March 12, 2014
The Workplace Safety and Insurance Board (“WSIB”) has released Douglas Stanley’s long-awaited report (the “Stanley Report”). The report made many recommendations, most notably:
The Stanley Report also discussed the cost consequences of these recommendations.
1. A New Classification System:
The existing classification system is based on the Standard Industrial Classification (SIC) and currently has 155 rate groups.
The Stanley Report recommended abandoning the SIC in favour of the industrial coding system, North American Industrial Classification System (NAICS). The Stanley Report recommended that the WSIB should adopt the NAICS system of classification for the purpose of all data collection. The WSIB would use an employer’s predominate business activity with no distinction for size of employer or their ability to segregate their earnings, resulting in one, not multiple rate groups per company.
According to the Stanley Report, this would lead to a significant consolidation of rate groups from the current 155 down to 20 to 25 groups.
The report further recommended that these changes be phased in starting in 2016, at the earliest.
2. Elimination of existing experience rating systems:
The Stanley Report concluded that the existing experience rating programs (NEER, CAD-7, and MAP) should be abandoned and replaced with a prospective, risk adjusted premium rate setting system known as the “risk adjusted premium rate setting.”
The Stanley Report proposed a three-step framework for developing the risk adjusted premium rate setting:
The Stanley Report also recommended examining the “window” for the current experience rating programs as it relates to return to work activities and the 72 month lock-in provisions in WSIA, and consider appropriate, and immediate, program amendments, while the risk adjusted premium rate setting is put in place.
The Report also recommended that the WSIB consider whether the SIEF program should be continued.
3. Implementation of “charges” for paying down the UFL
The Ontario legislature has recently imposed accountability on WSIB with respect the UFL. The regulation requires the WSIB to attain full funding of the UFL. Under the regulation, the WSIB must reach at least a 60% full funding level by 2017; 80% funding level by 2022; and 100% funding by 2027.
To achieve this goal, the Stanley Report recommended that employers make contributions to the UFL made up of two fixed and one variable charges (or premiums):
4. The elimination of the Fatal Claims Policy
The fatal claims policy was put into place with the aim of ensuring that no employer who experiences a workplace fatality should receive an experience rating program refund in the year in which the fatality occurred. The Stanley Report recommends that the Fatal Claims Policy be rescinded as the system proposed by the report does not include retrospective premium rebates nor include a subjective assessment of performance in setting an employer previous rate, thus making the Fatal Claims Policy redundant.
The Stanley Report makes clear that the funding of other cost burdens including the UFL and prevention initiatives is an added cost to employers. The funding cannot come out of the premium rates set for the purposes of recovering 100% of accident costs. Security of benefits for injured workers is guaranteed by the collection of those premiums.
Other Notable Recommendations
The Stanley suggested that the WSIB examine the responsibilities of temporary employment agencies and client employers with respect to employer classification and experience rating, and consider amendments to the current policies and practices to ensure a fair representation of risk and cost within the current rate setting approach, and as part of any new Rate Framework. This suggestion comes on the heals of the Ontario Governments tabling of Bill 146 which would attribute experience rating costs on employers who utilize Temporary Help Agencies.
If implemented, these recommendations will result in significant changes for many employers. If you would like to better understand how these changes will impact you, please do not hesitate to contact one of our Mathews Dinsdale or CompClaim professionals who will be pleased to assist you.
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