Does the Number of WCB Claims Filed Affect Overall WCB Premiums?
With the first half of January almost complete, it hopefully went injury and accident free. It’s a new year, a new beginning, and a fresh start for your workplace safety record. Whether your accident/injury/claim record was excellent, good, fair, poor, or non-existent last year, ensuring that you minimize, reduce, and/or eliminate WCB claims in the current year can have a positive impact on your WCB premiums in years to come.
How are premiums determined?
To fully appreciate how WCB claims influence premiums, one must understand how WCB premiums are determined. The premiums employers pay fund workers’ compensation insurance, essentially the amount collected, when invested, should be enough to cover all current and future costs of all claims incurred in the same year.
The amount of premiums to be collected is determined by an annual estimate of insurable earnings and claims costs of a given year; therefore premiums collected in 2016 come from all the employers that are operating in 2016 and should be enough to cover all the costs related to all the claims that will occur in 2016. To ensure accurate rate calculations it is important for every employer to report their annual insurable earnings to the WCB.
How are premiums distributed?
The total amount of premiums to be collected is then distributed amongst all employers based on their size, their industry classification and their WCB claims history. This provides a level of fairness that employer’s premium payments reflect their risk of accident or injury and their claims track record. It only makes sense that an employer in the oil and gas industry with 500 employees and 25 WCB claims would pay higher premiums than a convenience store owner with 5 employees and no WCB claims.
How is my rate established?
According to WCB policy, all employers are classified by sector, then by rate group within the sector and then by industry within the rate group; a base premium rate is then set for every industry. The rate established for each employer is based on the base rate for their industry combined with their own claims experience and how they compare to the rest of their rate group. If an employer’s claims experience is better than the average for their rate group, they will receive a premium discount, if it is higher than the average, it may result in a premium surcharge.
How can my claims experience affect my premium rate?
To make sure that an employer is not penalized unfairly because of one particular high cost claim or a year with a lot of claims and to recognize a good claim record, premiums are not based on a snapshot of one specific year but rather the accumulation of data over a number of consecutive years. For small business employers, a five year window is reviewed and if there have not been any Time Loss claims in that period, they are eligible for a 5% premium discount. If they have more than 5 Time Loss claims, they are subject to a 5% premium surcharge.
For large business employers, who have paid more than $15,000 in premiums over a 3 year period, a three year window of claims experience is reviewed. No Time Loss claims with limited costs have no impact on the premium rate. However costs associated with No Time Loss claims (over the limited amount) plus all Time Loss claims are totalled from a three year period and compared with the average claim costs of employers of a similar size, in the same industry. Employers with less costs than the average will receive a discount, employers with more costs will be levied a surcharge.
Is it the number of claims or the costs of the claims that affect my premiums?
Both the number of claims and the costs associated with those claims can influence premium rates. Keeping the number of claims down is key for small business employers as this is the determining factor for discounts and surcharges. For large business employers, the total costs for all claims incurred is used as comparison with the industry average.
Although the rate setting and premium calculations can be complex and complicated, the basics remain simple: The fewer claims and claim costs on your account, the lower your premiums; the more claims and claim costs the higher your premiums.
This is why it is so important to be proactive in preventing workplace accidents and injuries and to attempt to contain the costs of any claim that should occur.
More information on WCB premiums and rate setting can be found here or if you would like additional explanation or further details on the WCB process or your specific premium rate, you can connect with us on our Facebook page, through our Twitter account, on our LinkedIn profile and you can always email us at [email protected] or at [email protected] or contact us directly during business hours through our chat feature or by calling 1-844-377-9545.