Rate Framework: Experiencing Rating Programs

Starting January 1, 2020, our new premium rate-setting model will be replacing all existing experience rating programs. In 2020, you will receive your final NEER and CAD-7 statements, as well as your final adjustments under these programs, which will include an assessment of the 2019 year.

Under our new premium rate-setting model, we will be moving to a prospective rate-setting approach instead of a retrospective rate-setting approach. This means that your individual claims experience will be factored in when we set your premium rates.

Rate Framework: Experiencing Rating Programs

How will experience rated businesses be transitioned into the new premium rate-setting model?

If you are currently a part of the MAP, NEER and CAD-7 experience rating programs, your 2020 premium rates will be set using your experience rating information that was issued in 2018, 2017 and 2016, along with your paid claims experience for injuries or illnesses from 2013 to 2018,. Your 2020 rate will not include experience rating information for the 2018 injury year, since we will not have the 2018 experience rating information when we set 2020 rates.

Also important to note:

  • If a business is eligible for NEER for the first time in 2018, then your first NEER statement, a system generated statement issued quarterly to all NEER businesses that includes claims information for monitoring purposes, will be issued in 2019, and will not be included in your 2020 premium rate calculation. 
  • Rebates or surcharges issued in 2018, 2017 and 2016, will be considered in your 2020 premium rate calculation.
  • Businesses will receive their final NEER and CAD-7 statements in 2020, which will include any rebate/surcharge based on the first assessment of their 2018 claims.
  • Our new premium rate setting model will take effect on January 1, 2020 but you will still receive your final NEER and CAD-7 assessments in the fall of 2020. The September, 2020 NEER statement will review claims experience information for 2019, 2018, 2017 and 2016 and the CAD-7 assessment will review 2019 and 2018 claims experience.
  • Example: Business A is assigned a NEER surcharge of $100,000, based on their September, 2019 statement. In September, 2020, NEER costs drop for Business A, since there are fewer claims and an increase in health and safety initiatives for that year, resulting in a $20,000 rebate. This business would receive its $120,000 rebate in December of 2020. The final NEER assessment will be issued in November, 2020 and rebate cheques will be mailed in January 2021. Similarly for a business that’s part of the CAD-7 experience rating program, the final CAD-7 assessment will be issued in the fall of 2020, which will account for the 2019 and 2018 review years. If a business is entitled to a rebate, the rebate will be mailed in November 2020.

How will the new premium rate-setting model affect my current experience rating plan?

In 2020, our new premium rate-setting model will replace all experience rating programs and incorporate employer level adjustments in the rate setting process.

For our various experience rating programs, here is a list of all of your final statements, rebates/surcharges and adjustments:

Experience rating program

Final statement issued

Final rebate

Final Surcharge

MAP

December 2018

2019 premium year

2019 premium year

NEER

November  2020

January 2021

December 31, 2020

CAD-7

September2020

November 2020

October 31,2020

Will there be rebates/surcharges remain under the new model?

No, since we are moving to a prospective rate setting approach, there will be no rebates or surcharges under our new model. The rates you pay under the new model will better reflect your individual claims experience, making experience rating programs unnecessary.

Can you provide a detailed breakdown of how claims will affect my rate, similar to NEER and CAD-7?

Starting in 2020, you can request an extended summary statement that provides details about how your individual premium rate was calculated, your individual rate adjustments based on your claims experience and a breakdown of your claims costs.

If I already received an adjusted premium rate under one of the MAP, NEER or CAD-7 experience rating programs, why are these years being considered again under the new model? 

Any rate adjustment under the existing experience rating programs is applicable only to years preceding implementation of the new model. We use claims experience from these years to set future premium rates. This means that the experience for these years is not being double-counted. We simply use it as a guide to future rate-setting. This rate-setting approach is the same approach used under the current system for setting rate group rates.

Will you be using all claims to calculate my new rate under the new model?

All allowed claims will be considered when calculating your rate under the new model, including claims with “zero costs.” It is important to note that certain claims will be excluded at the employer level. For example, specific long-latency occupational disease claims will be excluded. As well, certain high cost claims will be capped based on an employer’s per claim cost limit. These concepts exist as well in the current experience rating programs. 

Why does the new model factor in both allowed lost time and no-lost time claims, when setting premium rates?

Both lost-time and no lost-time claims lead to benefit payments under the Workplace Safety and Insurance Act. As a result, we use both types of claims for the determination of an employer’s predictability and actual claims cost.

Note: The impact of a single claim will vary by business depending on the class a business belongs to, their individual risk and other parameters as defined by the new model.

If a business has received rebates in the past, will this be included in the new model?

We will use your experience under the current system in 2013-2018 (and NEER, CAD-7 and MAP premium rate adjustments for premium years 2016-2018) to determine the rate you will pay under our new model.

