1. Ohio BWC Update Paul Flowers – Director, Self-Insured Department
Dave Sievert – Auditing Supervisor

2. Ohio BWC Update General Updates Self-Insured Security Requirements
Assessment Rates
Current Status of Obtaining Security
Next Steps for Determining Security Requirements

3. General Updates Ohio Administrative Code 4123-19
The biennial budget for the State of Ohio (H.B. 59) required two changes to the SI rules:
The Administrator must establish a rule with provisions for waiver of the requirement that SI applicants have 500 employees in Ohio
The Administrator must establish a rule with provisions for waiver of the requirement that SI applicants operate in Ohio for a minimum of two years

4. General Updates
The proposed rule requires the Bureau to waive the 500 employee requirement if the applicant meets the following requirements:
The applicant meets all requirements established in ORC (B)(1)(c-h)
The employer provides audited financial statements for the current year and four previous years
The employer meets at least one of the following requirements:
The employer has a substantial employee count outside of Ohio, as determined by the Bureau, or
The employer has obtained excess insurance in an amount and with a retention level determined by the bureau to be appropriate.

5. SIEGF & Mandatory Assessment Rate History
Year
Guaranty Fund
Mandatory Surplus
Combined Rate
2008
.0527
.0450
.0977
2009
.0935
.1462
2010
.1154
.0300
.1454
2011
.0827
2012
.0400
.0690
.1090
2013
.1138
.0100
.1238

6. Purpose of Assessments
Self-insuring employers pay semiannual assessments based on a percentage of the employers’ indemnity payments in claims.
Fund various administrative costs and the self-insured employers’ guaranty fund (SIEGF) and the mandatory surplus fund.
Should a self-insuring employer default on its future claim liabilities, the BWC will first pay these costs with any security on file for that employer.
Once the additional security is exhausted any remaining costs are paid for out of the SIEGF and/or mandatory surplus funds.

7. SIEGF and Mandatory Assessment Rates
The combined assessment rate (SIEGF and Mandatory) for 7/1/2013 has increased approximately 14 percent due to several reasons:
1) Increased costs paid out of the SIEGF
- Two large 2012 defaults (costs already exceeded security on hand and are being paid out of the SIEGF and mandatory surplus funds)

8. Default Claim Disbursement History
Year
Guaranty Fund
Mandatory Surplus
Total
2007
$17,547,888
$14,614,617
$32,162,559
2008
$16,972,818
$18,036,251
$35,009,069
2009
$19,911,292
$13,009,388
$32,920,680
2010
$16,249,212
$16,929,660
$33,178,872
2011
$13,637,481
$18,888,120
$32,525,601
2012
$21,551,411
$13,829,887
$35,381,298
2013 (proj.)
$27,092,427
$10,405,341
$37,208,412
2014 (proj.)
$28,083,733
$9,458,446
$37,542,179

9. SIEGF and Mandatory Assessment Rates
2) Projected increase of costs and claims in future years
- Approx 10% of all defaulted claims are the result of recent defaults

11. Default History Year Number of Defaults Number of Default Claims
Pre
147
37,001
141
47,494
2010 7
3,861
2011 5
430
2012 4
10,368
2013 to date 2
117
Total
306
99,271

12. SIEGF and Mandatory Assessment Rates
3) Decline in reported paid compensation over the last several years
- 35% reduction in paid compensation from 2003 to

13. Paid Compensation History
Year
# SI-40 Reported
Paid Compensation
2003
1,356
$248,802,346
2004
1,361
$238,207,100
2005
1,343
$228,085,839
2006
1,360
$221,610,279
2007
1,377
$214,982,719
2008
1,395
$209,686,150
2009
1,392
$201,504,727
2010
1,414
$199,711,742
2011
1,477
$191,441,171
2012
1,420
$162,095,217

15. SIEGF and Mandatory Assessment Rates
4) Restatement of 2012 claim disbursements among the SIEGF and Mandatory funds
- Requirement to maintain 125% of prior years costs in the SIEGF

16. Projected Fund Balances
Estimated Balance (12/31/14)
Estimated Disbursements (2013)
Ratio of Balance to Payments
Mandatory
$9,967,000
$10,405,000
96%
SIEGF
$40,603,000
$32,428,000
125%
Total
$50,570,000
$42,833,000
118%

17. Security Background
In January 2011, a new methodology was implemented to determine the risk (claims liability) of a self-insuring employer
A concept was developed that evaluated a combination of an employer’s financial performance, using Moody’s analytics, and its claims liability, using self-reported case reserves
Based on this evaluation an employer may be required to supply additional security, at no more than 100% of the reserve total, as a condition of self-insured renewal

18. Current Security Status
Employer Risk Type
Number of Employers
Reported Reserves
Security Amount
High Risk
122
$165 million
$178 million
Moderate Risk
115
$99 million
$38 million
Low Risk
716
$430 million
$11 million
Low Claims
248
$14 million
$17 million
Total
1,201
$708 million
$244 million

19. Next Steps
The continued refinement in determining financial and claims risk will hopefully place less burden on the SIEGF
Accurately identifying the full exposure an employer presents to the fund will lead to appropriate security requirements
In an effort to achieve this objective, the current reserving methodology will be evaluated

20. Next Steps
1) Request independent actuarial studies from employers identified as having the most potential risk to SIEGF
High financial risk (Moody’s rating Ba3 or lower for 2 consecutive years), and
Significant 2012 reported reserves ($1M or higher)
- Identified 25 active employers in this group (2% of active SI’s)
Actuarial studies will be required as part of the next renewal period
- If renewal March or after study will be required for 2014 (72%)
- If renewal prior to March study will be required for 2015 (28%)

