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 |
Premium Discount Program Plus (PDP+)
- Eligible if EM is greater than .15
- Three-year program
- 10-Step Business Plan
PDP+ advantages
| Joining |
= 10-percent premium reduction |
| Reducing claims frequency |
15 percent = 5-percent rebate check |
| Reducing claims severity |
15 percent = 10-percent rebate check |
| Bonus for achieving both |
= 5-percent rebate check |
| Total Savings |
= 20-percent bonus |
Saving with PDP +
| Annual premium before discount |
$50,000 |
| PDP+ savings for first year |
$5,000 |
| Net premium |
$45,000 |
| Freq./severity credit (20 percent) |
$9,000 |
| Net premium |
$36,000 |
| Net savings |
$14,000 |
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 |
In group? Save more with DFWP
| Annual premium before discount |
$3,400 |
| Group-rating savings |
$2,040 |
| DFWP savings (Level 1 = 10- percent) |
$136 |
| Net premium |
$1,224 |
| Net savings |
$2,176 |
Combine DFWP and PDP+
| Annual premium before discounts |
$50,000 |
| PDP+ savings for first year |
$5,000 |
| DFWP savings (Level 1 = 10 percent) |
$4,500 |
| Frequency/severity credit (20 percent) |
$8,100 |
| Final premium |
$40,500 |
| Net savings plus bonus |
$17,600 |
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
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