November 26, 2007
Noel Shepard

After passionate business opposition to a proposed 10% reduction in the maximum group rating discount, the Ohio Bureau of Workers’ Compensation Board of Directors announced on November 14 that the reduction will likely only be 3%. 

BWC Administrator Marsha Ryan has made group rating reform a top priority.  Ohio employers have been able to enjoy as much as a 95% premium discount if their claim loss history was significantly less than the loss expectations set by the BWC.  However, increased scrutiny of the BWC over the past few years prompted a review of Ohio’s group rating program.  Actuarial studies ordered by the BWC demonstrate that the steep discounts enjoyed by many Ohio employers is carried on the backs of employers with more claim losses.

In September 2007, the Ohio BWC Board of Directors agreed to reduce the maximum group rating discount from the current 90% to “no less than 80%.”  In an effort to level the playing field among Ohio employers, a 10% reduction in the group rating discount would give a 4% reduction in base rates for all employers. 

However, many business associations and third party administrators were extremely concerned about the size and timing of the proposed discount reduction.  An employer with an excellent loss history who would otherwise pay $100,000 in individual workers’ compensation premiums could have paid only $10,000 under the 2007 group rating structure.  However, with the proposed 2008 group rating structure, the same employer would pay $20,000 in premiums.  Also, many businesses have already established budgets for 2008, and uncertainty about workers’ compensation premium increases threw a wrench in business planning. 

Additionally, third party administrators are deep in the marketing cycle for their 2008 group rating plans.  TPAs must follow strict notification rules established by the BWC.  It has been difficult for TPAs  to give discount quotes to employers because the BWC has been debating the reduction in the maximum discount available.

On November 14, 2007, the Actuarial Committee of the Board of Directors heard public comments about the proposed discount reduction.  The Committee heard from 60 speakers over a three hour period, receiving an additional 115 written statements.  Ultimately, the Committee decided to  recommend to the Board of Directors a 3% reduction in the maximum group rating discount from 90% to 87%.  The Board of Directors will vote on the matter at its November 21, 2007 meeting.

Please contact the Frost Brown Todd Labor Department for strategies to reduce your workers’ compensation premiums.