In our last few blogs and newsletters, we’ve been updating you on the changes we’re noticing in Ohio BWC’s Group Retro program. Initially, there was the withholding of 2018 and 2019 refunds (six total payouts for participating employers). Then, we began noticing the overall degradation of retro refunds. Most recently, we’ve noticed how BWC’s changes to their claim reserve calculations are having a tremendous impact on the performance of Group Retro pools. For those of you who didn’t read our post about reserve calculations, here’s an abridged version: workers’ comp claims have a dollar amount reserved at the onset of a claim (yes, even if you do salary continuation) for additional funds that the insurer thinks it may end up costing. BWC’s method of calculating reserves changed in January 2021 and Spooner’s tracking of these trends show reserves increasing as much as 1900% on some claims. Why does it matter? That pretend money is treated like real money when your experience is calculated for the next year, determining your premiums. That $5000 ankle sprain is now a $29,000 ankle sprain, and the insurer (BWC) will recoup their losses from you accordingly.
We’ve been tracking the impact these reserves have on Group Retro, and it shows a vast majority of the pools underperforming. Some competitors even show the possibility of an assessment, meaning that policyholders will actually owe money back to BWC instead of getting a refund. The Group Retro program refunds part of premiums to groups when losses are lower than expected – but an assessment occurs when losses are higher than expected. Most industry pools show at least one group in the red, but the service industry groups seem to be getting hit the hardest.
You might assume that if your pool is projected to be assessed, that your TPA would have reached out to help your company prepare for this possibility. The truth is, they’re not obligated to notify you in advance if they see it coming. The way Group Retro has been performing, it may not be a bad idea to check in with your TPA mid-policy year and ask where the group stands. They are provided these estimates on a quarterly basis by BWC, but will typically not share that information unless they’re asked – as it often has a negative impact on their ability to retain customers for the coming policy year. Spooner doesn't always share the same concerns as other TPAs, as our clients have come to rely on our effective claims management as opposed to relying on us saving them money via programs alone.
All of Spooner’s Group Retro pools are currently safe and still projecting refunds. While we can’t predict the future, we feel confident about the performance of our pools based on our dedication to proactive claims management and our investment of safety services for Group Retro clients. If you’d like to know how your current Group Retro pool is performing (yes, even if you’re not a Spooner client!), please reach out to us at 440-249-5207.