Have you ever wondered how BWC calculates your workers’ compensation insurance premium rate?

By Christopher S. Carlson, FCAS, MAAA, BWC Chief Actuarial Officer

It all comes down to an equation:

     Modified premium rate
+   Administrative cost rate
+   Disabled Workers’ Relief Funds assessments
=   Blended insurance rate per $100 of payroll

With the definitions in the sidebar as reference, let’s break down the formula:

All employers have a base rate determined by their manual classifications.

Larger businesses also have an experience modifier, a projection of expected future claims costs (based on past claims experience).

Multiplying the base rate and experience modifier (if you have one) results in the modified premium rate (MPR).

BWC factors in an administrative cost rate, used to run BWC and the Industrial Commission, and then adds assessments for two Disabled Workers’ Relief Funds that provide cost of living increases for disabled workers.

The result is your blended premium rate, the amount you pay per $100 of payroll

So there you have it, a quick lesson in BWC Premium Rate Development 101. This YouTube video provides even more detail on how BWC calculates your Ohio workers’ compensation premiums.

Remember, the best way to keep premiums low is to provide a safe workplace. Safer workplaces reduce accidents, reduce costs, and in the end, reduce your premiums.

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