In recent years, stakeholders, experts and the WSIB have identified a number of fundamental challenges to the WSIB's current classification and premium rate setting approach.
Following the recent engagement with stakeholders, Mr. Douglas Stanley released his final Pricing Fairness report, in which he recommends that the WSIB develop an Integrated Rate Framework that would change the way employers are classified and the way premium rates are set.
After a careful review of Stanley's recommendations, consideration of stakeholder perspectives and challenges, the WSIB's own analysis and advice from a team of actuarial experts from the firm Morneau Shepell, the WSIB committed to bring forward a proposed preliminary Rate Framework for discussion with stakeholders.
The WSIB's objectives are to consider reforms that ensure that everyone pays their fair share for workplace coverage, to ensure that there is a reasonable balance between premium rate stability and responsiveness, and to make it easier for stakeholders to understand and engage in the process.
The proposed preliminary Rate Framework described in these technical papers builds upon Stanley's recommendations and proposes a plausible working model - a way forward for the WSIB to distribute the costs of the system in a fair and transparent manner.
Its key features are:
- A simplified, transparent and modernized classification system, aligned to an accepted national standard;
- A fair process that prospectively sets premium rates, reflecting individual employers' claims experience relative to their industry; and
- Consideration for a reasonable transition path to ensure employers can gradually adjust to the new premium rate setting process.
Although the WSIB is proposing a plausible working model, there are a number of options and key questions for further consideration. The WSIB understands that it is only with stakeholders' varied and unique perspectives that it will be able to make informed decisions on the issues currently faced by the system.
The WSIB is thankful for the support and thoughtful engagement of stakeholders in the Rate Framework Reform initiative and looks forward to further opportunities to hear the diverse perspectives as we consider potential reforms to the current approaches for employer classification and premium rate setting.
March 31, 2015