WorkSafeBC Insurance Model and 2019 Rates Surrey Board of Trade - - PowerPoint PPT Presentation

WorkSafeBC Insurance Model and 2019 Rates

Surrey Board of Trade

January 31, 2019

Workers’ case:

• Duty of care
• Breach of duty of care
• Damages

Employer’s defense:

• Contributory negligence
• The “fellow servant” rule
• The “assumption of risk”

90% of injured workers received no compensation

Before workers compensation

• No fault system
• Not mandatory
• Administered privately
• Employers individually liable
• No fault system
• Mandatory
• Administered by the state
• Employers collectively liable

Meredith’s choices in 1915

Accident Fund

Accident Fund

Accident Fund

1910 1920 1930 1940 1950 1960 1970

Employment Insurance Universal Health Care Old Age Security Workers Compensation Income Assistance Maternity Benefits

Canadian Social Welfare

2 3 1.Income security for workers 2.Inexpensive protection from litigation 3.Standards for safe workplaces 4.Free expert advice

What your premiums pay for:

Claim costs Number

• f claims

Investment returns

What is driving your rate?

Premium rate drivers are:

6

Injury management Injury prevention

Quick facts (2017)

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Prevention

• Occupational health and

safety regulator and inspectorate

• 500,000+ workplaces
• ~ 43,000 inspections
• ~ 34,000 safety orders
• ~ 340 penalties

Claims

• 153,000 workplace

injuries reported

• Income replacement

benefits

• Clinical, return to work

(RTW), and emotional support

• Long term pensions
• Exempt from the Canada

Health Act

Insurance

• Sole insurer of workers’

compensation in British Columbia

• Employer funded
• ~ 230,000 registered

employers

• ~ 2.4 million workers

covered

• Premium rates set

annually

• Annual premiums

approximately $1.5 billion

2017 results and 2019 rates

• The provincial injury rate reached a historic low of 2.18 claims accepted per 100 person years of

employment

• Excellent RTW at 81.8% of workers back at work within 26 weeks
• Lower Injury Rate and improved RTW outcomes led to better-than-planned claims cost performance

($197M better than plan)

• Investment portfolio outperformed WorkSafeBC’s return requirements

(10.5% vs 4.4%) for the year

• WorkSafeBC Board of Directors has set a preliminary average base rate unchanged from 2018 of 1.55%

in 2019

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2015 – 2017 results

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2015 2016 2017 Total comprehensive income $995M $488M $1,406M Investment income $1,306M $826M $1,738M Net actual market rate of return 8.7% 5.1% 10.5% Investment required rate of return 4.0% 4.5% 4.4% Total claim and operating costs $1,802M $1,857M $1,879M Injury rate (injuries per 100 workers) 2.22 2.20 2.18 Return-to-work within 26 weeks 82.6% 82.7% 81.8% Return-to-work for workers in vocational rehabilitation 81.0% 80.6% 82.6%

1.55%

0.00 0.50 1.00 1.50 2.00 2.50

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Rate($)

Total Cost Rate Admin Cost Rate Base Rate

Premium rates and cost rates

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1.68% 0.47%

Rate group structure

• Similar classification units (CUs) are placed together into industry groups.
• Industry groups with similar costs are placed into one of 20 clearly defined

and stable rate group bands with progressively higher cost rate boundaries.

• Sufficiently large enough industry groups form their own rate groups.

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~50 ~250 ~550

Rate Groups

(~50) Industry groups (~250)

Classification units (~550)

20 Above 6.00 19 4.75 - 6.00 18 4.00 - 4.75 17 3.50 -4.00 16 3.00 - 3.50 15 2.55 -3.00 14 2.15 -2.55 13 1.85 -2.15 12 1.55 - 1.85 11 1.35 - 1.55 10 1.15 - 1.35 9 0.95 - 1.15 8 0.80 - 0.95 7 0.65 - 0.80 6 0.55 - 0.65 5 0.45 - 0.55 4 0.35 - 0.45 3 0.25 -0.35 2 0.15 -0.25 1 up to 0.15

2019 base premium rate changes

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• 118,000 firms will experience base rate decreases
• 108,000 firms will experience base rate increases
• 4,000 firms will experience unchanged base rates

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% <=

• 20.0%
• 20.0%

to

• 15.0%
• 15.0%

to

• 10.0%
• 10.0%

to

• 5.0%
• 5.0%

to

• 0.1%

No Chg 0.1% to 5.0% 5.0% to 10.0% 10.0% to 15.0% 15.0% to 20.0% >= 20.0% Percentage (%) of Employers % Change in Base Rate

51% 47%

Base Rate Increase

2%

No change

Experience rating: rewarding safety

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For example: An employer with $1 million in payroll with a base rate of 1.50 percent would pay $15,000, but could pay as little as $7,500 or as much as $30,000, depending on its safety record over time.

100%

• 50%

Base Rate

Surcharge Discount

50% $7,500 $15,000 $30,000