Third Quarter & 2019 Rate Presentation
Outline Presentation Agenda 01 Background 02 Current financial situation 03 Drivers – what has and has not changed? 04 Report of the Task Force on WorkSafeNB 05 Financial impact of the Task Force recommendations 2
Background 3
WORKERS’ COMPENSATION IS FOUNDED ON THE MEREDITH PRINCIPLES 1. No fault compensation 2. Security of benefits 3. Collective liability 4. Independent administration 5. Exclusive jurisdiction Founded on historic compromise: workers receive benefits and medical treatment, employers pay a premium but can’t be sued when workplace injury occurs. 4
WHO WE ARE WorkSafeNB is a Crown corporation reporting to the Minister of Labour, Employment and Population Growth. We are committed to preventing workplace injuries and illness through education and enforcement. We administer no-fault workplace accident and disability insurance for employers and their workers, funded solely through employer assessments. 5
FULLY FUNDED BY EMPLOYERS Employer premiums cover costs related to: Occupational health and safety requirements (prevention, inspection and • compliance) Medical care and rehabilitation for injured workers • Prescriptive benefits outlined in legislation(ex. wage loss compensation • benefits for injured workers) Discretionary benefits outlined in policy • WorkSafeNB administration costs • Other legislative requirements (ex. Workers’ Compensation Appeals • Tribunal, worker and employer advocates) 6
APPLICABLE LEGISLATION WO RKPL AC E HEAL T H SAFET Y C O MPENSAT IO N C O MMISSIO N & WO RKERS’ WO RKERS’ C O MPENSAT IO N APPEAL S C O MPENSAT IO N T RIBUNAL AC T (WC ) AC T Outlines authority and Act outlining wage replacement governance for both and medical benefits to New WorkSafeNB and the WCAT Brunswickers injured in the course of employment IDE A O C C UPAT IO NAL HEAL T H FIREFIG HT ERS’ AND SAFET Y (O HS) AC T C O MPENSAT IO N (FC ) AC T Act and regulations concerned Act outlining wage replacement with the health and safety of and medical benefits to New New Brunswickers at work Brunswick firefighters injured in the course of employment 7
WHO WE SERVE 15,000 registered employers 30,000 workplaces Retail Health Construction ≈ 80% of employers have fewer than10 employees Care ≈ 92% of employers have fewer than 20 employees L ar gest Sector s 300,000 workers ≈ 5,500 claims per year where worker misses time from work due to workplace injury ≈ 5,600 claims per year where medical treatment >$2.5M >$0.5M required for workplace injury but no time is missed from work due to workplace injury L ar ge Medi um Small 3.5% 15.6% 80.9% 8 E mployer T ype by Size (payr oll)
ASSESSED VS. SELF-INSURED EMPLOYERS D E ASSE SSE MPL OYE RS SE L F - INSURE D E MPL OYE RS Mostly private sector Most provincial and federal public • • sector employers Employer assessment rates are • determined by the in-year claim Pay-as-you-go • costs plus all estimated future costs (liabilities) related to injuries that Do not contribute to the Accident • occurred that year Investment Fund Assessment rates are calculated per Less focus on education and • • $100 of employer payroll prevention services that could be Rates vary as annual costs and provided by WorkSafeNB • investment returns fluctuate Funds collected for future liabilities • 9 are invested in an “Accident Fund”
Current Financial Situation 10
ASSESSMENT RATE HISTORY $4.00 $3.50 $2.92 $3.00 $2.50 $2.04 $2.01 $2.12 $2.02 $2.00 $1.70 $1.70 $1.44 $1.48 $1.50 $1.21 $1.11 $1.11 $1.00 $0.50 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 • July AGM – Announced 2019 range of $2.69 - $2.95 per $100 of payroll 5 11
2019 ASSESSMENT RATE COMPONENTS 2019 Assessment Rate Components New Accident Costs $1.81 Funding Required to Return Accident Fund to 110% ( $380 million payable over 8 Years) $0.52 Administration* $0.52 Reorganization & IT Systems Transformation $0.08 Average Assessment Rate $2.92 5 12
IMPACT OF 2019 ASSESSMENT RATE INCREASE ON EMPLOYERS 7,000 small employers will pay an average of $700 more than in 2018 • 6,500 medium size employers will pay an average of $5,000 more than in 2018 • 1,100 large size employers will pay an average of $45,000 more than in 2018 • 120 largest employers will pay an average of $327,000 more than in 2018 • Large and largest employers will pay 71% of the increase - 1,220 employers will • pay about $90 million more than in 2018 13
