2004 Self-Insured Employer Guaranty Fund (SIEGF) assessment
Status of defaults
From 2001 to 2003, 57 self-insuring employers defaulted on workers’ compensation obligations. BWC projected an assessment would be needed for the SIEGF based on the inherited costs. At this time last year, to allow you to budget as far in advance as possible, we informed you of the calendar year 2002 costs and their impact on the 2003 assessment, which is payable in 2004.

BWC is required to maintain a minimum SIEGF balance of twice the prior year’s payout. Based on calendar year 2003 costs of approximately $20 million, we have determined the projected assessment for the July 1, 2004, through June 30, 2005, period will be $40 million. Note: This is only the second SIEGF assessment since 1995. As we did in early 2003, we are providing this information as soon as we can for your budgeting consideration.

Proposed assessment rate adjustment
The 2004 SIEGF assessment rate will be introduced to the Workers’ Compensation Oversight Commission this spring. The rate will be effective July 1, 2004, and payable March 1 and Sept. 1, 2005. The rate is based on your 2003 reported indemnity costs. Last year’s total self-insured, reported indemnity costs were approximately $240 million. For a rough estimate, you can use this same figure to determine your rate as a percentage of your paid and reportable compensation. As a reminder, BWC established the semiannual payment of this assessment to help self-insuring employers manage their cash flow in line with the normal semiannual assessments.

In light of current economic conditions – and since self-insured bankrupt injured worker claim payments aren’t impacted – we've been working with the self-insuring community and Ohio Self-Insured Association on a proposed rule that would change the current SIEGF balance requirement. The proposed range most likely will be one to less than two times the previous year’s payments from the guaranty fund. This will provide relief to your cash flow while still covering annual costs of the SIEGF. However, this rule is yet to be introduced and would still need to be approved to be effective. So please do not count on it! We encourage you to budget for the $40 million assessment.

Reinsurance coverage
BWC contracted for a study in 2002 concerning the costs and benefits of reinsurance coverage for the SIEGF. Benfield Blanch, located in Minneapolis, conducted the study. Benfield Blanch is part of the Benfield Group, the largest privately owned reinsurance intermediary in the industry. To quote from the firm’s report, “To the extent third party credit enhancement is available, we believe it will be costly. Our analysis suggests… a cost of approximately $87 million.”

Today, the excess coverage market remains tight. In fact, some self-insuring applicants have recently withdrawn their applications based on the inability to secure cost-effective excess coverage. If the SIEGF was even able to find a reinsurance vehicle, clearly the estimated premium far exceeds the benefits to Ohio’s self-insuring community.

Sysco
In 2003, we reimbursed 217 requests for $2.5 million dollars due to the Sysco case. Overall, we have reimbursed 915 requests for $8.8 million.

LTV asbestos claims update
Of the original 1,765 asbestosis claims, 162 have been allowed, 1,038 denied and 210 are awaiting additional information such as an HRCT or exam. The remainder have been suspended, dismissed, settled or abated. The Industrial Commission of Ohio has overturned 53 denials.

We have received 396 additional claims since LTV filed for bankruptcy. Of those, 30 have been allowed and 197 denied, with the remainder suspended, dismissed, settled or abated. Here are the payouts.

Other updates
In 2003, we had 1,036 complaints. Of those, 365 were found valid, 466 were found invalid and the remainder is in process, dismissed or withdrawn. For 2002, there were 1,063 complaints with 335 valid, 520 invalid and the remainder in process, dismissed or withdrawn.

A new medical reimbursement payment schedule went into effect Jan. 1, 2004. For information on individual medical treatment reimbursements amounts click on:

• Medical providers;
• Look-ups;
• Fee schedule look-up.