The Ohio Bureau of Workers’ Compensation yesterday proposed a 10.8 percent reduction in premiums that would go into effect July 1, assuming it is approved by the bureau’s board at its meeting next month.
The cuts would save employers a projected $153 million for the year.
The proposal is the latest in what has been a string of cuts. If the new measure is passed, rates will have dropped by 21.4 percent collectively since 2011.
“It’s always good news when the bureau talks about cutting premiums, and 10.8 percent is not chicken feed, that’s for sure,” said Andrew Doehrel, president and CEO of the Ohio Chamber of Commerce.
Employers will likely use the savings for things such as improving workplace safety or buying equipment that could improve productivity, Doehrel said. Some may even hire an extra worker or two or bring back a worker who was let go.
“This is a tough area, workers’ compensation,” Doehrel said. “I think its great reflection of the activity down at the bureau to manage the system well, and that includes not just claims but their investments.”
The reduction is based on several factors, including fewer claims and a previously announced change in how employers are billed.
The bureau is going to a system to bill businesses upfront, as is common throughout the insurance industry, instead of after a coverage period as the bureau traditionally has done. The change in billing allows the bureau to boost its investment income since it will collect money earlier.
The bureau is going to give private and public employers a one-time credit of $1.2 billion to help in the transition to the new billing system.
“The ability of employers to expand and create jobs is directly tied to a number of factors, including the cost of their workers’ compensation coverage,” said Steve Buehrer, the bureau’s administrator/CEO. “That’s why low and stable rates have been one of our highest ongoing priorities.”