1. What is the Ohio Plan Advantage?
A renewal premium credit that may be rewarded to a member on an annual basis based upon that member’s risk management practices and a calculation of that member’s loss ratio.
The maximum potential Advantage renewal premium credit is the direct result of the member’s consecutive Policy Years of enrollment in the Ohio Plan. Those members that have at least three, but less than five consecutive Policy Years of membership in the Ohio Plan are eligible for a renewal credit of up to 5% of the Annual Premium that was paid by that member for the first Policy Year of the Development Period. Members with 5 or more consecutive Policy Years of membership in the Ohio Plan are eligible for a renewal credit of up to 10% of the Annual Premium that was paid by that member for the first Policy Year of the Development Period.
2. Why is the Ohio Plan adopting the Ohio Plan Advantage?
The Ohio Plan wants to encourage its members to follow active, prudent risk management practices and to reward members who use such prudent practice which should result in the overall reduction of claims and claim expenses.
3. How does the Ohio Plan Advantage work?
The Ohio Plan Advantage is based on a 100-point system with a member earning points based upon the member’s risk management practices and loss ratio.
Loss ratio calculation - maximum points 60:
The loss ratio score is equal to the difference between 60, the maximum points available, and the member’s loss ratio for the most recent four complete Policy Years preceding the policy term during which the renewal premium of the member is calculated. (For members with less than five consecutive Policy Years of membership, the loss ratio will be based on the number of completed Ohio Plan Policy Years preceding the policy term during which the renewal premium of the member is calculated.) A member’s loss ratio is calculated by dividing the member’s Incurred Losses by the Premium.
Risk management calculation - maximum points 40:
The risk management score is a calculation based upon actions taken by a member to address recommendations made in connection with of that member’s most recent Risk Management Survey.
A member receives risk management points as follows:
There were NO Recommendations issued AND there were NO concerns noted at the time of the last survey. (No Concerns) |
40 |
Responses to ALL recommendations were received ON-TIME and adequately addressed the concerns noted. (On-time Compliance) |
30 |
Responses to ALL recommendations were received LATE, but did adequately address the concerns noted. (Late Compliance/Not Surveyed) |
20 |
Responses to ALL recommendations were received, but not ALL of the corrective actions were implemented at the time of the renewal evaluation. (Non-Compliance) |
10 |
ALL recommendations were NOT responded to prior to renewal evaluation. (No Response Made) |
0 |
The risk management score given a member who has not received a Risk Management Survey will equal 20 points.
4. How do the earned points benefit a member?
As detailed in the preceding section, a member earns points by accumulating loss ratio and risk management points. Earned points are converted into the corresponding percentage (50 points = 50%) and applied to the appropriate 5% or 10% maximum potential Advantage premium credit. Earned points will be calculated and available for renewal Advantage premium credits beginning on January 1, 2006 for those members of the Ohio Plan who have been enrolled in the Plan for a minimum of three consecutive Policy Years as of their policy renewal date. Advantage renewal premium credits will be issued at the time of a member’s policy renewal.
The Board of Directors of the Ohio Plan retains sole discretion in determining whether Advantage renewal premium credits will be issued in any year that the Ohio Plan Advantage is in effect. The Board makes the determination based upon the overall well-being of the Ohio Plan. If the Board determines to withhold or adjust the amount of renewal premium credits in any given year, such funds shall remain with the Ohio Plan as part of its members’ equity.
Definitions
Development Period – the 3 Policy Years preceding the member’s renewal date.
Incurred Losses - all sums expended or reserved on a member’s behalf for their claims, including but not limited to settlements, investigation fees, attorney expenses, and expert expenses.
Policy Year - the 12 months running from the inception or renewal date of a member’s policy through the termination date of a member’s policy.
Premium – only primary layer premium and does not include any premium paid by the member for additional property and casualty limits above $1,000,000.
Renewal Evaluation – 90 days prior to the current policy’s expiration date.
Risk Management Survey - The most recent survey conducted of the member’s risk management practices and policies.
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