August 15, 2012
Appearing July 4 before the Standing Committee on Government Agencies, the Workplace Safety and Insurance Board (WSIB) chair Elizabeth Witmer stated, “There are tough decisions to be made not the least of which is a decision about our insurance premium for employers for the next few years. But I am confident we are moving in the right direction for the benefit of Ontario’s workers and employers.”

An independent funding review of the Workplace Safety and Insurance Board (WSIB) has made a series of recommendations on the board’s unfunded liability, as well as employer incentives, the existing rate group structure, and other compensation-related concerns.

The board’s unfunded liability ranges from $12.4 billion to $14.5 billion, depending on the source.

To address the unfunded liability, the report recommends adopting a funding strategy that
  • is based on realistic assumptions
  • puts the WSIB on course to achieve 90 per cent to 110 per cent funding within 20 years
  • calculates premiums based on a variable basic charge that takes into account new claims costs that are properly priced and fully funded on an annual basis, and a fixed “unfunded liability component”
  • will signal the need to re-price the unfunded liability component in timely fashion

The unfunded liability is one of six issues on which the report makes recommendations.

“I am optimistic that the employer community will support such an approach,” says the chair of the study Harry Arthurs. “After all, most briefs I received from employer groups stressed that the WSIB must operate on sound business principles. As far as I am aware, such principles do not include wishful thinking about discount rates, persistent mispricing of new claims costs or fixing premium rates with a view to placating stakeholders rather than generating the necessary revenues.”

Arthurs recommends that the board continue to maintain experience rating programs only if it meets three conditions:
  • it declares the purpose of these programs to be solely to encourage employers to reduce injuries and occupational diseases and to encourage workers’ return to work, and it concludes that the programs are accomplishing their purpose
  • it adopts a firm policy to protect program integrity and commits the necessary resources to detect, prevent and punish employer abuses
  • it establishes a credible monitoring process to ensure that the first two conditions are met

Arthurs recommends replacing the existing classification system with a new system of sector groups that would be defined by the board and the province’s chief prevention officer. These sector groups would be used to set premium rates and to organize injury prevention, safety education and return-to-work/labour market re-entry programs. Arthurs suggests that the sector groups comprise combinations of existing rate groups and build on existing Safety Groups, employer associations and other organizations with which firms already work.

To avoid marginalizing small firms, or having their rates determined by costs attributable to dominant firms, Arthurs suggests creating a separate small business sector or establishing a standard rate for small businesses within each sector.

In total, 75 representative organizations and 55 individuals and businesses submitted written briefs, made oral presentations or both. An additional 14 submitted comments online or by letter, or provided their views orally.

The full report is available at www.wsibfundingreview.ca.

 

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