Experience Modification Cap – Effect on Workers Comp Costs
Does the Experience Modification Cap really help reduce employers’ Workers Comp premiums?
The Ohio Bureau of Workers’ Compensation’s board of directors recently approved a cap on premium increases aimed at preventing unforeseen spikes in workers’ comp costs.
This is a case, once again, whether the government has launched an artificial modification to the E-Mod system that is in place in one form or another in every state. I am not sure that this will work as it would seem that the most safe employers would be subsidizing the least safe ones. The E-Mod system for Workers Comp is the system that has worked for many years. The NCCI has modified some of the rules, but not the way the E-Mod system works.
Someone will have to pay for the cap and it will be the safer employers. This may even cause a somewhat safe employer to be more lax in their safety. If my company was going to receive a cap and I could cut the safety budget, then would I not try to figure out how to have a minimally safe company? That may be an extreme example. Workers Compensation’s rating, audit, and premium system works well for the environment that it exists in for the most part. Why alter what actually works?
I had read where some employers’ premiums had swung wildly, but the way the E-Mod system is built, that one bad accident or one bad year is spread over three years. I think where the main fault lies with the Ohio BWC is the way that the Classification Codes are set each year. I would not say that is the reason for sure, as I would have to look at the rates for each classification codes for years to see what the changes were overall.
The bottom line is that while the Experience Mod system is not perfect, it should not be altered as one group of employers will end up subsidizing another if the system is changed.
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