Workers' Compensation

How Much can Group Rating Save You?

Ella Baker
Reading time 3 Mins
Published on Jul 1

A Third-Party Administrator (TPA) aims to save you money by managing your workers compensation claims. They advocate for you and reduce stress while saving you premium dollars. A valuable cost containment strategy your TPA can offer you, is access to group rating (or group experience rating) program.

Group rating programs allow employers, who operate similar businesses, to group together to achieve lower premium rates than they could through individual rating. Savings vary depending on claim experience, industry, and payroll history. All participants must be a member of a sponsoring organization, like a chamber of commerce. Enrollment is for one rate year only and can be renewed annually, depending on eligibility.

What are the benefits of participating?

Participation in a group rating program can allow you to see significant premium rate reductions. This discount varies by group, but can be as much as 53% off the base rate for private employers, and 59% for public employers. While your coverage is still through the Bureau of Workers’ Compensation (BWC), BWC does not form the groups.

Who is eligible to participate?

The BWC requires companies interested in participating to meet the following criteria:

  • Be current on all undisputed premiums, administrative costs, assessments, fines and monies due to any BWC administered fund as of the eligibility determination date.
  • Not have cumulative lapses in workers’ compensation coverage in excess of 40 days within the 12 months preceding the eligibility determination date.
  • Report actual payroll for the preceding policy year and pay any premium due upon reconciliation of estimated premium and actual premium for that policy year.
  • The employer’s main operating manual classifications, as determined by the premium obligations, for the rating year beginning two years prior to the coverage period are assigned to the same or similar industry groups.

How does Group Rating work?

The BWC treats the group of companies participating in a group rating program as one large company. The group rating plan is an annual plan, and ratings are recalculated each policy year.

Employers pay their premium based upon the reduced rate. The group’s rate is determined by the BWC by calculating the experience modifier using the combined experience of all members of the group.

Although TPA’s aren’t required, the cost-savings and expertise of these groups can lead to reduced risk and lower costs for your company. Partnering with a TPA is an investment in your business’ future that can provide a safer workplace and less time spent on claims administration.

Learn more about Workers’ Compensation today by contacting a Sheakley WC professional. Stay up-to-date on all things Sheakley by subscribing to our blog and following us on social media.

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