The proposed $1 billion dividend is part of a three-pronged proposal Gov. Kasich announced recently. Also on the table is a $900 million credit to employers to transition to a new payment system, accompanied by a rate reduction and tripling the investments in safety grants.
"All three elements of the proposal would be funded from BWC's net assets, which have grown to $8.3 billion and are far in excess of the target funding ratio for assets to liabilities established by the BWC board in 2008," according to a statement issued by the BWC.
"Currently, BWC's $8.3 billion in combined net assets exceeds the target funding ratio of assets to liabilities established by its board in 2008. The guidelines of between 1.15 and 1.35 mean that for every dollar in liabilities, BWC must have between $1.15 and $1.35 in assets," the BWC explained. "The ratio currently stands at 1.49, a strong indication of financial strength and security, but above the upper range established by the board. This proposal moves BWC to within the established guidelines."
In response to a question, BWC officials denied the bureau is overcapitalized. "It's not really related to premiums that are charged, it's more related to the investment portfolio and its growth," said BWC Administrator/CEO Steve Buehrer. "The investment return over three years, 11.4 percent annualized, has been a big driver. Better management, more diversity in the investment portfolio, as well as an ongoing look at costs in the system has led to this point where dividends, etc., are possible."
If approved by the BWC's board of directors, the $1 billion dividend would be sent to more than 200,000 private and public sector employers. The rebates would equate to about 56 percent of employers' most recent annual premium. The board meets later this month and may consider the proposal.
The governor is asking the state Legislature to approve a change to a prospective payment system, which would allow customers to pay in advance of their coverage periods. The BWC would issue $900 million in credits to employers to offset transition costs. "This would also result in rate reductions of 2 percent for private employers and 4 percent for public employers," the BWC said.
The bureau is also being asked to expand its Safety Grant Program to $15 million from $5 million. Buehrer said it would benefit workers from "ongoing and increased efforts to bring better safety practices to workplaces."
Meanwhile, the BWC is appealing an order to pay nearly $860 million to 264,000 employers for allegedly charging excessive premiums. The order came from an Ohio Common Pleas Court judge in response to a suit that said the employers were paying inflated prices for insurance.
"The BWC has fully reserved for it," Buehrer said. "We believe the case was wrongfully decided, and we are pursuing an appeal."
Buehrer said the bureau has reserved $854 million, which officials said was the amount at the time in December. The judgment is now $859 million.
Read more at the WorkersComp Forum homepage.
June 3, 2013
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