Nov. 21, 2007
BWC Board Rejects Public Input and Increases Premiums for 2008;
Lowers Group Rating Discount to 85%
On the day before Thanksgiving, the Bureau of Workers’ Compensation (BWC) Board opted to ignore its actuary committee’s recommendation to slow the rate of its proposed increase in premium costs for group-rated employers. The committee’s recommendation for a more reasoned approach, with a moderate increase, followed a public hearing where PIA and several other interested parties testified about the effects a drastic increase would have on nearly 100,000 Ohio employers. The BWC had claimed the public hearing was scheduled to hear directly from citizens, employers and organizations about how the proposed changes would affect all parties. Unfortunately, the bureau crammed "public input" into a two hour window - then ignored the committee recommendation that arose from the public’s concerns.
As reported in last month’s ProAction, the BWC Board had been considering a reduction in the maximum rate of discount available to group-rated employers from 90 percent to 80 percent. PIA joined other group rating sponsors and several employers in opposing such a drastic increase in premiums, particularly with such inappropriate timing. Employers have already received enrollment materials for next year’s WC insurance plans, and any rate changes adopted this late in the timeline are not reflected in those materials.
Despite knowing the timing of the proposed change was a problem, the BWC Board pushed its actuary committee for a recommendation to approve the proposed increase in premiums for 2008. In response, the committee held the crammed public hearing and then voted to recommend a smaller increase in the premiums. But the board rejected that recommendation and went halfway to its original proposal by lowering the rate of discount to 85 percent. That represents a significant premium increase of millions of dollars for employers across the state of Ohio.
The bureau had formed a study group this summer that it said would be a platform for discussion on the rate of discount. However, as a member for the study group, PIA felt that all four meetings held were nothing more than presentations by the BWC in efforts to push their agenda - not open discussions to gather stakeholder feedback. In fact, there were several requests for data supporting the BWC’s conclusions and predictions that were never supplied to stakeholders. That’s why PIA told the actuary committee at the public hearing that, in addition to having concerns about the proposed change and its timing, we are not able to tell our employers we feel a comprehensive review of all issues that affect rates has been done.
Fortunately, the bureau says it is committed to involving interested parties and plans to continue holding stakeholder meetings throughout next year as it continues its considerations for more changes in rates. PIA plans to stay involved in those meetings and will continue pushing for a comprehensive approach to any workers’ compensation reform that considers all aspects of group rating before making additional increases to premiums.
Nov. 9, 2007
Bureau Considering Increase to Workers’ Compensation Premiums
At the request of Administrator Marsha Ryan, the new Board of Directors of the Ohio Bureau of Workers Compensation (BWC) wants to increase insurance premiums for 100,000 employers across the state. Billed as a move necessary to bring more stability to base rates, the BWC is considering lowering the rate of discount available to employers in group rating - discounts they earn by pooling together in groups, increasing safety standards and keeping injuries and loss histories low. PIA sponsors a group rating program, sold by insurance agents, that helps more Ohio employers earn discounted rates - and access to a safety consultant free of charge - services that were once only available to the largest employers.
PIA agrees that a thorough review of the group rating program is warranted to reduce any premium imbalances that exist between group rated and non-group rated employers. However, the BWC Board is considering a reduction in the rate of discount now - prior to a thorough review of the system.
Most damaging, if the board then votes to lower the rate of discount for the 2008 enrollment year, that action will have occurred after group rated employers have already received enrollment materials. The BWC knows the enrollment marketing timeline has already begun, and that employers are already receiving materials indicating the current maximum discount rate available.
If your agency has clients enrolled in group rating, and the rate of discount is reduced in November or December, your clients will face higher premiums than they may be expecting. In some cases, premiums will double. This drastic change, if made with such disruptive timing, would cause a negative impact for too many Ohio employers.
PIA strives for a more comprehensive approach to any workers’ compensation reform that considers all aspects of the program, rather than taking a single action against group rating discounts. Now is not good timing to make a significant change to the discount rates.
The BWC's actuarial committee will be holding a special public hearing on this issue on Nov. 14, with potential plans to recommend a discount rate reduction to the full BWC Board for its next meeting at the end of the month. PIA urges you to contact the BWC Board and let them know how this action would affect your business. Tell the bureau to hold off on reducing the rate of discount until a thorough review of the system has been completed. Contact the BWC by e-mailing the actuarial committee before the Nov. 14 hearing on group rating at GroupRatingInfo@bwc.state.oh.us. To learn more about the hearing, click here.
To learn more about PIA's efforts to promote a more reasoned approach, read PIA's letters to employers in our association sponsored group rating program, House Insurance Committee Chairman Bill Batchelder and BWC Administrator Marsha Ryan.