Rate Framework: Our new policies

We have currently approved nine new policies to support the implementation of the rate framework. Read the new policies.

Here are descriptions of the nine policies, to help you understand and prepare for the new model:

Transition

The transition policy (PDF) outlines our phased approach to moving businesses into our new premium rate-setting model, and outlines what you can expect if you have a projected rate decrease or increase. To help businesses smoothly transition to our new model, rate increases will be phased in over three years, from 2020 to 2022, while rate decreases will be applied immediately in 2020. 

Coverage status

The Coverage Status policy (PDF) outlines the ability of businesses in either Schedule 2 industries or industries described in Schedule 1, Part II to apply for mandatory coverage under Schedule 1. This policy has been revised to be simpler and easier to understand, and is aligned with the revised Schedule 1 of Ontario Regulation 175/98, which was recently changed to reflect the new classification structure.

The detailed guidelines for applying for Schedule 1 coverage, including the conditions for cancelling Schedule 1 by-application coverage, will remain in Policy 12-01-02, Employer by Application.

Classification structure

The revised Classification Structure (PDF) policy is simpler, easier to understand and supports our new classification structure under the rate framework. The new classification structure will consist of 34 classes and subclasses that are adapted from the North American Industry Classification System (NAICS).

The policy defines the key concepts, such as business activity, classification, and classification change. As is the case today, we will not separately classify support operations that are not business activities in their own right. Also, specific classification rules apply to businesses with multiple business activities that maintain segregated payrolls versus a business that does not.

Single and multiple premium rates

The Single and Multiple Premium Rates (PDF) policy introduces new rules for how we determine whether businesses with more than one business activity are assigned a single premium rate, based on predominant class, or are eligible for multiple premium rates. 

In order to be assigned a separate premium rate for a business activity, in a 6-digit NAICS code, your business activity must be significant and must not be considered integrated with the business’ other operations. This is intended to maximize the benefits of the employer level premium rate setting approach under the rate framework.

If your business has one business activity

Your business will get one NAICS code and one premium rate.

If your business has two or more business activities

For each business activity, your business is assigned a separate NAICS code. You will automatically be assigned a predominant rate based on the classification that has the highest amount of insurable earnings.

You may qualify for a separate rate

for some of your classifications. The following diagram illustrates when this would apply:

Do your business activities meet the significance test

Associated employers

The Associated Employers policy (PDF) replaces existing policy and now allows us to combine two or more business’ claims experience and insurable earnings to set premium rates. To support this expanded policy direction, the changes include a new two-part “test” to determine whether two or more businesses are associated. The test of affiliation focuses on the structure of your business. The test of cooperation focuses on what your business does and how it works with other affiliated businesses.

Premium rate setting

The Employer Level Premium Rate Setting (PDF) is a new policy that outlines our two-step model to set premium rates for Schedule 1 businesses for the upcoming year. Step 1 involves setting a class average premium rate based on each class’ share of responsibility for the costs generated to maintain the insurance fund. Step 2 involves setting a risk adjusted premium rate for each business based, in part, on how their risk and claims experience compares with the collective experience of their class.

Employer premium adjustments

The Employer Premium Adjustments (PDF) policy outlines the circumstances under which we will adjust the premiums billed, payable, or previously paid by employers. Most adjustments will be limited to January 1st of the third prior year, with some exceptions.

A major feature of this policy includes the collapsing (or in some cases, expansion) of certain windows for adjustments to premiums already paid, or premiums billed/owed by businesses. Our new adjustment approach covers three separate policies, and amalgamates them all into one, comprehensive policy.

Temporary employment agencies classification

The Temporary Employment Agency (TEA) (PDF) policy is a new policy that outlines the special classification rules that will apply to TEAs under our new premium rate setting model. In particular, with respect to the staff that TEAs supply to client employers, they will be classified in the premium rate setting class(es) of their clients.

Temporary employment agencies transition

The Temporary Employment Agencies Transition to the Rate Framework (PDF) policy is a new policy that outlines the special rules to transition temporary employment agencies (TEAs) to the new model. Specifically:

  • TEA’s pre 2020 experience related to supply of worker business activities will generally not transfer to the new model.
  • Starting in 2020, TEAs will be assigned the class average premium rate for each of their supply of worker operations (e.g., supply of workers to Class A, NAICS code 561320 etc.) until they gain sufficient experience post January 1, 2020 to become eligible for a risk adjusted rate.

The special rules are necessary to account for the significant change to the method of classifying TEAs in the new model and to meet the objective of generally aligning the premium rates of TEAs and their client employers.