OHIO Companies face higher comp premiums

Skyrocketing health-care costs are the main reason for the premium increase.
THE VINDICATOR, YOUNGSTOWN, OHIO
By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
GIRARD -- Managers at Brainard Rivet have been scrutinizing the company's books lately, looking for money to allocate for employee raises.
They headed back to the drawing board Friday when the Ohio Bureau of Workers' Compensation announced plans for an employers' insurance rate increase averaging 9 percent.
"We've already postponed the raises a month -- we used to give them in May. Now we may push it back another month to help offset this increase," said Judith Volpe, general manager of the Girard-based, employee-owned rivet maker. "This is just one more thing to make running a business more difficult."
Volpe said workers' compensation insurance takes a sizable chunk out of the small company's operating budget. Managers have emphasized safety to keep rates down, and they applied unsuccessfully for a state safety grant last year.
"We'll try for that grant again this year, and we're looking for ways to lower our costs in other areas," she said. "But I think our rates will be high. For us employees, that means a smaller profit-sharing check."
Higher bills are coming
Jim Samuel, BWC chief of corporate affairs, said employers can expect higher workers' compensation premiums in July because the agency will not be paying an annual dividend for only the second time since 1996.
Employers can expect bills to go higher again in February 2004, reflecting the new rate increases averaging 9 percent. The increases, approved this week by the BWC Oversight Commission, take effect July 1.
The dividends were paid to employers in the form of credits on their workers' comp premiums when the agency's investments were doing so well that it had huge surpluses, sometimes totaling several billion dollars. In all, the BWC has returned $9.3 billion in dividends to employers since 1993.
Now the surplus totals $400 million, but James Conrad, bureau chief executive, said he does not feel comfortable continuing the dividends at that level.
Samuel said it's too soon to say whether next year's bill will include a dividend credit, which would help offset the rate increase.
He emphasized that the bureau has not increased rates since 1992, and employers' premiums will actually be 34 percent lower, even with the increase, than they were in 1995.
Rising health-care costs
The main reason for the rate increase, Samuel said, is to cover skyrocketing health-care costs.
Bureau records indicate that medical costs in general have grown 48 percent over the past four years, with hospitalization costs up 68 percent and prescription drug costs up more than 104 percent.
The agency offers safety programs that can enable an employer to reduce its workers' comp costs by as much as 40 percent.
BWC officials mentioned Gasser Chair, with corporate headquarters in Liberty and plants in Youngstown and Hubbard, as a company that has been successful in using the BWC programs to lower its costs.
Trudy Cheney, human resource director for the chair maker, said the company has a "full-blown safety program," and it also saves by buying its workers' compensation coverage as part of a group.
The prospect of higher rates hasn't been a big concern for the company, which employs about 160. "Our only defense, really, is keeping our claims down, and we're doing that," Cheney said.
vinarsky@vindy.com