21. Next Steps
2) Upon receipt of studies, BWC actuarial/finance will analyze to validate:
Validation of self-reported case reserves
- If reserves are validated, future studies will only be requested every 3-5 years
- If reserves are not validated, studies may be requested more frequently and/or security may be increased
The full claims liability (including IBNR)

22. Next Steps
3) Based on the results identified in #2, the BWC and SI workgroup will collectively identify what appropriate adjustments, if any, should be made to current security model
4) Additional group of employers will be requested to provide actuarial studies in 2014 as a condition of renewal.
Moderate to high risk (Moody’s rating Ba2 or lower), and
Significant claim reserves

23. Overturned Claims Reimbursement
What is the Claims Surplus Reimbursement Fund?
How does Sysco effect the Self-Insured Employer?
Sysco Application Process
Covered Compensation

24. What is the Sysco Claims Reimbursement Fund?
Sysco Food Service v. Industrial Commission – Employer able to be reimbursed for costs due to overturned decisions
Kokosing Construction v. Ohio BWC- Clarified that a certified claim later found to be fraudulent is also reimbursable to participating employers
Extendicare v Ohio BWC- Employer right to be reimbursed if you were in the fund when the compensation was paid

25. What is the Sysco Claims Reimbursement Fund?
Ohio Revised Code (O.R.C.)
A participating self-insuring employer must be able to document a final administrative or judicial determination. The employer must show documentation that compensation and benefit payments should not have been made payable to the injured worker.

26. How does Sysco effect the Self-Insured Employer?
Assessments
Calculated by the established rate times the paid compensation. Reimbursements can be credited
Program Options-
Surplus Claims Reimbursement is not mandatory
Opt In
Continue to be assessed semi-annually
Opt out
No assessments
Irrevocable

27. Application Process Sysco application submitted
Copy of any and all relevant Hearing Orders. Including the hearing order authorizing payment and the order that was overturned (final determination).
Detailed information showing what benefits were paid. Including payment screens, fee bills and all copies cancelled checks.
Notification if employer took a credit on the SI-40.
Positive proof of medical benefits (fee bills) and indemnity payments (check copies) which are being requested.
Original form allows writing for Basis for Request – Use each line, otherwise it will shrink to fit..and get small.

28. Application Process Cont.to
Fax to
Mail to
Ohio Bureau of Workers’ Compensation
Attn: Self Insured Claims Reimbursement administrator
30 W. Spring St
Columbus, OH 43215
Mail sometimes goes straight to the claim and may be delayed. or Fax are best options.

29. What is Reimbursable
Covered Expenses TT
PTD PP WL
Medical

30. What is Reimbursable Non-Covered Expenses Lump Sum DWRF
Attorney Fees(otherwise specified in the hearing order)
Deposition Fees(otherwise specified in the hearing order)
Investigation Fees

31. Level 1 Audits Scope All active and Cancelled Self Insuring employers
Aggregate Reserves
Last Three SI 40 paid compensation reports

32. Level 1 Audits – Information that may be requested
SI 40 Backup reports- Paid compensation sorted by Payment types, with individual claim payments documented. Require beginning with Si 40 submission
Claim Loss Run
Information to explain anomalies in PTD, Death, Recoveries and total amount of compensation reported each year

33. Level 1 audits- Process
SI Department will send out instructions for SI 40 reporting at the end of the calendar year
Employer reports paid compensation on line and provides a copy of the backup information to the address
After February 28 deadline, SI department will identify employers who have not submitted SI 40 or backup report and request

34. Level 1 audits process (cont.)
Aggregate Reserve Review
SI department will compare aggregate reserve to total paid for a high level determination if reserves are sufficient.
Reserves are evaluated to ensure that claims are not being suppressed
Properly evaluate required security
Provides insight into employer’s financial practices and stability.

35. Level 1 audits process (cont.)
If there is a question about the aggregate reserve BWC will request a loss run to include paid to dates , total outstanding (reserve) and total incurred
Employer may provide other information which will help understand the aggregate reserve.
For Example: Several claims recently settled below reserve
Plant closure

36. Level 1 audits process (cont.)
SI 40 review
Review total paid comp, PTD, Death and Recoveries
May look at TT paid
If there is a significant drop in these categories from the previous two years BWC will request explanation for the drop
Seeking explanation that may be as simple as location closing, fewer claims reported due to new safety initiative, PTD recipients passed away….

37. SI Department Updates
Self Insured section of will be redesigned on 11/14/13. Intent is to be more efficient. Please provide feedback to
Renewals must be submitted electronically, no paper renewal applications will be accepted.

38. General Updates C-84 policy SI-7 submission
If BWC receives a C-84 and the SI employer does not indicate what action is being taken, the BWC will send a letter requesting clarification
If the SI employer does not respond it will be referred to the Industrial Commission as a disputed matter
SI-7 submission

39. Sensitive Data
Effective November 1, BWC Will use Zixmail to secure sensitive data
BWC will send out instructions and notification for the initial to a recipient.
Recipient will need to set up login and password in ZixMail to access the .
Once logged into ZixMail, the message can be addressed essentially as it is now.

40. Ohio BWC Update Paul Flowers – Director, Self-Insured Department
Dave Sievert – Auditing Supervisor