In the challenging environment of WSIB the question currently posed is - how will WSIB raise sufficient funds to ensure that the money will be there to pay Loss of Earnings (LOE) benefits and medical benefits on future claims.
One proposed answer is to change the employers WSIB Rate Group systems and Experience Rating Plan(s). This is the recommendation from Douglas Stanley in his report entitled "Pricing Fairness: A deliverable Framework for Fairly Allocating WSIB Insurance Costs".
Currently, WSIB has some 155 Rate Groups in which employers pay their premiums. Each Rate Group has an assigned dollar value associated to it; and employers remit their premiums based on their assessable payroll.
The Douglas Stanley Report recommends that the current WSIB Rate Group system be replaced by what is called the "North American Industrial Classification System (NAICS)" and to consolidate the WSIB Rate Groups to just 20 to 25 groups.
The report also recommends an end to multiple Rate Groups for employers citing that it provides a significant amount of complexity in the system and can lead to adverse implications related to the fairness of the current system".
The proposed NAICS would classify employers based on the employers business activities, with no distinction for size or the employer's ability to segregate their earnings. In this model, the CAD-7, NEER and MAP experience rating plan would be replaced by what is called "Risk Adjusted Premium Rate Setting" whereby employers would be grouped by risk and accident costs into three bands:
- High Risk Bands - Premiums that are greater than the average.
- Average Class Rate - Premiums would be average.
- Lower Risk Band - Premiums that are lower than the average in their class rate.
Based on individual accident experience, employers would move up or down on these "bands".
We are expecting that WSIB will be releasing further details on the proposed plan put forward by Douglas Stanley for public consultation and phase in the program starting sometime in 2016.
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