BWC Update

1
BWC Update
2
Why MIRA II?

• Uses recent claim history and regularly updates
  it
• Modeling distinguishes between inconsequential
  claim data and true cost driver
• Modeling learns complex relationships in the
  claim data
• No special logic on new claims as used in MIRA I

3
Why MIRA II?

• Focus on transparency
• Established mapping and logic more closely
  related to BWC specific claims, rules, statutes
  and processes
• Provide customers with weekly reserves

4
How MIRA II Sets A Reserve
30 Days have passed since last comp paid date (V3
to date)

• TTD reserve
• Living maintenance
• PP
• PP
• TPD / Wage loss
• Medical
• COO
• Face Disfigure

Type 1
Death
CLAIM


30 days since C-92 indicator status is A and
no PP payment is made, and no subsequent PP
payment is made
Total comp paid 0, and more than 180 days
since the filing date have elapsed
5
MIRA II Web Service Offerings

• Claim data information (New)
• Claim reserve history report (New)
• Claim payment transaction report (New)
• Claim reserve change report (New)
• Claim demographic screen (New)
• MIRA II annual statistics (New)

6
Claim Inquiry Report

• Report data (sections)
• Claim info
• Policy info
• Payment info
• Injury info
• Dependent info

• Medical payments
• Indemnity payments
• Medical payment Trends
• Reserve adjustment (suppression)
• Total cost of claim
• - paid reserve

7
Claim Payment Transaction Report
8
Claim Reserve Change Report
9
Summary

• Accuracy
• Use new historical claim data that is regularly
  updated
• Clarity
• Statistical Data on Average Claim Reserve
• Transparency
• Listing of Claim Data used in reserve prediction

10
Mechanics of Experience RatingSplit Plan Defined
11
Mechanics of Experience Rating Current Ohio Plan
Example

• The current Ohio plan does not distinguish
  between claim frequency and claim severity, even
  though claim frequency is more predictive of
  higher future costs. Note the following two
  examples, where the claim frequency difference is
  10 to 1, however the experience mods are the same
  because the total losses are equal.
• Example 1
• Example 2

12
Split plan overview

• Split plan
• Employer A 1 loss totaling 250,000
• Employer B 10 losses totaling 250,000
• Calculation of EM for Employer A with one
  250,000 claim under split plan
• 0.89 (20,000 400,000) 0.32 (230,000
  600,000)
• (400,000)
  (600,000) 1 0.54
• Calculation of EM for Employer B with 10 claims
  totaling 250,000 under split plan
• 0.89 (200,000 400,000) 0.32 (50,000
  600,000)
• (400,000)
  (600,000) 1 0.65

13
Max Discount

• Effective 7/1/09 77

14
Impacts to base rates

• Base rates are expected to decrease by
  approximately 25 percent
• Assumes transition from 95 percent to an
  actuarially appropriate split plan

15
Premium Caps

• Experience Modifier Cap
• 100 percent increase from one year to the next
• 20 percent cap for employers impacted by
  credibility change
• If premium increases by more than 20 percent
  because of credibility table reduction, the
  employers increase will be capped at 20 percent.

16
Impact to max discount policies

• 7/1/06 - 95 to 93 percent 40 percent increase
• 7/1/07 - 93 to 90 percent 43 percent increase
• 7/1/08 - 90 to 85 percent 50 percent increase
• 7/1/09 20 percent cap for qualified policies

17
New programs and products

• Deductible program
• allows employers to bear some risk in exchange
  for a lower premium
• Group retro program
• allows mid-size employers who are ineligible for
  self-insurance to band together and assume some
  risk in exchange for a possible dividend

18
New programs and products

• Safety dividend program
• allows a group of similar, experience-rated
  employers to band together and assume some risk
  in exchange for a dividend
• Shared savings
• allows groups of top-performing employers to
  sacrifice some discount in exchange for greater
  premium stability within the group

19
Future rules under study

• Establishing safety requirements for group-rated
  employers
• Improving educational outreach, such as a
  comparison guide to help businesses make better
  decisions when joining a group
• Strengthening sponsor requirements
• Studying additional continuity strategies

20
Legislative Update

• SB 334- Workers Comp. Interstate Jurisdiction
• Allows employers working in other states, to take
  out coverage through private insurers
• Allows employers to exclude wages paid for labor
  in other states if they have other coverage
• Once claim is filed in Ohio, injured worker waive
  rights to file in other states
• Allows Ohio to recoup monies if worker filed for
  benefits in another state as well as Ohio

21
Board announces rate decrease

• 5 Average reduction in base rates for Private
  Employers
• First decrease since 2001
• 10 Rate Reduction for State Agencies
  (Universities, University Hospitals)
• First decrease in 9 years

22
Supreme Court DecisionWise vs. Ryan

• Lawsuit Overview
• 1997 claim was settled
• 2002 IC was asked to vacate settlement
• IC denied request
• Supreme Court stated application did not include
  reason for settlement as required under R.C.
  4123.65, thus vacating agreement

23
Wise vs. Ryan- cont.

• BWC cancelled all pending settlements
• Future settlement applications will be rejected
  that do not include reason for settlement
• Previously approved settlements could be vacated
  if injured worker files a motion

24
Tele-Interpreter Service

• Customers can call 1-800-OHIOBWC
• Selection of 150 languages and dialects
• Responses provided in real time

25
Comprehensive Rate Review

• Largest study undertaken by BWC
• Multilayered to include examination of all BWC
  programs and services and how they interact with
  each other
• Detailed look into how rates affect premiums
• Completed study by December 2008

26
Preferred Customer Markets

• Public Employer Commissions (PECs) limited to
  cities, counties schools
• Construction companies
• Temporary staffing agencies (not PEOs)
• Nursing Homes

27
Questions?