Restoring Operational Excellence


Home
 Contact us
Promoting economic success for Ohio's
Rate reform
 Accomplishments
Become involved

Comprehensive, Customer-focused Reform of Ohio's Workers' Compensation ProgramFlash versionPDF version State of the agencyRestoring Operational ExcellencePerformance measures

 

On March 20, the Board of Directors approved our comprehensive rate reform plan to set rates more accurately and equitably for non-group employers. The plan goes into effect for the July 1, 2009 policy year for private-sector employers.

This landmark decision by the board puts emphasis on our commitment to all Ohio employers – providing the right rate for the right risk. By providing more accurate, competitive rates and new performance-based programs, the Ohio’s workers’ compensation system will be an asset for Ohio’s economic development.

Highlights of the plan include:

  • Base rates for non-group employers are projected to decline by an average of 25.3 percent;
  • Group-rated employers will pay an average of 9.6 percent more in premium as a result of the credibility table change from 85 percent to 77 percent maximum credibility limit;
  • The introduction of a “break-even” factor for group-rated employers keeps their rate levels at the targeted 9.6 percent change. This change prevents groups from receiving the base rate reductions intended for non-group employers;
  • This recommendation has no projected premium shortfall for the July 1, 2009 policy year;
  • Only employers with an individual experience modifier (EM) of 1.01 or greater will be eligible for a 100-percent EM cap;
  • Group-rated employers cannot stack other discounts associated with other BWC programs except those associated with the deductible program;
  • The date sponsoring associations must notify group-rated employers they’re not renewing them for group will move from March 30 to April 6. This change is for policy year 2009 only.

Two factors primarily drive the decline in base rates for non-group employers is. The first is eliminating the use of group and non-group EMs to calculate base rates. This action allows BWC to assess premiums to non-group employers at base rates commensurate with the cost they bring to the system.

The second source is the overall rate recommendation for private employers. Chief Actuarial Officer John Pedrick recommended an overall rate reduction of 12 percent based on downward trends in claims costs. Combined, these two sources reduce base rates for non-group employers by an average of 25.3 percent.

Because we wanted to limit base rate reductions to non-group employers, we created a “break-even factor” for group employers. This factor will bring the 2009 base rates back to the 2008 rate levels for those in group. We will apply the factor, which is 31 percent, to the group EM. Overall, group employers will only see an average 9.6 percent increase in premium after we make all adjustments.

Finally, these changes will result in no anticipated premium shortfall. The projected premium needs for policy year 2009 is approximately $1.804 billion. Because we’re applying a “break-even factor” to group-rated employers, only the non-group rated employers will benefit from the rate level decrease. This will also allow us to collect the expected necessary premium for the policy year.

While we must do additional work to ensure all employers will pay premiums that reflect their risk, these changes advance our efforts significantly. We will continue to keep you apprised of ongoing efforts and thank you for your interest.

Sincerely,



Marsha P. Ryan
BWC Administrator