Change is coming for Schedule 1 Employers who are insured under the Workplace Safety and Insurance Act. The Workplace Safety and Insurance Board ("WSIB") will implement the New Rate Framework effective January 1, 2020. The WSIB has been in communication with employers about where they will be placed in the New Rate Framework and employers should familiarize themselves with the program to be ready.
The New Rate Framework will replace the existing systems of MAP, CAD-7 and NEER and move to a single rating system where employers will pay prospective and fluctuating premium rates based on claim experience. The final dates for each of MAP, CAD-7 and NEER are:
- MAP: Final Statement to be issued in December 2018 with a final rebate/surcharge in 2019
- NEER: Final Statement in November 2020 with a final rebate/surcharge on January 1, 2021/December 31, 2020
- CAD-7: Final Statement in September 2020 with a final rebate/surcharge in November/October 2020
By now, employers should have received communication from the WSIB establishing the initial placement in the framework. If you have not heard from the WSIB it is highly recommended to reach out to learn your placement in the new system. Although the WSIB continues to release new policies and guide documents on the New Rate Framework, some known changes are worth highlighting.
For example, a significant change for employers will be the length of time that costs are assessed and included in premium adjustments. Under the New Rate Framework a six year cost window will be established. This is up from the windows used under the previous programs.
A further change is that the current system levies a fixed annual premium with the possibility of a rebate or a surcharge, while the New Rate Framework will eliminate these large lump sum payments. This could be viewed as a positive as often times an unexpected surcharge can be debilitating for a company; however, the rebates are welcome influxes of money to a business. The Rate Framework will determine a "Class Average Premium Rate" for each Class/Subclass based on the claims experience of all employers in the Class/Subclass each year. Each employer's individual premium rates will then be set in relation to the Class Average Premium Rate, taking into account each employer's individual claims history (including claims costs) and how that compares to other employers in the Class/Subclass. Employers will then be assigned to a "Risk Band", which represents a premium rate calculated as 5% increments above or below the Class Average Premium Rate.
There will be a transition period to help employers adjust to the Rate Framework. To establish the rate for January 1, 2020 the WSIB used earnings and claims from 2013 through to 2018 to determine the risk band that would have applied in 2019, had the Rate Framework been in place. Based on performance the Employer can then move up or down through the risk bands. There are also some transition rules to help reduce uncertainty and fix costs.
- For 2020 the risk band cannot be higher than the risk band that would have applied in 2019 but it can move down.
- For 2021 the risk band can move one risk band up or any number down.
- For 2022 the risk band can move two risk bands up or any number down.
- For 2023 onward a maximum of three risks bands will apply to movement both up and down.
As a result the best chance to move premiums down will be prior to 2023. As a result, employers may wish to use this time to critically assess if they have any claims from 2013-2018 that can be successfully appealed. The lawyers at CCPartners are able to assist you in both understanding the New Rate Framework and helping to assess your file to determine if there is an opportunity to reduce your premiums.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.