Rate Framework: FAQs

General rate framework

What is the rate framework?

The rate framework is an innovative rate setting structure intended to increase the transparency of the premium rate setting process to better align employer premium rates with actual costs of the system. The rate framework will change the way Schedule 1 employers are classified, and how premium rates are set and adjusted.

Will this mean increased or decreased rates for businesses?

As a business, the premium rate you pay for your WSIB coverage will be more reflective of your individual claims experience. Any changes to your rates will be phased over time to allow you to adjust to the new rate.

When will the rate framework come into effect?

The WSIB board of directors has approved an implementation date of January 2020. The WSIB is committed to ensuring that the transition to the new model occurs in a manner that fosters stability.

What are the benefits of the rate framework (changing the classification scheme and premium rate setting processes)?

The rate framework model will increase transparency of the premium rate setting process and will also better align employer premium rates with actual costs of the system. One of the key concerns with the current approach to employer classification and setting premium rates is that it does not accurately reflect the individual risk and experience of employers. As a reference, below are detailed goals of the rate framework:

Simpler classification

We will be moving from our current classification structure to the NAICS (North American Industry Classification System) based classification structure. The NAICS structure is used by Stats Canada to classify employers all across Canada.

In the rate framework, employers will be assigned to a Predominant Class. This is generally based on the Class that represents the employer’s largest percentage of insurable earnings.

Premium rate stability

The rate framework takes a prospective rate setting approach. This means that you will be given projected premium rates in advance, which will act as an early indicator of the direction of your premium rates.

Easy to understand

The rate framework will be very clear, simple and easy to understand, and promotes active and informed participation by all parties.

Collective liability

We will continue our risk sharing arrangement among all employers who collectively pay premiums to maintain the insurance fund. The rate framework is revenue neutral – the amount of premium dollars collected by the WSIB will not change.

Ease of administration

Since the rate framework is very clear in its classification and rate setting approach, this will mean a more efficient and effective system for employers and for the WSIB to administer and maintain.

I can’t find the specific information I want on the WSIB website. Where can I get more information on the rate framework?

 

If you have a specific question that is not answered by the rate framework information on the WSIB’s website, you can send your question by email to rateframework@wsib.on.ca.

Will I be getting more rate framework information from the WSIB before it takes effect?

Yes, while we transition into the rate framework, we will be actively engaging with all of our stakeholders to ensure every employer is engaged and educated about the new model.

Experience rating

How will the rate framework impact my current experience rating plan?

When the rate framework is introduced in 2020, the current experience rating plans will cease. The last CAD-7 and NEER assessments will be issued in 2020, which will review the 2019 injury year and previous years applicable to the plans. The final MAP statement will apply for the 2019 premium year.

Are CAD-7/NEER and MAP ending?

 

Yes, all mandatory experience rating programs: NEER, CAD-7 and MAP will be ending when the rate framework begins.

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

 

Yes, however certain claims will be excluded and capped as is currently done.

Will this include claims that are allowed but do not have costs associated with them?

Yes, all allowed claims will be considered to calculate the new rate under the rate framework, including claims with “zero” costs.

Will NEER/CAD7 still be a part of the rate framework?

 

No, the NEER and CAD-7 programs will no longer exist once the rate framework is implemented, because the new model will be more reflective of businesses’ individual claims experience. The principles of the experience rating programs will be applied within the rate framework.

I have a small business and am currently registered in the Merit Adjusted Program (MAP). How will a 2018 claim under MAP affect my rate once the new premium rate setting model is implemented in terms of lifetime claim costs? Is there a claim limit that wi

No, there is no claim limit in the new model that would guide any decisions relating to return to work, as is now the case under MAP. In the new model, all claim costs will be considered a part of a business’ individual claims experience and will be used to set a business’ individual rate. Premium reductions or increases will be driven by your claims costs in comparison to your Class.

Under the new model, all benefit payments made during the six years preceding the rate calculation year for injuries arising during this six-year period will be taken into account when setting rates for the rate year.  For example, rates set for 2020, the rate year, will be set in 2019, the rate calculation year. All benefit payments made from 2013 to 2018 for work-related injuries/illnesses arising from 2013 to 2018 will be taken into account for the rate calculation.

There are per employer claim limits, varying with the predictability level of your business. These serve to limit the extent to which individual experience will factor into your rates. Claims excluded from individual employer rates in this way are charged for at the class level i.e. distributed over all businesses within the same class.

Our new model

I received a letter in the mail about the new premium rate-setting model. What is NAICS?

