Rate Framework: FAQs

Our new model

What are the benefits of the new model?

Our new premium rate setting model will increase the transparency of the classification and premium rate setting processes, making it easier to understand how businesses are classified and how your rates are set. In the new model, rates will be more reflective of your individual risk and claims experience.

Classification

What is NAICS?

Our current classification structure is being replaced with the North American Industry Classification System (NAICS). It is a North American standard and is already being used by Statistics Canada and the Canada Revenue Agency. NAICS streamlines our classification from 155 rate group to 34 classes/subclasses.

What is predominant class/subclass?

The predominant class/subclass is generally the class/subclass with the largest share of insurable earnings, over a three-year review period prior to the premium rate-setting year, if available.

Where can I review my classification?

Prior to 2020, you can review your classification in our Employer Classification Manual (ECM). The new ECM will provide a list of all the classification categories under NAICS and their corresponding descriptions.

What should I do if my classification changes between now and when the new model is implemented?

You should advise us of any material changes within 10 days (for example, changes in: insurable earnings, business activities, ownership, etc.), and we will make the appropriate changes to your account. These changes may affect your classification and premium rate under the new model, since your premium rate is based on your business activity, insurable earnings and claims experience.

Premium rates

What years are considered when calculating my premium rate?

A rolling six-year period is used to calculate your premium rate. Specifically the six years prior to the rate-setting year. For example, in 2019, we will use the years 2013-2018 to determine your 2020 premium rate. During the course of that time, your insurable earnings, claims count and claims costs are the components reviewed and taken into consideration.

How does risk band movement impact premium rates?

Your predictability is a measure of how much your past claims experience and insurable earnings can be used to predict future outcomes.

A low predictability means a business’ insurable earnings and the number of past claims is quite low. In this case, your claims experience would not have a significant impact on your rate. Instead, your premium rate will be more influenced by the rates of your class to protect against volatility and the dramatic effect one claim could have on your rate.

Businesses with a higher number of allowed claims, claims costs and larger insurable earnings, have a higher predictability. In this case, volatility is not as high, as each single claim likely will not have a significant impact on your rate.

What is a class rate?

The class rate represent the premium rate a business would pay based on the collective risk profile for all the businesses within the class and your class’s shared responsibility to maintain the insurance fund.

What is a projected premium rate?

Your projected premium rate provides the future direction, up or down, that your premium rate is headed if there is no change in your individual and class experience from year-to-year.

What are risk bands?

In our new rate-setting model, classes will have a set of risk band, where each risk band represents a rate in relation to the class rate. A rate is assigned to each risk band, either above or below the class rate. The difference between each risk band rate is approximately five per cent. Depending on your claims experience, your business will be assigned to a risk band that best represents your risk in relation to your class. Your assigned risk band rate includes rate adjustments based on your individual experience.

How does risk band movement impact premium rates?

Generally, businesses can move up or down a maximum of three risk bands towards their projected premium rate.

Businesses with projected premium rate increases will see their rates increase up to a maximum of three risk bands per year, until they reach their projected premium rate. Businesses eligible for decreases will see their rates decrease up to three risk bands per year until they reach their projected premium rate.

What factors will be used to determine premium rates under the new model?

In the new model, your rates will be calculated by considering three components:

  1. Insurable earnings
  2. Number of claims
  3. Claims costs

What is starting point rate?

In the new model, each business will be assigned a starting point rate that reflects their claims experience and 2019 rate group rate. Our transition rules will be applied to the starting point rate a business receives in determining the 2020 premium rate that they will pay.

We will take into consideration whether or not your business was in previously an experience rating program, when calculating your starting point rate.

How will business’s transition to the new model?

To help you smoothly transition into our new model, any initial projected rate increases will be staggered over time and any rate decrease will be applied immediately.

Businesses with projected premium rate increases

In 2021, businesses with projected premium rate increases will move up a maximum of one risk band from their 2020 risk band.

In 2022, businesses that have not yet reached their projected premium rate will move up a maximum of two risk bands above their 2021 risk band.

Businesses with projected premium rate decreases

Any projected rate decreases have been applied to your 2020 rates. This will also happen in 2021 and 2022.

Starting in 2023, our premium rate setting policies under the new model will be fully in effect. Businesses with projected premium rate increases or decreases will see their rates move up or down a maximum of three risk bands each year until they reach their projected premium rate, protecting them from any sudden changes to their premium rates.

Can a business be assigned the class rate?

We assign the class rate to new businesses. Your business is considered a new business if you have less than 11 months of experience available in the review period. Once a business has 11 months or more of experience in the review period, their following year’s premium rate will be set based on their past insurable earnings and claims experience. Businesses with experience similar to the class are also assigned the class rate.

I currently have different business activities and pay separate premium rates. Will I continue to receive multiple premium rates under the new model?

In the new model, businesses with multiple business activities are assigned a class and a rate based on their predominant business activity - the business activity with the highest insurable earnings.

Businesses that have more than one business activity, that is appropriately separate their payroll and meet the multi-rating criteria, can be assigned multiple premium rates. For more information on how we determine if a business qualifies for multiple premium rates, refer to Policy 14-01-07 Single and Multiple Premium Rates.

How will lost time and no-lost time claims impact premium rates?

When determining your premium rate, we will access three components: insurable earnings, number of claims, and claim costs. All allowed claims, both lost time and no-lost time injuries, will be used to calculate premium rates. Lost time claims typically have higher claims costs and may increase premium rates accordingly.

Construction

In the new model, will there be a class similar to the current rate group 755?

In our new model, non-exempt partners and executive officers in construction, who were previously classified under rate group 755, will continue to receive a separate premium rate that reflects the low risk of their work in comparison to the rest of the construction industry.

Associated Employers

What is the criteria for considering two or more businesses associated?

Two or more businesses will be considered associated if they must meet the combined experience outlined under both the Test of Affiliation and Test of Cooperation.

visit the Associated Employers policy.

If family members operate businesses that are separate and distinct from one another, are they considered associated?

If two or more businesses meet both the tests of affiliation and cooperation, they are considered associated. Just being affiliated with another business does not necessarily mean that the two businesses are associated.

When considering the test of Affiliation, what is the definition of ‘control’ in the case of a corporation?

A person, group of persons, or partnership controls a corporation if enough voting shares in relation to the holdings of other shareholders are held by or for the benefit of the person, group of persons or partnership, in order to elect a relative majority of the board of directors.

If I close and then re-open my business, will the WSIB transfer the insurable earnings and claims experience to my re-opened business?

Yes, if a business closes and re-opens within 12-months of the closure, the transfer of experience will occur even if the business registers the business under a new name, produces new articles of incorporation, or obtains a new WSIB account number.

The transfer of experience will occur if the reopened business substantially retains the same of any two of the following:

  • employees
  • clients
  • suppliers
  • business processes and equipment
  • health, safety and disability management programs, and
  • Management team.