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Media Advisory: June 27, 2008

Long-term plan to reform BWC premium rates adopted

Board approves transition to a new split-experience rating plan; reduces max discount

COLUMBUS – The Ohio Bureau of Workers’ Compensation (BWC) Board of Directors today unanimously approved the first phase of a long-term plan that is expected to improve pricing accuracy and equity when determining workers’ compensation premiums for all Ohio employers. The improvements are expected to reduce Ohio’s workers’ compensation base rates by as much as 25 percent once implemented.

“The long-term plan proposes to transition to a nationally tested split experience rating method for calculating premium rates that will distinguish random accidents from consistently unsafe workplaces,” said BWC Administrator Marsha Ryan. “Reforming BWC’s rate making process will provide greater stability for employers, while improving BWC’s cost competitiveness with other states.”

In addition to transitioning to a new rate making process, similar to one used in 38 other states, the long-term plan also includes components such as:

  • Implementing a transitional reduction in the maximum discount from 85 percent to 77 percent beginning July 1, 2009;
  • Capping premium increases due to these changes at 20 percent for employers affected by the transitional discount reductions;
  • Capping premium increases due to an employer’s claim history at 100 percent for all employers, particularly those removed from a group; and the
  • Development of new, performance-based options such as deductibles that will encourage employers to manage costs and improve workplace safety efforts.

The long-term plan proposes a gradual transition to the new experience rating method over three years. The first phase of the plan was approved with further study on the group rating rules and governance to be complete by 2009. Other aspects of the long-term plan, such as an additional discount reduction in 2010 and the rating transition in 2011 will be addressed after further testing and impact analysis are complete.

“The long-term plan proposed by BWC was developed with input from all parties and will help to fundamentally improve the way premium rates are calculated for all employers,” said BWC Board of Directors Chair Bill Lhota. “Transitioning to a new rating plan will improve BWC’s pricing accuracy for individual employers while also reducing the volatility of the current system.”

In addition to the recommendation by BWC’s staff, Deloitte Consulting, Inc. this week offered a detailed presentation supporting improvements to BWC’s discount programs, including the group rating program. Deloitte Consulting has been studying BWC’s discount programs since early 2008.

The year-long study by Deloitte Consulting was initiated in House Bill 100 to measure the performance of Ohio’s workers’ compensation system and compare Ohio’s workers’ compensation system to other state and private compensation systems. The study is expected to continue until December 2008.

Ohio’s group-rating program allows businesses to band together to potentially achieve lower premium rates than they could individually. An independent organization sponsors each group and administers group participation.

For details on the BWC’s plan to restore operational excellence, visit www.ohiobwc.com/reform. For information about the agency’s plan to improve experience rating for workers’ compensation and strengthening the group-rating program, click here.

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Contact: Keary McCarthy
614-644-8944 or 614-312-7272
mccarthy.keary@bwc.state.oh.us


Contact: Maria Smith
614-728-8045 or 614-205-5709
mccarthy.keary@bwc.state.oh.us