Experience Rating

Experience rating is the practice of adjusting an employer’s assessment (premium) rate based on its claims costs (and sometimes number of claims). The WSIB now has experience rating programs that impose extra fees (surcharges) on employers who perform worse (have higher claims costs) than other employers in the same class of industry or occupation. Employers who have claims records that are better than other employers in the same class receive partial refunds (rebates).

Experience rating is supposed to encourage employers to make their workplaces healthier and safer and encourage return to work. In reality, there is little to no evidence that experience rating accomplishes these goals. Experience rating is bad for workers because it provides employers with strong financial incentives to minimize claims costs.

Proposed changes ignore “moral crisis”

Professor Arthurs’ 2012 report on WSIB funding identified the experience rating system as a “moral crisis” that must not be ignored and called for radical change or termination of the related programmes. Instead, the Board commissioned another report (2014) by Douglas Stanley which recommended embedding experience rating even more deeply into the system to achieve “insurance equity.”

Same game under any other name….

The WSIB ‘s new Rate Framework (approved Nov. 2016, in effect 2019) expands experience rating, making it the key factor in rate setting. For more information about the Board’s framework see “What Workers Should Know”. Instead of the current experience rating programs, the framework uses claims experience more directly in setting a employer’s premium rate. Employers with lower claims costs will be placed in a lower “risk band” and pay a lower rate, while employers with higher costs will move up the scale to a higher “risk band” and pay a higher rate. There will be fewer classes of employers (currently called rate groups) and so claims experience will be the main factor in determining what an employer pays.

Seven draft policies were released in 2017, with a Policy consultation that closed mid- January 2018. Submissions from injured worker advocates have highlighted that the Rate Framework is intended to promote premium rate equity (not a permitted purpose under the Act) and that the proposed policies continue to ignore :

the incentive under experience rating to avoid premium increases by using temporary workers for more dangerous work
the incentive for claims suppression (and the many forms it can take) by basing premium rates solely on claims costs rather than classification and actual health and safety practices
integrating measures to promote health and safety into the rate framework