment history
This service offering allows you to view any adjustments made to your experience
modifier. Additionally, you can download and view a list of events that led to a
Note: For rating years prior to July 1, 2009, the previously calculated EM
and the current EM, if applicable, will be shown. If we have made any adjustments,
the history of the rate adjustment will show at the bottom of the screen. For rating
years July 1, 2009, and beyond, this screen will show if you are participating
in a rating plan and/or program at the bottom of the screen and the accompanying
discount associated with them.