BWC Raises group insurance rates despite objections

Group rating program participants face higher premiums for 2009 and 2010. The Bureau of Worker’s Compensation (BWC) Board of Directors voted to both lower maximum credibility to 65% and apply a significant stratified surcharge (the so called “breakeven factor” of BEF) to all group employees, reducing the maximum discount to around 51%.

Board members rationalized the decision to move forward with lowering the max discount and applying surcharge by stating that employers will not have to pay these premiums until 2011 and BWC offers various payment plans to assist employers who will have difficulty paying their premium.

Unfortunately the Board’s decision means more than 70,000 employers will need to budget back-to-back premium increases for 2010 and 2011. Businesses that have not had claims because of a strong focus on safety are going to face steep premium increases when there isn’t data to back it up.

The BWC and Board of Directors have been increasing premium for group rated employers each year since 2005 in an effort to achieve “premium equity” between those employers participating in a group plan and those who don’t qualify due to excessive loss history. BWC reported that the inequity between group and non group employers was solved in the changes made through 2009.  The most significant of these increases are effective for the 2008 and 2009 rate years for premiums payable in 2009 and 2010. The Board decided   to move forward with BWC’s 2010 rate plan despite calls from public and private business leaders, including OSCPA, to postpone further increases until the result of the 2008 and 2009 changes could be fully analyzed.

A coalition of professional and trade associations, including OSCPA, advocated a more modest approach to lowering the maximum credibility to 65% without applying a surcharge.