A performance-based incentive program designed to recover a portion of premium for employers that reduce injury rates to employees and lower associated claim costs.
Group Retrospective Rating is a performance-based incentive program designed to recover a portion of premium for employers that reduce injury rates and lower associated claims costs. It is similar in concept to Group Rating, as employers are evaluated as if the group was one big organization. However, with this program, organizations continue to pay their own individual premium but have the opportunity to receive retrospective premium adjustments (refunds or assessments based on the performance of the group) at the end of each of the three evaluation periods performed by the Ohio Bureau of Workers’ Compensation (BWC).
Three evaluations are performed by BWC at 12, 24, and 36 months after the end of the policy year. At the end of each period, BWC looks at the expected losses of the group and compares to the actual losses to calculate the group’s retrospective premium. If the premium calculated is less than the group’s total standard premium, the participants receive a refund for that period. However, if the premium is greater, an assessment will be levied by BWC, but each group limits the maximum assessment by selecting a premium cap which can be factored into your budget so your organization is prepared
An example of a group retrospective savings calculation for a mid-sized service company with $1,000,000 of annual payroll is provided below:
• Standard Premium for Group: $4,000,000
• Minimum Premium (assume 25%): $1,000,000
• + Developed Losses (incurred losses x BWC developmental factor): $1,400,000
• = Retrospective Premium (minimum premium + developed losses): $2,400,000
• Group Retrospective Refund (Standard Premium – Retro Premium): $1,600,000
• Estimated Refund Percentage: 40%
Using the estimated refund percentage of 40% from the group example above, this mid-sized service company with payroll of $1,000,000 may expect:
o Individual Premium: $62,500
o Group Retrospective Rating Premium: $37,500
o Group Retrospective Rating Savings: $25,000
Savings reflected above do not include the additional savings that can be realized by also participating in programs compatible with group retrospective rating such as Destination Excellence Go Green and Safety Council (participation rebate only).