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TORONTO-Canadian risk managers can lower their workers comp costs by taking a more active approach to managing this exposure, a panel of experts says.
Risk managers have the skills to effectively manage workers comp and are well positioned to handle a shift in Canadian comp systems to more of an insurance-style model, in which costs are more closely tied to claims experience, panelists add.
One Ontario employer, in fact, has earned millions of dollars in rebates from the comp system after adopting an emphasis on safety and loss prevention.
"Workers comp is the place to be in the future," said Jason Mandlowitz, national manager for workers comp services for claims specialist Crawford-THG in Etobicoke, Ontario.
"The risk managers of today are the workers comp managers of the future," he said.
If managed correctly, workers comp can become a profit-maker rather than a money-loser for a company, he added.
The panel discussed the Canadian workers comp system at the Canadian Risk & Insurance Management Society conference held in Toronto earlier this month.
Mr. Mandlowitz said a number of widely held myths about the workers comp system in Canada no longer are true.
The first myth is that workers comp benefits, which are provided through provincial compensation systems, are a fixed cost of doing business.
In Canada, companies pay premiums to the provincial workers comp systems that are based on their industry and claims experience.
"If you successfully manage workers comp, you can affect the assessment costs," Mr. Mandlowitz pointed out.
The second myth is that workers comp only takes money from the company. But, he said, a company can get a rebate of 15% to 20% of its annual assessment with good loss experience.
The third myth is that provincial governments keep increasing employers' workers comp costs by providing higher levels of benefits to injured workers.
This is no longer true, Mr. Mandlowitz said, as a number of provinces have reduced comp benefits to minimize their exposure to growing unfunded liabilities and also to reduce the cost burden on businesses.
Meanwhile, a bill working its way through the Ontario Legislature would help reduce workers comp costs, an attorney says.
Called Bill 99, it is expected to become law this fall and take effect Jan. 1, 1998.
The bill, which would overhaul the workers comp system in Ontario, is "a "watershed event," said Robert Cronish, a lawyer in Toronto.
"As long as the board has no financial responsibility to employers, we will continue with the benefit generosity and continue to have the highest assessment in Canada," he said of Ontario's system.
Under the current system, "compensation was first, rehabilitation was second-return to work is something the board was never able to do," and health and safety were last, Mr. Mandlowitz said.
But, under the proposal, the order would be reversed, and health and safety would have the highest importance, followed by return to work, rehabilitation and then compensation, he said.
Bill 99 would change the system in a number of ways. Among other things, the bill would: establish new worker claim reporting requirements; involve the employer in determining a worker's fitness to return to work, whereas now the province's workers comp board makes that decision exclusively; mandate that the worker and employer communicate during the worker's absence; require the worker to provide the employer information on functional abilities; require health care providers to cooperate with the employer; and bar compensation for stress except in cases of traumatic events.
The new law would more closely emulate the U.S. system, Mr. Cronish said, as it would place greater emphasis on return to work.
One Ontario company has reduced its workers comp costs even without the benefit of the proposed law.
Toronto-based Schneider Corp., a sausage and meat producer, has received $11 million Canadian ($7.9 million) in rebates from 1988 to 1996, said James Melchin, the company's manager of health and safety.
In 1988, the company received its first experience rating, and because the rating was poor, Schneider had to pay a penalty of $293,000 Canadian ($246,000). After that, the company decided to emphasize safety and loss prevention to lower its claims and get workers back to their jobs more quickly.
Schneider started a modified work program in 1989 and created the job of placement coordinator to oversee the program. In 1990, the company created a safety services coordinator to improve worker safety. In 1991, an ergonomics analyst was added, which has reduced cumulative trauma injuries by 10% in each succeeding year.
As a result, the company had fewer claims and a better claims rating with the provincial workers comp system. In 1991, the effort paid dividends, as Schneider received a rebate of $420,000 Canadian ($363,000).
Richard Saylor, insurance and risk manager for Coca-Cola Beverages Ltd. in Toronto, moderated the session.