How is past experience used in current ER programs vs. rate framework?

Pre-rate framework

Post-rate framework

Under the current rate-setting system, we consider six years of experience to determine your rate group rate for all businesses, whether or not they participate in the experience rating programs.

Then, in addition to that, for businesses participating in experience rating programs, we look at three years to determine your adjustment.
Each year, you are charged your individual rate, that is, the rate group rate adjusted with the prospective adjustment for businesses participating in experience rating programs.

Under rate framework, we will look at six years to set employer individual rates and there will be no additional adjustment programs.

Please note: We will treat excluded claims under the rate framework the same as we did previously.

Will my new rate include past adjustments for MAP, NEER or CAD-7?

Yes, your starting point rate, the rate at which you enter the new model, will take account of any adjustments that were made during the three years prior to the rate-setting year (2016-2018). 

What happens to the ‘maximum claim cost’ for each year?

Under our new rate-setting model, we will apply a ‘per claim limit’ that changes based on a business’ predictability and the year of injury.
For example, for larger businesses, the predictability scale would be 100%, so the per claim limit to apply will be 7x the Maximum Insurable Earnings (Max IE).

(We determine the Maximum Insurable Earnings each year to be 175% of the average Industrial wage)

Note that the concept of ‘Firm cost limit’ that limited total costs for a business under a given accident year, or an annual limit, no longer exists in this form under the new model.

Will future costs or projected costs still be made using Reserve Factor tables?

Under the new model, we no longer use Reserve Factor tables to charge projected future costs. 

Expected future costs will be considered in determining the New Claims Cost for each NAICS class and then these costs will be allocated to businesses using Claim Cost Ratios (Or CCR’s) which are the ratio of six years of payments for injuries arising during the six-year period to insurable earnings over the same period. This means that the premium rates charged each business are expected to provide for all future payments associated with injuries or illnesses arising during each injury-year.

NEER and CAD-7

How will the new premium rate-setting model affect my current experience rating plan?

In 2020, our new premium rate-setting model will replace the MAP program and incorporate employer level adjustments in the rate setting process. When the rate framework is implemented in 2020, the current experience rating programs will end.

If you are a part of the MAP program, you will receive your final statement in December 2018 for the 2019 year. If you are a part of the New Experimental Experience Rating (NEER) or CAD-7 programs, you will receive your final statements in 2020.

Will you be using all claims to calculate my new rate under the new model?

All allowed claims will be considered for the calculation of your rate under the new model, including claims with “zero costs.” It is important to note that certain claims will be excluded at the employer level. For example, specific long-latency occupational disease claims will be excluded. As well, certain high claims will be capped based on an employer’s per claim cost limit. These concepts exist in the current experience rating programs.

Why is the rate framework using both allowed lost time and no-lost time claims?

Both lost-time and no lost-time claims lead to benefit payments under the Workplace Safety and Insurance Act. As a result, we use both types of claims for the determination of an employer’s predictability and actual claims cost.

Note: The impact of a single claim will vary by business depending on the class the business belongs to and  the individual risk and other parameters as defined by the new model.

Merit Adjusted Premium (MAP) Program

When the new model is introduced, what will happen to the MAP program?

When the rate framework is introduced in 2020, the MAP Program will end. The final MAP statement will apply for the 2019 premium year (sent in December 2018).

If a business has received the 10 per cent discount through the MAP program, will that discount be grandfathered into the new model?

The MAP program will end before our new premium rate setting model is implemented and the 10 per cent discount will not be transitioned into the new model.

We will use your experience under the current system in 2013-2018 (and MAP premium rate adjustments for premium years 2016-2018) to determine the rate you will pay under the rate framework.  

How is past experience used in MAP vs. rate framework?

Pre-rate framework Post-rate framework

Under the current rate-setting system, we consider six years of experience to determine your rate group rate.

Then, in addition to that, we look at three years to determine a MAP adjustment.

Each year, you are charged your individual rate, that is, the rate group rate adjusted with your prospective MAP adjustment.

Under rate framework, we will look at six years to set employer individual rates and there will be no additional adjustment programs.

We will treat excluded claims under the rate framework the same as we did previously.

If I already received an adjusted premium rate under MAP, why are these years being considered again under the new model?

Any rate adjustment under the existing experience rating programs is applicable only to years preceding implementation of the new model. When we use claims arising in these years to set premium rates, it is only to set future premium rates. The experience for these years is not being double-counted. We simply use it as a guide to future rate setting. Please note that this is not a change from rate group rate setting under the current system.

Will my new rate include MAP adjustments I already paid for (or received) for a specific year?

Yes, your starting position under rate framework will reflect any MAP adjustments or ad hoc adjustments arising in the last three years.