Frequency and Severity Defined
2-percent performance bonus
• Employers who reduce their frequency or severity by 10 percent or more below the previous year’s frequency or severity, or employers who maintain both frequency and severity at zero will receive an additional 2-percent refund of their annual premium.
Frequency = claims per $million of payroll
• BWC calculates frequency by multiplying the total number of claims reported in the measurement year by 1 million and dividing by the employer’s total reported payroll for that year.
• The entry date, i.e. the date on which a BWC staffer enters the claim into BWC’s claim management system, determines the year in which the employer reports claims.
• BWC excludes claims combined into other claims, as well as claims in a disallowed, disallowed/appeal or dismissed status as of the date on which it measures frequency.
• BWC will count each claim only once. Additional allowances on existing claims do not constitute new claims. BWC treats medical-only and lost-time claims equally — a claimis a claim regardless of its type or severity.
• The employer’s payroll helps create equity — a large employer with many claims may actually have a lower frequency than a smaller employer with fewer claims.
• Likewise, if an employer’s payroll increases while the number of claims reported remains constant, frequency will decrease.
• An employer having no claims in the year in which his or her baseline frequency is established and no claims in its measurement year will receive the 2-percent premium refund for frequency reduction because it is impossible to reduce zero by 10 percent.
Severity = days absent per $million of payroll
• BWC calculates severity by multiplying the total number of days absent during the measurement year by 1 million and dividing by the employer’s total reported payroll for that year.
• BWC will calculate the total number of days absent in the measurement year using those claims reported in the measurement year, plus claims with injury dates in any of the four previous years.
• BWC charges no days to the employer’s severity if the claim incurring the days absent during the measurement year is outside this five-year period.
A claim with an injury date in 2003 would be included in measurement years 2003, 2004, 2005, 2006 and 2007 only. For that claim, BWC would ignore any absent days occurring for measurement in year 2008.
• BWC excludes combined claims, as well as claims in a disallowed, disallowed/appeal, or dismissed status as of the date on which severity is measured.
• BWC calculates days absent as the days between the last day worked and the return to work date. BWC does not count the last day worked nor the return-to-work date as a day absent.
• BWC assumes the date of injury is the last day the employee worked unless the employer specifies a different last day worked.
• BWC assumes the return-to-work date is beyond the end of the measurement year unless the employer specifies an actual return-to-work date.
• BWC assesses medical-only claims no more than seven days absent.
• BWC assesses lost-time claims as days absent from the last day worked (or date of injury if no last day worked exists) until the earliest of:
The end of the measurement year;
Actual return to work;
Injured worker’s death (except death claims, defined below).
• If a claim experiences several periods of disability (time off work), BWC evaluates each period separately, and only those days absent occurring in the measurement year arecounted.
• There are two specific exceptions to the rules governing the calculation of days absent and both apply to lost-time claims where there is no record of a last day worked. Normally, BWC would assess these claims days absent beginning on the day after injury and continuing forever, for a maximum of 365 days in each of the measurement years.However:
BWC will assess zero days absent for occupational disease claims (i.e. accident type equals occupational disease) classified as lost time but having no last dayworked;
BWC will assess zero days absent for lost-time claims having no last day worked and no pay plan other than percent permanent partial.
• An employer having no days absent in the year in which his or her baseline severity is established and no days absent in its measurement year will receive the 2-percent premium refund for severity reduction because it is impossible to reduce zero by 10 percent.Death claims
• A death claim is one where the accident type is specified as death, rather than accident or occupational disease.
• BWC assesses death claims, due to their social and financial severity, 365 additional days absent after the date of death.
• For frequency purposes, BWC will count death claims only once.
• For severity purposes, death claims will incur days absent over at least two measurement years.
• A worker suffers a seriously injury on May 11, 2002.
• He remains in a coma until he dies on Nov. 13, 2003.
• The claim incurs days absent from May 12, 2002, through Nov. 13, 2004, or 234 days absent in 2002, 365 days in 2003 and 317 days in 2004.
• BWC will calculate frequency using claims and payroll reported between July 1, 2009, and June 30, 2010 (policy year 2009). BWC will compare this frequency to the baseline frequency, which it calculates using claims and payroll reported the previous year July 1, 2008, and June 30, 2009 (policy year 2008).
• BWC will calculate frequency using claims and payroll reported between Jan. 1, 2011, and Dec. 31, 2011 (policy year 2011). BWC will compare this frequency to the baseline frequency, which it calculates using claims and payroll reported the previous year Jan. 1, 2010, and Dec 31, 2010 (policy year 2010).