WorkSafeBC Classification, Rate Setting

WorkSafeBC Classification, Rate Setting and Preliminary 2012 Base Premium Rates School Districts
August , 2011

Topics
WorkSafeBC’s mandate
Overview of the classification & rate setting system
School district classification unit details
Historical and 2012 rates for School Districts
2012 rate details
Industry performance trends
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WorkSafeBC’s Mandate
To work with workers and employers as follows:
• To promote the prevention of workplace injury, illness, and disease
• To rehabilitate those who are injured, and assist with timely return to work
• To provide fair compensation to replace lost wages for injured workers during their recovery
• To ensure sound financial management for a viable workers’ compensation system
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Overview of 2012 Rates
The average base rate will remain at $1.54 in 2012, down from the 2008, 2009 and 2010 rate of $1.56 per $100 of employers’ assessable payroll.
39 percent of employers will experience a base rate increase
53 percent of employers will experience a base rate decrease
8 percent of employers will have their base rate remain unchanged
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The key rate drivers for 2012
The 2012 benefit target cost rate has decreased 5.9% from the 2011 to 2012 rates
The injury rate had a significant 20.9% drop in 2009 (in part due to the decline in the workforce of high risk industries) and a further 2.6% drop in 2010
Smoothed investment income returns in 2010 of 4.8% (9.8% on a market basis) were below the actuarial requirements of 5.4%.
The change in financial position from a $758 million surplus in 2009 to a $435 million surplus in 2010 to a projected $8 million deficit by the end of 2011
Modest rate increases are projected through 2015
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Classification & Rate Setting
The Board has adopted a modified collective liability system, under which self-sufficient groups of employers are created on the basis of similar cost rates. These groups must be large enough to provide for an adequate spread of the risk and stability in the assessment rate.
The costs of compensable injuries and diseases, along with the costs of administering claims and carrying out other statutory requirements, are collected from employers in the form of assessments. For this purpose, employers are classified into classification units, industry groups and rate groups. The costs incurred in relation to these groups determine the assessment rate paid by their members. The Board creates groups that are large enough to provide for an adequate spread of the risk and stability in the assessment rate.
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Rate Group
Industry Group
Sector
Subsector
Classification Unit
Employer Classification System
British Columbia’s
aggregate economic
undertaking
Assessments paid by employers
ACCIDENT FUND
Aggregation
Granulation
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64 firms
$3.4 billion in 2010 assessable payroll
Top 5 firms make up 35% of the payroll , 36% of the 5-year claim costs
Top 10 firms make up 48% of the payroll , 50% of the 5-year claim costs
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DV01
$0.48
Rate Group DV
2012 membership cost rate $0.42
The membership cost rate is calculated using up to 15 years of data (until 2,000 wage loss claims are accumulated), weighted more heavily on most recent years, and capping any claim to a maximum of 8 time maximum assessable payroll.
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Costs and Rates
The 2012 base rate down due to lower benefit cost rate and improved rate group surplus arising from significantly lower than projected prior year claim costs. Rate decrease limited to 20%.
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WorkSafeBC Classification, Rate Setting

by BCPSEA on Aug 29, 2011

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