Over the past few years, many employers in Ohio have been looking at the Group Retrospective Program implemented in 2009 by the Ohio Bureau of Workers’ Compensation (BWC) as another option to garner savings when it comes to their workers’ compensation premium. Enrollment numbers have doubled each year, especially with employers that are of medium size and debit-rated by the BWC.

“If you are an employer in Ohio who has some claims in your experience — as accidents will happen — but also has a solid safety program in place, Group Retrospective Rating may be an option. Organizations that do not qualify for a Group Rating program or are seeing little savings from this program should consider Group Retrospective Rating as an alternative,” says Heather Vogus, vice president at CompManagement, Inc.

Group Retrospective Rating enrollment for private employers ends April 30 for the 2013 policy year.

Smart Business spoke with Vogus about the program and why it has the attention of businesses across Ohio.

What is Group Retrospective Rating? 

Group Retrospective Rating is a performance-based incentive program designed to recover a portion of premiums for employers that reduce injury rates and lower associated claims costs. It is similar in concept to Group Rating, as companies are grouped together to be rated as if the group was one big company. However, with this program, companies continue to pay their own individual premium but have the opportunity to receive retrospective premium adjustments, such as refunds or assessments, at the end of each of the three evaluation periods performed by the BWC.

How are groups evaluated by the BWC?

Three evaluations are performed by the BWC at 12, 24 and 36 months after the end of the policy year. At the end of each period, the BWC looks at the expected losses of the group and compares those to the actual losses to calculate the group’s Retrospective Premium. If the premium calculated is less than the group’s total Standard Premium, the participants receive a refund for that period. However, if the premium is greater, an assessment will be levied by the BWC, but each group limits the maximum assessment by selecting a premium cap that can be factored into your budget so that your organization is prepared. Before entering a program, be sure to have a feasibility study created to ensure this program fits the risk tolerance of your organization and has the ability to garner appropriate savings.

Why should my organization participate?

If your organization is committed to improving workplace safety and accident prevention, as well as taking action to reduce the frequency and severity of accidents involving your employees, this program has the ability to attain premium savings to boost your bottom line. The BWC has just released statistics showing that the 2009 private employer Group Retrospective Rating program has refunded a grand total of $12.4 million to date, for an average of $33,940 per employer.

How is the Group Retrospective savings projection calculated?

First, the overall group premium is calculated. As an example, suppose the Standard Premium for the group is $4 million and the Minimum Premium, assuming 25 percent, is $1 million. Add Developed Losses, which is incurred losses multiplied by the BWC developmental factor of  $1.4 million, and that equals the Retrospective Premium — the minimum premium plus developed losses — to give you $2.4 million.

The Group Retrospective Refund, which is the Standard Premium minus Retrospective Premium, is  $1.6 million, and the Estimated Refund Percentage is 40 percent.

Using the estimated refund percentage of 40 percent from the group example above, a mid-sized service company, assuming a payroll of $1 million, may expect:

• Individual Premiums of $62,500

• Group Retrospective Rating Premiums of $37,500

• Group Retrospective Rating Savings of  $25,000.

Savings reflected above do not include the additional savings that can be realized by also participating in programs compatible with Group Retrospective Rating such as Destination Excellence Go Green and Safety Council (participation rebate).

Heather Vogus is vice president at CompManagement, Inc. Reach her at (800) 825-6755, ext. 65440 or heather.vogus@sedgwickcms.com.

Insights Workers’ Compensation is brought to you by CompManagement, Inc.


Published in Cincinnati

Across the country, every business continues to look for ways to save money and reduce operational expenses in order to reinvest in their people, technology and other business practices. Workers’ compensation premiums are one operational expense that may be reduced if your organization has implemented safe work practices and adopted claims management best practice techniques.

“If you are an employer in Ohio, there are many solutions available to you for discounted workers’ compensation premium. Group Rating remains one of the best programs available as a solution for your company with high discounts and program compatibility options,” says John Logue, vice president at CompManagement, Inc.

Smart Business spoke with Logue about why every employer in Ohio should review options for workers’ compensation discounts regardless of size.

What is Group Rating and why should my organization participate?

The Ohio Bureau of Workers’ Compensation (BWC) designed Group Rating in the early 1990s as an incentive program for those employers who establish and maintain safe working conditions. Employers with a better-than-average safety record and little if any claim costs pay at or below the base premium rates established by the BWC. The BWC looks at the group of employers and adjusts the rates as if the group was one big company, thus potentially giving employers much lower premium rates than they could attain on their own. Discounts typically range between 15 percent and the maximum discount available from BWC, which for policy year 2013 is 53 percent for private employers.

How are groups formed?

Third-party administrators (TPAs) that represent sponsoring organizations, such as trade associations and chambers of commerce, review an employer’s experience (current year and past four years). Once the employer has signed a Temporary Authorization to review their information, the TPA will review both the employer’s claim costs and payroll. Group participation is a year-to-year enrollment. If the employer’s experience meets the sponsor’s guidelines for the policy year, then they are invited to participate in the program. Many employers are already members of trade associations or chambers of commerce in their community, so it is worthwhile to investigate whether or not it includes this member benefit.

If eligible for Group Rating, what other programs should my organization consider?  

While participating in Group Rating, an employer may also earn additional discounts through Destination Excellence, Drug Free Safety Program and Safety Council, to name a few. Some of these programs include elements of things companies are already doing today, such as making payments online, paying on time, being active in local safety councils and reducing the frequency/severity of claims, and establishing drug-free workplace policies. An employer should contact the group sponsor’s program administrator to evaluate the multiple options and discount percentages allowed, as well as be informed of the different eligibility requirements and expectations to be met for continued participation in the programs.

How is the group savings projection calculated?

Group savings will differ between sponsor programs with those with larger groups offering more stability and accuracy in projected savings. It is very important to make sure that your organization provides the most current payroll information and any future budget impacts when comparing quotes between sponsoring organizations, as payroll, claim costs and industry are major factors in determining the premium for your organization.

An example of the potential savings for a mid-sized service company:

•  Payroll — $3,990,000

•  Individual discount — 16 percent

•  Individual premium — $14,683

•  Group discount — 53 percent

•  Group premium — $9,632

•  Group savings — $5,051

John Logue is vice president at CompManagement, Inc. Reach him at (800) 825-6755, ext 6574 or John.Logue@sedgwickcms.com.

Save the date: Group Rating enrollment for private employers ends Feb. 28 for the 2013 policy year

Insights Workers’ Compensation is brought to you by CompManagement

Published in Cincinnati