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Ohio Workers Comp Crisis Was Rumbling For Few Years

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Ohio Workers Comp Crisis Comes To A Head

The Ohio Workers Comp crisis reached a fever pitch this month.   I have not mentioned Ohio for a few months. Ohio is one of the few remaining monopolistic state funds where the state is the only insurance carrier.

Picture of Ohio workers comp crisis breaking like rope
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Recently, a county court judge’s ruling certified the original suit as a class action which allows 100,000 small businesses statewide to seek upwards of $1.5 billion in restitution for allegedly being overcharged on their workers’ compensation premiums.

I had analyzed the Ohio situation in one of my past posts. The rumblings started  when a statistically unfair advantage  was generated by pulling together employer groups but not allowing all companies into these groups.

The Ohio Bureau of Workers Compensation (BWC) had overcharged small business by allowing certain employer groups to have Workers Compensation coverage at heavily discounted rates. The BWC charges below-cost rates to group members to make up for the losses by overcharging businesses that don’t qualify for a group.

Stamp Ohio Workers Comp State
123RF

The attorney for the class action group said the flawed method entices employers with unrealistically low premiums. When a work-related injury occurs and forces a business out of a group, it creates a risk-averse system that allows the group to maintain a pristine claim experience and artificially low premiums because the ejected member must now pay excessively high premiums.

The bottom line is that monopolistic state funds do not act like a true business or insurance carrier.   That is why they are not sustainable in today’s current insurance market. There are now only four monopolistic funds left. If they do not adopt business models similar to the regular market insurance carriers, the remaining ones will likely not survive.

Who will eventually pay for the possible $1.5 billion from the Ohio mess? The taxpayers will end up with the tab.

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

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