LOOKING AHEAD

 This month will be the final NEER “adjustment” ending the almost 40 years of this retrospective claims cost experience rating program.  CAD-7 is also coming to an end.  The WSIB introduced a new prospective model—Premium Rate Setting.

This new model relies on 6 years of an employer’s insurable earnings, claims costs and claims count. Insurable earnings and claims count to calculate the predictability value while claims costs are weighted to set the risk value.  Using these two values, the employer’s risk profile is established.

All employers in Schedule 1 received a WSIB notice in September 2019 of their starting rate calculations.  What many employers may not have understood is the projected premium rate and the impact it can have.

True story…an employer who was paying $0.56/$100 insurable earnings in 2019 is now paying $0.65/$100 insurable earnings in 2020.  The projected premium rate is $1.54/$100 insurable earnings.  The cost impact is significant.  The following table illustrates the impact.  For example purposes, the insurable earnings are $10 million.

Year WSIB Premium

2019 $56,000

2020 $65,000

2021 $69,000

2022 $76,000

    2023 $154,000

This employer in 2019 and previous enjoyed rebates from the WSIB NEER program.  The premiums were always a known factor and the expectation were NEER rebates given their rigorous claim and accommodation programs.

With the new model, their WSIB premium costs will dramatically increase 3 fold over the next 3 years and the rebates will be eliminated.  The focus will continue to be claim and accommodation programs but the biggest impact should be there injury prevention program—health and safety in the workplace.

The 6 years are rolling years—for 2020 the years used are 2013 to 2018 inclusive; for 2021 the years are 2014 to 2019; etc.  Claims costs are weighted with the 3 most recent years given more weight.   Two things are important to note:

Date of injury is still very relevant.  Claims with a date of injury in 2013 to 2018 are the costs used in determining the risk value.

The year claims cost are paid out is still very relevant.  A 2015 claim with costs paid out in 2015, 2016 and 2018 will have more weight given to the costs paid out in 2016 and 2018.  To better illustrate this point, see your Premium Rate Extended Statement report issued by the WSIB in September 2019.

WSIB e-Services has your premium statements, claims costs detail statement as well as Compass (a new type of report) allowing you to analyze your premium rates and past claims costs.

Contact my office if you’d like more information about your premiums and strategies for the future.