Group Rating Update
By: Meredith Ullman | 10/31/2014 | Category: Workers Compensation-Premiums
To group, or not to group, that is the question.
First off, what is a “group” when referring to group rating under Ohio Workers’ Compensation? Group rating is a program that combines companies within the same industry and with similar claims experience in order to achieve the maximum discount off workers’ compensation rates. Within each group there are different tiers offering varying discounts. Currently, the highest discount an employer can receive is 53 percent.
When does group rating start for the year? This question is not as simple as it sounds. Due to recent changes at the BWC, the Ohio Workers’ Compensation system is transitioning from a retrospective billing system to a prospective billing system. The changes being instituted by the BWC in billing are now impacting the timeline for group rating. The new billing system has also significantly impacted the length of time claim costs can impact an employer. Third party administrators vary in when they begin sending group quotes. At Comprehensive Risk Management (CRM), the third party administrator Ross, Brittain & Schonberg works with closely, the group quotes for 2015 went out in August and will continue approximately until the end of October.
How do third party administrators come up with the quotes? Group rating quotes utilize BWC base rates and claim loss data. The BWC base rates for each year are not available until the end of June, just before the July 1 rate year commences. For its 2015 group quotes, CRM utilized the 2014 base rates in order to be as close to the actual rates as possible. CRM then also postponed quoting until the second quarter claim cost data was available so they could calculate the most accurate group rates possible. Different third party administrators released group quotes earlier but in doing so based premium calculations on the 2013 base rates. Unfortunately, those estimates may be far off from the actual rates that will be calculated in 2015, as the “starting point” rates (2013 base rates) will be two years old. Other third party administrators may also implement arbitrary deadlines to sign up with their group in order to get the “maximum benefits.” Such wording is merely a high pressure tactic to sign you into their group based on stale information. All third party administrators in Ohio have to file their group rating (standard group) programs by the third Monday in November.
What are the benefits of joining a group that is managed by CRM? In addition to the discount in premiums CRM will quote, and the experienced claim management, you also will have the benefit of utilizing a Ross, Brittain & Schonberg attorney to manage contested claims and represent your company before the Industrial Commission.
Claimants’ have attorneys, shouldn’t employers? There is a big difference between what an attorney can do versus what a hearing representative can do when representing employers before the Industrial Commission. For instance, a hearing representative sent by a third party administrator cannot cross examine a claimant. A hearing representative can also not question the employer or any other witnesses, which is often an integral part of defending a claim. Furthermore, a hearing representative cannot comment on the credibility of witnesses or the weight of evidence. Most importantly, a third party administrator’s hearing representative cannot make any form of legal argument. All hearing representatives may do before the Industrial Commission is communicate an employer’s area of concern and present a list of facts or summary prepared by the employer. (For more information on hearing representatives versus attorneys see “Attorney Representation at Hearings before the Industrial Commission of Ohio”
How do other group members’ claims impact your company’s ratings? Because groups are formed based on the preceding year, a claim that arises during your membership in a current year does not impact your premiums. For example, should a claim arise in 2014, those claim costs do not start impacting that employer until the 2016 group year. Therefore, should one of your fellow group members suffer a high cost claim, it will not impact you or the other group members for that year because enrollment in the group is based on the preceding year. The high cost claim may impact the employer with the claim down the road and preclude them from being regrouped, but there is no cost to the individual group members of the current group. Of course, with Ross, Brittain & Schonberg attorneys defending your contested claims, we strive to make sure that high cost claims do not occur or are controlled so that future group enrollment is possible.