Our current classification system is being replaced with the North American Industry Classification System or NAICS structure. The NAICS system is a North American standard and is already being used by Statistics Canada and the Canada Revenue Agency.

What are the benefits of the new model (changing the classification scheme and premium rate setting processes)?

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.

Will I be getting more information about the new model from the WSIB before it takes effect?

We launched an extensive engagement campaign in September 2017, and will continue to engage businesses prior to implementation of the new premium rate-setting model in 2020, to ensure businesses are ready and prepared for the coming changes.

Classification

What does predominant class/subclass mean?

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.

Why do I have to review my classification now if the new model does not take effect until 2020?

As we get closer to the implementation date of our new premium rate-setting model, we want to ensure your current classification and the corresponding new NAICS code(s) are correct.  This will help us ensure accuracy as we move towards implementation in 2020.

How will Temporary Employment Agencies be classified in the new model?

There are special classification rules that will apply to temporary employment agencies under the rate framework. The specific details surrounding these businesses are still being reviewed and more information will be provided to you in the near future. Please continue to visit our website for updates and the latest news about the rate framework.

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

We ask that you 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 rate framework as your premium rate is based on your business activity, insurable earnings and claims experience.

I do not agree with the Class/Subclass my NAICS code falls into, as it does not accurately represent my business activity. Why does the NAICS code belong to this Class/Subclass?

The new NAICS classification structure replaces the current rate groups with 34 Classes/Subclasses. It has fewer and larger groupings (34 classes instead of 155 rate groups). Each industry Class/Subclass follows the NAICS code structure. Under the rate framework, the Industry Class/Subclass for your business is determined by the NAICS code associated with your business activities.

While you may be within a certain Class/Subclass, individual premium rates within that Class/Subclass will be different for each business.  Under the current system, the “rate group premium rate” is the premium rate that all businesses in that rate group pay. The rate framework works differently. Instead, your premium rate will reflect how you as a business compare to the Class/Subclass as a whole.

Is there anywhere on the website where I can review classification information?

We are in the process of developing a new Employer Classification tool and it will be made available to all businesses ahead of implementation of the new model in 2020. In general, the new model relies on the NAICS structure and descriptions to classify businesses. To familiarize yourself with the general classification structure we recommend reviewing the Appendix in Policy 14-01-01 The Classification Structure and the Statistics Canada website.

Rates

How do I prepare for the new model if I do not know my new rate?

We do not anticipate that businesses will see significant shifts in rates for 2020, and are working hard to ensure the transition to the new model is smooth and easy for businesses. We will provide more information following the finalization of the transition policy.

What factors will be used in determining the 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

When calculating my premium rate, what years are considered?

Under the new model, a rolling 6-year period is used to determine your premium rate.  Specifically the 6 years prior to the rate-setting year. Example: 2013-2018 would determine your 2020 premium rate (note: 2019 is the premium rate-setting year). During the course of that time, your insurable earnings, claims count and claims costs are the components reviewed and taken into consideration.

I currently have different business activities and pay separate premium rates. Will I qualify for multiple premium rates with this new model?

In the new model, businesses with multiple business activities are assigned a class and a rate based on their predominant business activity, which is the business activity with the highest insurable earnings. Businesses that have more than one business activity who appropriately segregate payroll and meet the multi-rating criteria, may be eligible for multiple premium rates. Once we validate that you meet the multi-rating criteria, you may be assigned a separate premium rate.

Please refer to Policy 14-01-07 Single and Multiple Premium Rates (PDF).

I have outstanding payroll for prior years that have been provisionally assessed. Will these assessments be included when calculating premium rates under the new model?

Yes. Provisional assessments for any outstanding periods in the review year would be included in the premium rate calculation. To ensure your premium rate is calculated based on actual insurable earnings, please provide us with the appropriate earnings figures for the missing periods.

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

We will assess three components when determining your premium rate: 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.

What is the two-step model in setting premium rates for the upcoming year for Schedule 1 businesses?

Our new model considers the following in setting premium rates for the upcoming year for Schedule 1 employers:

Step 1:  Employer Class Average Premium Rates – set at class/subclass level and is equivalent to the standard premium rate set at the rate group level.

Step 2:  Risk Adjusted Premium Rates - individual rate assigned to businesses based on their claims experience and total insurable earnings in comparison to their class.

What is predictability and how does it affect premium rates?

A business’ predictability is a measure of how much past claims experience and insurable earnings can be used to predict future outcomes. Predictability will be used to dictate to what extent premium rates should be affected by individual claims experience. Predictability is calculated using a six-year rolling window of claim counts and insurable earnings. Businesses are then grouped into a predictability “scale” that measures the level of individual and collective experience to assign to an individual business.

