Ohio to Cap Experience Modifier Increases in Workers’ Compensation

The Ohio Bureau of Workers’ Compensation (BWC) board of directors has approved a rule that is expected to prevent spikes in workers’ compensation insurance costs for many employers.

The cap on an employer’s experience modifier (EM) is expected to limit extreme premium swings in the event of a serious accident or loss of a group-rated premium.

The cap will take effect on July 1, 2009. BWC said it plans to leave this cap in place permanently.

The cap will prevent any individual employer’s experience modifier from increasing by more than 100 percent from one year to the next. This cap is intended to significantly reduce premium increases resulting from loss of a group discount or other factors that can cause instability in employer premiums, according to Melissa Vince, the bureau’s public information officer.

BWC said the capping plan is part of its efforts to “foster economic growth by stabilizing premiums and providing relief for small businesses that are striving to remain competitive in a difficult economy.”

An employer’s EM is one of the key components in calculating an employer’s overall premium rate, measuring the total costs of the claims filed within an experience period.

“As businesses are challenged by the current economy, it is important to address the impact dramatic premium fluctuations have on many employers,” said BWC Administrator Marsha Ryan. “By increasing the stability and consistency of Ohio’s workers’ compensation system, BWC will continue to support the growth of business in Ohio and increase our competitiveness with other states.”

The board also approved a motion to allow BWC staff to explore options designed to “create greater equity in what Ohio employers are charged for workers’ compensation insurance coverage.”

The agency said it will look for new approaches to ensuring employers pay the right rate for the right risk. BWC staff will provide the board with regular updates on progress to this initiative with board members making a final decision in the coming months.

In addition, the board heard the first reading of a plan to initiate a deductible program that is intended to give employers more control of their workers’ compensation insurance spending. Under this type of program an employer would agree to pay the portion of claims below the deductible and receive a premium discount in return. The proposed creation of a new deductible program is part of a menu of new programs under consideration with target implementation dates as early as of July 1, 2009.

The BWC board of directors also voted to extend the deadline for employers to apply for the group rating program from February 28 to April 24. The application deadline extension will allow additional time for sponsoring organizations to determine how to proceed once potential changes are implemented.

Source: Ohio Bureau of Workers’ Compensation
www.bwc.state.oh.us