December 10, 2015 – In December 2015, the WSIB released an updated Rate Framework that incorporates a number of suggestions and recommendations made by stakeholders throughout the Rate Framework consultation process.
The Ontario Chamber of Commerce (OCC) commends the WSIB for incorporating 6 of the 7 recommendations directed to the WSIB in our September 2015 submission. The following is an update on the status of the 7 recommendations we made to the WSIB.
Recommendation 1: Provide a public and detailed analysis of how the proposed rate framework changes will impact employers. The WSIB has committed to conducting a risk disparity analysis that will form part of the regular, ongoing monitoring of the Rate Framework. Emphasizing the key goal of ‘fairly allocated premiums’, the WSIB indicated that the analysis could lead to updates to the class structure designed to better distribute the costs by industry.
Recommendation 2: Introduce a surcharge mechanism to ensure that employers with effective health and safety programs don’t pay the cost of poor performing employers within their class. In our submission, the OCC noted that the elimination of the surcharge mechanism in the proposed framework would become problematic when an employer’s costs far exceed the rate charged to the highest risk band in their class. The high claims costs incurred by the employer would then be absorbed by the remainder of the class through increases to the average class premium rate. The WSIB has responded with a commitment to implement a program similar to the Alberta Poor Performance Surcharge (PPS) to encourage high cost employers to improve their health and safety management efforts.
Recommendation 3: Expand the proposed class structure. The WSIB originally proposed to reduce the number of employer classes from 155 to 22. Members of the business community expressed concern that the proposed class structure risks grouping employers with very different risk profiles – which could impose undue costs on businesses. The WSIB has responded by increasing the number of classes in the proposed framework from 22 to 34. We will continue to work closely with the WSIB to ensure that businesses are fairly classified according to their risk profile.
Recommendation 4: Reconsider implementing the predominant class model. The WSIB originally proposed to subject employers to a premium rate based solely on the business’ predominant activity. We view this as problematic as it could lead to significantly higher premium rates for employers engaged in multiple business activities. The WSIB has committed to ‘further exploring’ exceptions to this general rule to allow employers to pay multiple premium rates that are reflective of their business activities. The OCC will work closely with the WSIB to ensure fairness for employers engaged in multiple business activities.
Recommendation 5: Retain the Second Injury and Enhancement Fund (SIEF). The WSIB originally proposed to eliminate the SIEF. The SIEF incentivizes employers to return injured workers to work and is a core feature of workplace insurance systems in other Canadian jurisdictions, including BC and Alberta, where workplace insurance boards administer a budgetary surplus. We are pleased that the WSIB confirmed that it will retain the SIEF in the updated framework., subject to further review. The OCC will remain actively engaged as the WSIB considers making adjustments to the program.
Recommendation 6: Implement a weighted cost claims ‘window’. The OCC recommended that the WSIB implement a weighted cost claims ‘window’ based on employers’ claims cost history over the past three rather than six years to ensure that the rate charged to employers is reflective of their recent commitments to health and safety. Further, we recommended that the WSIB consider implementing the Work Safe BC model in which the most recent year is weighted 50 percent, the prior year at 33.3 percent and the most distant year at 16.7 percent. Although the WSIB plans to move ahead with the six years claims window, the OCC is encouraged by the updated weighted feature in which the most recent three years are weighted at 66.6 percent and the remaining three years at 33.3 percent, a significant improvement from the model that had been previously proposed.
Recommendation 7: Eliminate the Fatal Claims Adjustment Policy. In our submission, the OCC recognized that the Fatal Claims Adjustment policy would be redundant in the proposed rate framework as a result of the elimination of the rebate/surcharge mechanism on which the policy relies to administer the fees charged to employers that experienced workplace fatalities. In the December update, the WSIB revealed a new fatality claim formula that is consistent with the claims cost mechanisms in the proposed framework. The WSIB did not comment specifically on the Fatal Claims Adjustment Policy.
In addition to the above recommendations, the OCC submission included the following three recommendations directed to the Government of Ontario:
The WSIB should be subject to oversight by the Auditor General.
The Government of Ontario should study the merits of introducing comparable WSIB delivery models including options such as full and/or partial privatization.
The Government of Ontario should amend the Workplace Safety and Insurance Act to exempt construction employers who have obtained comprehensive 24/7 insurance coverage from coverage under the WSIB scheme.
None of these recommendations have yet been acted on. The OCC and its province wide network of chambers of commerce and boards of trade will continue to work with the Ministry of Labour and the WSIB to ensure the needs of employers are considered in all areas of reform as we near the implementation of the framework in 2019.
Read the OCC’s submission to the WSIB Proposed Preliminary Rate Framework.
Read our recent blog post on the WSIB Unfunded Liability.