CLAIMS PROCEDURES - RATE EVALUATIONS
Workers’ compensation experience
- Lost time – more than seven days lost; average cost $40,5000
- Frequency – number of claims in experience
- Severity – amount of medical/indemnity and days lost per claim
- Base-rated employers – expected loss rate of less than $8,000
- Experience-rated employers– premium varies with frequency and severity
How are rates calculated?
- EM = experience modifier
- Base rating = 1.0
- Experience rating:
| > Credit rated – less than or equal to .99 (saving money) |
| > Penalty rated – greater than or equal to 1.1 (wasting money) |
Group Rating
Combining similar employers and experiences equals greater discounts and savings.
Saving money
$55,523 Initial annual premium, EM = 1.10 (penalty rated)
EM = .95 (now credit rated)
$48,100 |
|
Annual premium the next year |
$7,423 |
|
Net savings in second year |
|
|
Group savings (93 percent) |
$3710 |
|
Premium paid at group EM |
$51,813 |
|
Group Savings |
Base-rated employer in group
$7,588 Initial annual premium, EM = 1.00 (base rated)
$501 |
|
Premium at group EM (93 percent) |
$7,087 |
|
Net potential group savings |
Drug-Free Workplace Program (DFWP)
- More than 25 employees
- Up-front discounts
- Level 1 = 10-percent savings
- Level 2 = 15-percent savings
- Level 3 = 20-percent savings
Drug-Free EZ
- 25 or fewer employees
- Up-front discounts
- Level 1 = 10-percent savings
- Level 2 = 15-percent savings
- Level 3 = 20-percent savings
- 20 percent also possible by meeting claims goals
DFWP and Drug-Free EZ advantages
- Joining equals a 10-percent minimum premium reduction
- Grant money available
- Safer work environment/fewer injuries
Saving with DFWP
| Annual premium before discount |
$100,000 |
|
| DFWP savings (Level 1 = 10 percent) |
$10,000 |
|
| Final Premium |
$90,000 |
|
| Net Savings |
$10,000 |
|
Safety GRANT$
- 4-to-1 matching ratio
- $40,000 from BWC for safety
DFWP Grant
- 2-to-1 matching ratio
- $10,000 average grant for training
Transitional WorkGRANT$
- Safe and early return to work
- Lowers frequency and severity costs
- Savings continue annually
- $1,000 to $5,600 grants available
Saving with transitional work
| |
No transitional work |
With transitional work |
| Medical |
$6,000 |
$6,000 |
| Compensation |
$4,800 |
$1,200 |
| Reserve |
$24,000 |
$6,000 |
| Total Value |
$34,800 |
$13,200 |
Savings =$21,600 |
Keys to financial management
- Keep EM less than 1.0
- Achieve and maintain group rating
- Join BWC’s premium-savings programs
- Allow BMSO to assist in managing your claims
|