KEY FINANCIAL METRICS ($ MILLIONS) 2014 2015 2016 2017 2018 F or e c ast $1,521 $1,520 $1,594 $1,709 $1,728 Asse ts $1,108 $1,234 $1,422 $1,671 $1,898 L iabilitie s Ne t Inc ome $7 -$126 - $114 -$134 - $207 to -$237 F unding Position $413 $287 $172 $37 - $170 to-$200 F unding L e ve l 137% 123% 112% 102% 88% - 91% From 2014 to end of 2018: Liabilities increased by $800M • Funding position decreased by about $600M • Assets increased by roughly $200M due to strong investment • performance 14
BENEFIT COSTS AND REVENUE ASSESSED EMPLOYERS 500 399 400 400 314 178 300 292 191 285 273 268 262 250 127 104 130 93 $ Millions 202 203 200 176 196 132 193 111 187 177 38 34 25 164 157 -9 156 37 149 14 149 13 10 132 104 0 105 55 208 221 100 187 168 116 169 162 153 156 158 150 146 146 149 144 159 139 139 135 99 97 94 0 -13 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 projected -162 -100 Over 4 years, expenses expected to exceed Over 7 years, income exceeded expenses by $338 million -200 income by $573 million Expenses paid in year Expected change in future payments Assessment revenue Investment revenue 15
BENEFIT COSTS AND REVENUE SELF-INSURED EMPLOYERS Estimated liability increase of $196M based on WorkSafeNB’s discount rate. Liabilities will be higher when valued at lower discount rate used by GNB for its 150 financial statements. 130 123 120 115 110 Legislative change April 1, 2015 51 51 90 62 62 61 61 $ Millions 70 66 22 22 50 46 49 6 6 42 14 14 6 6 35 32 69 69 25 5 5 27 1 1 30 60 60 55 55 44 44 43 43 36 36 32 32 32 32 31 31 32 32 30 30 10 (4) -4 (7) -7 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 (10) projected (30) Expenses paid in year Expected change in future payments Paid Increase in liability 16
UNDERFUNDED LIABILITY WORKERS’ COMPENSATION BOARDS HAVE BEEN HERE BEFORE In 1992, WorkSafeNB was underfunded with a funding level of 77%. To return to full funding, significant measures included: 1. Reduction in benefit (Ex. loss of earning coverage as a % of wages for workers was reduced from 90% to 80% for the first 39 weeks then 85% thereafter) 2. The three-day unpaid waiting period was introduced 3. Steep surcharges were added to already high employer premiums Ontario, Nova Scotia and Newfoundland have all faced difficult decisions in last 15 years due to underfunding. 17
Drivers – what has and has not changed? 18
WHAT HAS NOT CHANGED? No major transformation in economy • Essentially similar group of employers • Essentially similar profile of workers • Investment income generated gains of $309 million since 2008 • (exceeding target) Administration expenses excluding OHS comparable to other • Worker Compensation Boards of similar size in Canada 19
LOST-TIME CLAIMS ASSESSED EMPLOYERS Spr ain, str ain and pain Br uise s, Contusions Se ve r e and E xte r nal 2500 2000 F a ir ly ste a dy in most ye a r s, mode st r e c e nt 1500 inc r e a se s 1000 47% dr op sinc e 2002, 500 unc ha ng e d sinc e 2013 32% dr op sinc e 2002, 0 unc ha ng e d sinc e 2011 20
IF EMPLOYERS ARE NOT ANY LESS SAFE, WHAT HAS HAPPENED? NB system outcomes very comparable to rest of Canada from 2000 to about 2015 • In 2015, legislation was implemented that established an independent, external Appeals • Tribunal , consistent with other provinces, essential for fairness, sober second thought The legislation granted the authority to the Appeals Tribunal to overturn Board policy • and bind WorkSafeNB in all matters. This is unique to only NB and Quebec and has resulted in unintended consequences The Workers’ Compensation Appeals Tribunal does not have visibility on the • substantial collective change resulting from an individual decision and its binding effect on WorkSafeNB policies Claiming patterns and associated costs • Effective broadening of the Wo rke rs’ Co mpe nsatio n Ac t to cover social health • 21 costs
PRIMARY ISSUES DRIVING COSTS HIGHER #1 COST DRIVER: LONGER CLAIM DURATION • Duration – length of time that benefits are paid • Unable to cease benefits • More long-term disability 22
DURATION CONTINUES TO INCREASE 70% 20% 18% 60% 60% 50% 15% 45% 40% 12% 10% 30% 20% 5% 10% 0% 0% % of workers off more than 26 weeks % of workers off more than 2 years 2013 2018 2013 2018 Each long-term disability claim costs more than $150k • 23
Recommend
More recommend
