During the three-and-a-half years of the Strickland Administration, many changes have occurred at the Bureau of Workers’ Compensation. Each has been touted as one that will improve the system and help Ohio become a friendlier place to do business. The goal of the Bureau has been to avoid workers’ compensation being once again labeled “the silent killer of jobs,” as it was described by George Voinovich early in his first term as governor.
Depending on one’s viewpoint, the modification of the group rating program has either benefited or damaged employers in the state. Based on several actuarial studies prepared by independent auditors, the bureau determined that non-group rated employers were, in effect, underwriting the discounts received by group-rated employers, whose risks of injuries did not necessarily warrant the extent of discounts they were receiving. As a result, over a period of years, the bureau reduced the maximum premium discount an employer could receive from the group rating program from a high of 95 percent to what currently amounts to 51 percent. Employers that qualify for group rating argue that the reduction of their group savings may result in them being unable to afford the increased premiums, which may result in layoffs or closing down their businesses. On the other hand, employers that do not qualify for the group rating program argue that by reducing the discounts, the bureau has evened the playing field for all Ohio employers, thereby stabilizing the employment scene, at least from a workers’ compensation standpoint.
Most recently, the Bureau has initiated rate reform in an effort to provide employers with a means by which they are offered lower premium rates that are also more stable. As a result, employers can better predict and budget for workers’ compensation premium costs in the future. In 2009, there was an overall premium reduction of 12 percent for private employers. Effective July 1, 2010, the overall premium rate for private employers was reduced by an additional 3.9 percent. These reductions depend, however, on the nature of one’s business and the risks to workers in the conduct of the business. So a given employer may not see such decreases.
In 2011, the bureau will institute an experimental “split-experience rating plan,” which places more emphasis on an employer’s claim frequency than the severity of the claims when calculating premium rates. Currently, one severe injury can cause an employer to become ineligible for group rating or give rise to a shockingly high premium which will linger in its experience for nearly five years.
These changes are designed to improve the system, but a wait-and-see approach will be necessary to determine whether these changes result in a more friendly business atmosphere in Ohio.