Ohio BWC Loses Court Case On Interesting Premium Calculations
I had previously posted about how the Ohio BWC is not acting as a true insurer and is using number voodoo to charge smaller employers outrageous premiums while giving certain employer groups enormous discounts. Ohio small businesses were being discriminated against due to their size in the area of Workers Compensation premiums.
Smaller employers do take a hit when looking at cost per unit of coverage. Of course, small companies always pay more per unit for anything from pens to building rent.
Last week, a judge ruled against the Ohio BWC and issued a restraining order blocking the Ohio Bureau of Workers’ Compensation from implementing its prospective group rating plan for policies incepting next year.
The bureau must implement a retrospective rating plan based on loss history for group policies rather than its established method of determining premiums by anticipating future losses. I still do not understand how they can predict future losses without looking at the prior losses. As I said earlier, it was all number voodoo.
Insurance based on the future only without looking at the past is call naive forecasting. The Ohio BWC attempted to go outside of the rating infrastructure that has been in place since the 1930’s. Viable alternatives to insurance seem to appear every year. The Ohio BWC plan was not one of them.
As I have said many times before in this blog, monopolistic state funds are becoming dinosaurs in the area of Workers Compensation. If a private insurance carrier operated in the same manner as the WSI in North Dakota or the BWC in Ohio, the insurance commissioner would fine them and/or place them in receivership.
An insurance system cannot be operated like a government agency in the current Workers Comp marketplace. There are four monopolistic state funds. I wonder how long they can survive.
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