Ohio Bureau of Worker’s Compensation (“BWC”) recently announced its intention to reduce the overall rates charged to private employers. If adopted, a 10.8% statewide reduction in premium rates would go into effect July 1, 2015.
BWC is attributing the proposed reduction to several factors including actual claim frequency that is lower than expected and the adoption of a prospective billing system. Currently BWC bills premiums in arrears. With a prospective billing system, BWC will begin to bill employers for coverage in advance. The act of collecting in advance is expected to allow BWC to increase investment income which in turn leads to reducing rates charged to employers.
Of note, the 10.8% reduction is a statewide average, and therefore, not every private employer will realize a 10.8% decrease. Actual premiums for private employers will continue to depend on various factors such as claim history, expected industry segment costs, and participation in various premium credit and savings programs. In all, BWC expects employers will save approximately $150 million in costs annually.
The BWC board of directors will vote on the proposal during its next meeting, which is scheduled for February 27, 2015.
