The rate an employer pays is based on the work being done and the risk of injury due to hazards associated with that work. BWC assigns NCCI manual classifications to an employer based on the description of work being performed. Each manual classification has its own base premium rate.
For example, the manual classification for an office worker carries a lower rate than the manual classification for a construction worker. There’s less risk of injury for the office worker, and claims costs are typically lower than claims costs for construction workers.
How are base premium rates determined?
- We use claims costs for a classification industry wide and not just from one employer's experience.
- BWC's actuarial department analyzes the costs of all claims in each manual classification during the oldest four of the most recent five years.
- We use this information to project the costs of claims that will occur the next year for each manual classification.
- BWC's administrator uses this actuarial data to make recommendations for premium rates and assessments.
- Final approval of premium rates comes from the BWC Board of Directors. New rates for private, state-fund employers are effective each July 1 and new rates for public, state-fund employers are effective each Jan. 1.
What is a base rated employer?
- Rates affected by claims costs industry wide
- Pay workers’ comp premiums based on the average costs of claims filed against all Ohio employers in like industries, using the same manual classifications
- The base rate assigned to a particular manual classification is determined by a review of combined claims costs in the experiences of all Ohio employers associated to that manual classification.
What is an experience rated employer?
- Rates affected by the claims costs record of their particular business
- Experience-rated employers with lower-than-average claims costs, compared to others in the same classification, will pay a rate lower than the base rate.
- Experience-rated employers with higher-than-average claims costs, compared to others in the same classification, will pay a rate higher than the base rate.
Smaller employers are excluded from experience rating for their own benefit. One serious accident could cause a smaller employer's rates to increase severely, and the employer's premium stability could be dramatically altered for the next four experience-rating years.
An employer's experience exhibit information is a statistical snapshot of claims costs for the oldest four of the most recent five-year period. It is used for the purpose of calculating the employers experience modification factor or EM.
- Each August, BWC provides an experience exhibit on this website for experience-rated state-fund employers. An experience-rated employer is an employer who is expected to have $2,000 or more in expected losses.
- The experience exhibit shows all lost-time claims within the experience period, including compensation awards, medical payments and claim reserves.
- The exhibit also lists the base rates for each manual classification and shows any experience modification, the percentage that is applied to the base rate used to determine premium.
- If the employer's actual losses are better than expected, the employers EM will be less than 1.00. If the employer's actual losses are worse than expected, the employers' EM will be greater than 1.00. An EM of 1.00 represents an employer with exactly the average losses for the manual classification.
View the experience exhibit for an employer policy
Assessments and blended rates
The rate that appears on the employer's payroll report and is used to calculate workers’ comp premiums is called a blended rate. The blended rate consists of several assessments added to the premium rate.
The assessments include administrative costs which are the operating costs of BWC and the Ohio Industrial Commission, and fund the Disabled Workers’ Relief Fund (DWRF).