Employers Think Insurance Boards Funding Fairness Report is Unfair

The Ontario Workplace Safety and Insurance Board’s recently released review of the province’s workers compensation system has raised several questions and indicated challenges still lie ahead, according to the Ontario Trucking Association.

The nearly-200-page “Funding Fairness” report, conducted by law professor, Dr. Harry Arthurs, was designed to give direction to the WSIB for the next 15-20 years and restore the system to financial health. But the report looks only at funding issues, not expenditures – a concern the Ontario Trucking Association and other employer groups raised during the consultations with Dr. Arthurs last year. The report did contain a chapter on the subject; however, due to the mandate, no recommendations were given.(WCx)

In response to the report, and issues related to unfunded liability, Ontario Minister of Labour Linda Jeffrey announced the provincial government would introduce a new regulation under the Workplace Safety and Insurance Act to require the WSIB’s insurance fund to reach sufficiency of 60% funding in 2017, 80% funding in 2022 and 100% funding by 2027.

However, the OTA notes: “What she didn’t say, but which is implicit in the report, is the way the WSIB is going to reach these targets is by increasing premiums, which are paid solely by employers.”

One of Dr. Arthur’s recommendations is that WSIB premiums should be based on actual costs, not whether rates are affordable. He says there should be no government interference with rate setting unless the province is experiencing a severe economic crisis. He also recommends each rate group should pay the full current and future costs of new claims, which the WSIB must accurately price.

It goes on to say that the current rate groups should be replaced with sectorial groups. This would take place over the next several years with appropriate transitional measures to avoid sudden premium rate increases, according to the report.

Additionally, the report raises questions over the future of experience rating programs. Dr. Arthurs’ recommends, for example, that experience rating should be maintained only if the board declares the purpose is injury reduction and return to work; it achieves these purposes; and is resourced to prevent abuses. He calls for a time-limited experience-rating experiment to be conducted in one industry.

Other recommendations include the reestablishment of medical/scientific panel to identify occupational disease and the full indexing of all benefits.

“It will be imperative that meaningful consultation with employers takes place,” says OTA president David Bradley. “If the WSIB administration has already made up its mind what it is going to implement from the Arthurs report and how it is going to do it, then the process will be doomed to failure. These are enormously important issues. Employers want a better system too, but we cannot afford to sign a blank check.

“Gutting experience rating programs is not the answer,” Bradley continued. “We’ve got to make sure that all employers are paying their fair share and I don’t see how anyone can talk about the future sustainability of the WSIB without dealing with the expenditure side of things.”(WCx)

The release of the report has prompted OTA to form a WSIB issues committee to help guide the association’s analysis and positioning on these issues over the next couple of years.

Author Michael B. Stack, CPA, Director of Operations, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher. www.reduceyourworkerscomp.com. Contact: [email protected].

WORKERS COMP MANAGEMENT MANUAL: www.WCManual.com

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