2011 premium rates - questions and answers
How is Ontario’s workplace safety and insurance system funded?
All the costs of providing workplace safety and insurance benefits and services to Ontario workplaces are paid for by Ontario employers. Ontario’s workplace safety and insurance system is based on the principle of collective liability, which means that employers who work in similar kinds of industries (with similar kinds of hazards) should be “collectively liable” for the costs of injuries in their industry.
Collective liability means that employers in, for example, the mining industry all pay their fair share of the costs of injuries in mining industry workplaces, while employers in the construction industry share the collective cost of injuries in their workplaces, and so on. (Employers covered under Schedule 2 of the Workplace Safety and Insurance Act, such as airlines, shipping companies and railways, are the exceptions ? they pay individually for the full costs of benefits for their injured workers).
How does the WSIB determine workplace insurance costs in various industries, and how does it determine the premium rates that individual employers in those industries are asked to pay?
The first step is to classify employers based on the nature of their business. This is done by assigning employers to “rate groups.”
There are 154 rate groups, covering everything from Meat and Fish Products to Aircraft Manufacturing. Employers in a rate group are given a premium rate, which is the amount they are asked to pay for every $100 of their workers’ insurable earnings. This rate is calculated every year based primarily on two things:
- The cost of claims for benefits due to workplace injuries and illnesses
- The frequency of injuries and illnesses
Other factors also come into play, but claims costs and injury/illness frequency are the two key drivers. These factors determine the amount the WSIB collects in premiums.
In theory, this amount should be enough to cover all costs associated with claims allowed during that year for the full life of those claims, as well as the costs of administering the workplace safety and insurance system.
How has the WSIB set premium rates for 2011?
For 2011 we have used the same method for setting premium rates as in previous years - but with one important change. While premium rates will stay the same for almost half of all employers, there will be no premium rate reductions. This reflects the urgent need to improve the financial health of the workplace safety and insurance system.
My company has an excellent health and safety record, but my rate group premium rate is increasing. Why are companies that have made health and safety improvements not benefiting from their hard work?
WSIB premium rates are set based on the claims experience of all employers in a rate group. This means that employers share the costs of the claims for that rate group. Your premium rates are based on those costs, as well as the frequency of claims in your rate group.
If your company’s health and safety performance has been good or better than the rate group average, you may become eligible for performance rebates under the WSIB’s incentive-based experience rating programs. The WSIB is moving ahead to re-design and improve these programs.
Employers with good health and safety programs can benefit from working with their health and safety association, and the other partners in Ontario’s health and safety system, to actively promote their successful programs among other workplaces in their rate group.
Employers will still benefit from improvements in health and safety in their workplaces, and this will help to minimize the possibility of future premium rate increases.
What are premium rates for employer rate groups made up of?
WSIB premium rates for employer rate groups are made up of three key components:
- Costs of new injuries and illnesses
- Administrative costs, including legislated obligations (Occupational Health and Safety Act, etc.)
- Unfunded liability, including charges to cover gains/losses, past claims cost, and bad debts
The illustration below shows the components of the average annual premium rate for 2011. These amounts will vary based on the premium rate for each rate group.
What can I do to minimize increases to the premium rate of my rate group?
Work to make your workplace safer and develop an early and safe return-to-work program. Also, share your workplace health and safety knowledge and experience with other members of your rate group.
Collaborative, aligned, and effective partnerships are vital to promoting prevention and better health care and work reintegration outcomes. Improvements in these programs will help to reduce the unfunded liability (UFL), and lead to more stable and predictable premium rates for employers.
Joint Health and Safety Committees (required in all workplaces that have more than 20 employees) can help you to identify areas where health and safety improvements are required. Ontario has health and safety associations (HSAs) dedicated to serving employers in your industry. If you aren’t already working with your HSA to improve health and safety in your workplace, you should visit the WSIB website or contact your WSIB Employer Service Representative for more information about your HSA.
Compliance is another important factor. If you suspect that a business in your rate group is getting an unfair financial advantage by not registering with the WSIB, not reporting injuries or illnesses, or not paying premiums, contact our anonymous Action Line at 1-888-745-3237 or email us at: email@example.com 24 hours a day, 7 days a week.
Special information for small business employers
If you are in the WSIB’s Merit Adjusted Premium plan (MAP), your 2011 rate group premium rate may be adjusted based on your individual accident record.
What is the Maximum Insurable Earnings Ceiling, and why does it change every year?
The WSIB maximum insurable earnings ceiling for 2011 is $79,600. This is an increase of 2.6 per cent from $77,600 in 2010.
Changes to the Maximum Insurable Earnings Ceiling are directly linked to changes in average earnings in Ontario as measured by Statistics Canada, and provisions under the Workplace Safety and Insurance Act.
Changes to the Maximum Insurable Earnings Ceiling can result in an increase to the premiums employers pay (to the extent that they have employees who earn more than the maximum of $79,600).
Under the Workplace Safety and Insurance Act, a worker’s average earnings for workplace insurance purposes cannot exceed 175 per cent of the Ontario average industrial wage for the year. The legislation requires the WSIB to calculate this yearly “Maximum Insurable Earnings Ceiling” based on the most recent published Ontario average industrial wage on July 1 of the preceding year.
The WSIB has calculated the 2011 Maximum Insurable Earnings Ceiling based on the average weekly earnings aggregate, which was published by Statistics Canada.
How is the Maximum Insurable Earnings Ceiling calculated?
The WSIB uses a standard formula to calculate the Maximum Insurable Earnings Ceiling:
$([average weekly earnings aggregate] x 365)/7 x 1.75
(The result is rounded to the nearest hundred dollars.)
What are some of the things an employer can do to improve workplace health and safety and reduce workplace injuries and costs?
There are a number of things an employer can do to reduce workplace injuries and costs. For example, you can:
- Conduct regular inspections and assess hazards to determine if they may cause injuries or illnesses. Hazards should be removed, or controls should be put in place to protect workers from them. You should inform your workers about hazards and tell them how they can work safely.
- Train your employees about their health and safety responsibilities so they know how to contribute to hazard controls.
- Provide health and safety orientation training for every new employee. Training should include job training and hazard control training.
- Create a joint health and safety committee (a must-do if you have 20 or more employees). This committee must have at least one worker and one management certified member. You must also provide the committee with the resources it needs to fulfill its role in the workplace.
- Develop a return-to-work program to help workers get back to work safely after an injury or illness. Preventing workplace injuries and illness is the responsibility of everyone in the workplace. If an injury and illness does occur, it is important for you and your employee to minimize the human and financial impacts by working to achieve a return to safe and productive work as soon as medically possible.
- Address musculoskeletal disorders (MSDs) and falls, which account for about 60 per cent of all lost time claims. On this website, you can find resources to help you address these and other hazards.
- Work together with the WSIB to improve your workplace safety and return-to-work programs. A wide range of information, incentives and initiatives is available to Ontario employers who want to increase efficiency and save money by improving their workplace programs.
How can I work with the WSIB and the other partners in Ontario’s workplace health and safety system to lower injuries and costs in my rate group?
If your injuries and costs are better than average, be a leader by helping others in your rate group. Play an active part in recruiting other firms in your rate group into the WSIB’s Safety Groups program and the Safe Communities Incentive Program (SCIP). These programs are voluntary, and help members create safer and healthier workplaces. They are there to help you help yourself.
- If your injuries and claims costs are higher than average, you can work with the better-performing firms in your rate group to improve your performance.
- Find out about programs that help make your workplace safer by contacting your Health and Safety Association.