Ohio: Board says plan will cut rates by more than 25 percent for some employers

Ohio officials said a plan is expected to reduce the average workers' compensation premium rate for non-group employers by more than 25 percent beginning July 1.

The Ohio Bureau of Workers' Compensation's board of directors said the plan will provide a solution to the long-term challenge of ensuring premium equity for all state-fund employers.

"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," said Marsha Ryan, administrator of the BWC.

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Ryan said 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, Ryan said, 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. Officials said 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, the BWC has 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. Ryan said that 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, which led the bureau to look at more innovative solutions to this long-term challenge.

The BWC's annual actuarial analysis to determine rates for private sector employers found that claims cost projections provided latitude for a significant decrease in base rates -- between 5 and 18 percent. Based on this data, the bureau's actuaries recommended a base rate reduction of 12 percent for the 2009 policy year, beginning July 1. 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, Ryan said, is expected to bring significant premiums savings to most private employers.

Plan eliminates additional discounts. Another element of the BWC's plan eliminates the opportunity for group-rated employers to stack discounts. Beginning July 1, employers that elect to participate in group rating will not be able to receive additional discounts associated with the state's Drug-Free Workplace Program. Both group-rated and non-group-rated employers will be eligible to receive discounts associated with participation 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's experience modifier to no more than 100 percent. Among the approved changes that define employers' eligibility for the cap, the board said:

Only employers with an individual experience modifier at 1.01 or higher will qualify.
Businesses not in good standing with the 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 a staff member from the BWC.

April 20, 2009

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