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Ontario mulls workers comp reforms

Changes would include prospective ratings


Ontario regulators' proposal to change the way employers' premiums are set as part of a revamp of the province's workers compensation system is getting some industry support.

If adopted, the Ontario Rate Framework Reform would transition Ontario's workers comp system to one that sets rates prospectively rather than retrospectively, according to Ontario's Workplace Safety and Insurance Board.

Under the current system, the employer starts each year paying the basic industry assessment rate, with retrospective refunds or surcharges after the year is done to reflect actual experience. The proposed prospective system would adjust future premiums with discounts or surcharges based on past years' experience.

“In general, employers ex-pressed unhappiness with the (retrospective) system, especially with the surcharge/rebate aspect, which is very punitive,” said Jeff Tung, a partner at London, Ontario-based consultant Windley Ely Inc.

Canada's largest workers comp programs, in Ontario and Quebec, both use retrospective rating systems. But there has been no effort to push a similar revamp in Quebec because it is more efficient and garners fewer complaints, he said.

“Quebec is not as aggressive with its surcharge/rebate amounts,” Mr. Tung said. “It's not as volatile.”

Other employer complaints about Ontario's current system include long waits to receive premium rebates and a lack of transparency about how rates are set, experts said.

Ontario tied for the third-lowest score among Canadian provinces on issues such as paying assessments, accuracy in rate classifications and employers' ability to understand how premiums are set, according to a 2011 study by the Canadian business federation.

“You're paying a higher premium than you should be paying,” said Ian Howcroft, divisional vice president of Ottawa, Ontario-based trade association Canadian Manufacturers and Exporters. “We'd rather have companies paying a more appropriate rate rather than getting a rebate.”

The average 2015 assessment for Ontario is $2.46 per $100 of payroll, the second-highest after Nova Scotia's $2.65, according to the Mississauga, Ontario-based Association of Workers' Compensation Boards of Canada.

Some are concerned about the potential effects of the reform, however.

“One of our biggest concerns is we don't want this review to be used as an exercise to raise premiums across the board,” said Nicole Troster, director of provincial affairs for the Toronto-based Canadian Federation of Independent Businesses.

Ontario regulators could not be reached for comment on the plan.

The Ontario plan includes a six-year experience rating period, significantly longer than other provinces and could contribute to higher costs.

The proposed framework also would narrow 155 rate groups to 20 to 25 classifications.

Mr. Howcroft said the manufacturer/exporter group favors that simplification.

“Our biggest issue is having a classification system that makes sense,” he said.

Each employer would have only one classification. An employer such as Wal-Mart Stores Inc., for example, would be placed in the retail classification because most employees work on the retail side, Mr. Tung said.

“For employers that have high-risk secondary activities, this could be a good thing,” Mr. Tung said. “Conversely, if they have a low-risk secondary activity, this could be a bad thing.”

The Ontario revamp also would eliminate the Second Injury and Enhancement Fund, which allows all or part of an injured worker's compensation and health costs to be transferred from the employer to the fund if a prior disability or pre-existing condition caused, contributed, prolonged or enhanced the injury.

The deadline to submit comments on the plan is Oct. 2, with the changes being implemented no sooner than 2018.