How does a business’ predictability value determine the impact on their premium rate?

The predictability value identifies the percentage of a business’ individual experience that will be considered and factored into their premium rate. Businesses with a high level of predictability will have more influence over their premium rates, whereas businesses with low predictability will have less ability to influence their premium rate (but more rate stability) since they have a lower level of predictability. In both cases, the rates for all businesses are a more accurate reflection of their individual risk and experience.

What are risk bands?

In the rate framework, classes will be divided into a number of risk bands. Risk Bands are a hierarchical series of divisions within each class and are equal to 5% increments in premium rate. The risk bands are a specific percentage, higher or lower, than the class average rate. The new model will provide greater rate stability by limiting annual year over year rate changes to +/- 3 risk bands (+/- 15%) .

How does risk band movement impact premium rates?

Generally, businesses will move a maximum of three risk bands each year from their prior year risk band towards their projected premium rate. As a result, a business may not reach their projected risk band in a given year however, this provides greater rate stability by limiting annual year over year rate changes to +/- 3 risk band.

Construction

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

Under the new model, the NAICS classification structure does not have a class or subclass similar to rate group 755. We are continuing to work on a solution for non-exempt partners and executive officers in construction. We will provide more details on these changes as we get closer to implementation.

Temporary Employment Agencies

What is a TEA?

A TEA is a temporary employment agency and is registered with the WSIB as a Schedule 1 business.  TEAs supply temporary staff to other businesses for a fee, which includes other types of remuneration.

How will TEAs be classified under the new classification structure?

TEAs will be classified under NAICS code 561320 (Temporary Help Services) for the business activity of supplying labour and will report their office staff’s insurable earnings under this classification as well.

TEAs will also be assigned unique TEA codes that reflect the various businesses to which they are supplying labour and will pay a premium rate for each of these classes.

TEAs may also be classified for any non-supply of labour business activity they perform and rules in the Classification Structure policy 14-01-01 will apply.

Who are client employers?

A business that is supplied staff from a TEA on a temporary basis for a fee is considered a client employer.  In some cases, the client employer may not be registered with the WSIB as they do not have coverage requirements.

Could a TEA have multiple NAICS codes under the same class/subclass?

Yes, TEAs will be assigned unique TEA codes related to supplying staff to the various classes and subclasses of their clients, and they may also have NAICS codes assigned for the non-supply of labour.

Is multi-rating criteria considered when assigning TEA codes for the supply of labour to different classes/subclasses?

No, multi-rating criteria is not applicable when assigning TEA specific codes on the account, such as “Supply of Labour to Class A, Agriculture” and “Supply of Labour to Class C, Utilities”.  Multi-rating criteria may be considered if the TEA is classified under business activities which are not related to supplying labour.

Are TEAs required to provide coverage for the staff they supply for other businesses?

Yes, TEAs are required to provide coverage for all the staff they supply to clients, whether the clients are Schedule 1 or Schedule 2, and in non-mandatory business activities as well.  The TEA is required to cover people in non-mandatory industries in Schedule 1, whether or not the client employer is registered with the WSIB, and will be classified in the business activity that best represents the client employer. 

Do TEAs need to complete a Form 90 when covering workers for a non-mandatory industry?

No, TEAs will not be required to complete a Form 90. 

How will TEA’s know their client classification with the WSIB?

TEAs are responsible to obtain this information from their clients in order to report the correct classification information.

If a client changes their business activity, will the TEA account also be reclassified?

The TEAs account may require a reclassification change based on their client’s change of business activity, if they do not already have the class/subclass assigned on their account.  TEAs are required to advise us of any material change and their account and changes will be effective the date the you are made aware of the change. 

Do rules of association apply to TEAs?

Yes, the rules of association apply if a TEA supplies staff to an affiliated business, the TEA is considered to be in a cooperative business relationship for the portion of labour they supply to the affiliated business. 

Are TEAs required to maintain segregated payrolls?

Yes, TEAs must maintain a segregated payroll and wage records, for each premium rate setting class they supply labour to and for their operations classified in NAICS 561320.   TEAs must also keep segregated records for any business activity they carry on that is not related to supplying labour.

If you do not segregate your insurable earnings, your TEA business will be assigned a single premium rate, based on the class with the highest class average premium rate of all industry classes that you supply labour to and any other business activities carried on by your business.  

How will I report insurable earnings for my office staff under the new premium rate setting model?

You will report insurable earnings for your internal staff under NAICS code 561320 (Temporary Help Services).