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Another Major Review For Ontario’s Workers’ Compensation System

Submitted by Ian Howcroft, Vice President, Canadian Manufacturers & Exporters (CME) Ontario…On April 25, 2013 CME presented to Douglas Stanley, who is holding public hearings that will help to shape Ontario’s workers’ compensation system. He is seeking input and will be reporting directly to the Chair of the Workplace Safety & Insurance Board (WSIB). This is the third major consultation that the WSIB has conducted over the last few years. The system was introduced in Ontario almost 100 years ago, and all recognize that there is a need to update it and ensure that it is relevant and properly and appropriately serving the needs of all stakeholders, particularly the workers and employers of Ontario.
CME has long called for a Royal Commission to conduct a comprehensive and holistic review of the entire system. However we have proceeded with a piecemeal approach that looks at discrete areas and issues, but does not provide the opportunity to tie everything together to create the holistic solutions that would best serve the needs of workers and employers. Notwithstanding the fact that there is no Royal Commission, CME is supportive of the need to conduct the review that Mr. Stanley is currently responsible for. His review looks at three main areas: Rate Classification, Premium Setting and Experience Rating.

While CME is not convinced that there is a definite need to overhaul the current rate classification system, we do support the opportunity to review it, as it is outdated and may not be meeting the needs demanded today. The SIC (Standard Industrial Classification) system may not provide the detail or flexibility needed, and we are therefore open to examining if the NAIC (North American Industrial Classification) system may better address current realties and improve the system. The existing premium rate structure should be maintained. This structure is consistent throughout Canada, and consists of cost of new claims; other administration and overhead expenses; and amortization of the unfunded liability and other gains and losses.

Our main focus and emphasis pertains to the third area of review, the Experience Rating System. Experience Rating is an essential component of Ontario’s workers’ compensation system—and it MUST be maintained. One must recognize that the workers’ compensation is an insurance system and experience rating is essential to ensure equity and that the goals and objective of the system are achieved. We do recognize that certain changes can be made to improve experience rating, such as moving to a prospective rating system. Some groups are opposed to experience rating, claiming that it incents employers to ‘hide’ claims and thus under-report. CME is adamantly opposed to not reporting claims or hiding claims—and this is prohibited by the system (legislation). However, there is no definitive evidence to demonstrate that experience rating promotes this. We need to have a strong and relevant experience rating system to ensure that it is fair, equitable and meets insurance principals. We have seen some significant improvements in Ontario’s workers’ compensation system that have benefit all stakeholders, but with a $14 billion dollar unfunded liability, we need to continue this progress. CME hopes that the Stanley Review will lead to more improvements in the system.

About CME – Canadian Manufacturers & Exporters (CME) is Canada’s leading trade and industry association, and the voice of manufacturing and global business in Canada. For more information, visit www.cme-mec.ca.