WCB’s 2016 Rate Model Review & Recommendations He Huang
Changes to the WCB’s rate model will impact the premiums employers pay
The WCB has adopted changes to its rate model which will impact the rates employers pay. The WCB enhanced its rate model based on recommendations that came from an external actuary’s (Eckler) review in 2016.
Eckler analyzed WCB’s model by reviewing detailed information on employers’ payrolls, classification and claim costs, they performed various calculations and tests, and reviewed the rate setting models in place in several other Canadian workers’ compensation boards In formulating a rate model, competing principles must be balanced. The rate model should be robust and sustainable, satisfying the needs, goals and expectations of employers, while being actuarially sound, relatively simple and easy to understand, to communicate and to administer.
The key principles Eckler applied to guide the WCB’s review of the rate model are:
Fairness (accountability, equity and incentives for prevention)
Collective liability (insurance)
Predictability (rate stability)
Transparency (ease of understanding).
Impact to premiums employers pay
Transition to the enhanced model will result in changes to some industries’ rates. Some employers’ rates will not be affected, some will decrease and some rate codes will increase. Understand more about the possible changes to your rate code by viewing the past recorded industry session associated with your rate code.
When will the enhanced model be implemented?
After considering the feedback received from employers following 16 industry information sessions in February and March of 2017, the Board approved full transition to the enhanced rate model in 2018.
For 2018 only, to help alleviate the impact for employers whose rate codes are increasing, the WCB Board decided to draw from the Injury Fund to cover additional costs associated with the transition to the enhanced rate model.
Starting in 2019, employers will not have their costs covered for the rate increases that may occur as a result of the transition to the enhanced rate model. Employers who experience a rate increase will be required to pay the increased rates.
Board’s decision based on Employer Feedback
In February 2017, the WCB invited employers’ input on how to transition to the enhanced rate model. The feedback submission closed April 7, 2017. Employers chose from three options for how they’d like the transition to occur:
Transition to the enhanced rate model immediately (2018)
Spread transition over 2 years (2018-2019)
Other transition option
After selecting an option, each section included a comment section for employers to provide more feedback.
Employer feedback results led to the Board’s decision to implement the enhanced rate model in 2018. The Board also decided to mitigate the impact of the enhanced rate model for the 2018 rate year only by drawing from the Injury Fund to cover additional costs for employers whose rate codes are increasing due to the changes.
 Eckler Ltd., (Sept. 2, 2016), Review of the model to establish the premium rates, from https://www.wcbsask.com/wp-content/uploads/2016/10/WCB16-EcklerReport.pdf
2018 Rate Model Education Sessions
Learn how changes to the WCB’s rate model will affect your industry’s premium rate. If you are in one of the following rate codes, your premium rate will be impacted.
The following industry rate codes will be impacted by the changes implemented to the rate model. Find your rate code and view the associated PDF to understand how the changes will impact the premium rates you pay:
The WCB uses its rate model to determine the revenue required in the coming year to cover the expected future cost of all injuries occurring in the year as well as its expected administrative costs. The WCB has been using its current rate setting model since 1998.
Following the 2015 Asset Liability Study (conducted by independent actuary, Eckler), a recommendation was made to review the WCB’s rate model.
In 2016, Eckler analyzed the WCB’s Rate Model, in particular the calculations done for the determination of premium rates, obtained detailed information on employers’ payrolls, classification and claim costs, performed various calculations and tests, and reviewed the rate setting models in place in several other Canadian workers’ compensation boards.
In September, Eckler released their Rate Model Review report outlining their recommendations for the WCB’s rate model. Their report outlines the 11 recommendations from the rate model review.
Province-wide education sessions
The WCB Board and Executive conducted a series of province-wide education sessions in the fall of 2016 to share the changes to the Rate Model. View the Education Session recording.
Then in February and March of 2017, they conducted 16 industry-specific sessions outlining what the impact might be in 2018 when the rate model is adopted based on data available at that time. Recordings are available for all sessions. See links below. The Board then asked customers for feedback on how the transition to the revised model should be implemented. This led to the Board’s decision to fully implement the new model in 2018 and cover the impact for employers whose rates are going up as a result of the new model implementation in 2018 (for the first year only).
To learn more
Customers can learn the potential impact to industry rate codes. To learn more about how the enhanced Rate Model impacts on premium rates, view the recorded education and rate model sessions conducted in 2016 and February and March of 2017. These sessions provide information on the impact to 2017 rates had the Board implemented the enhancements for the 2017 premium year. These are not 2018 rates but may provide a proxy for actual rates in 2018.
In 2016 the WCB began public education sessions to educate employers on the Rate Model Review.
The Rate Model education sessions were held around the province and conducted by WCB executives. Employers and the public had an opportunity to understand the importance of the Rate Model Review, ask questions and learn about the potential impacts as well as learn about upcoming industry-specific sessions in February and March of 2017. Employers are urged to attend the upcoming Industry-Specific sessions in Regina and Saskatoon on February 27- March 8. Register here. (Webinars available for all sessions. See registration page.)
Thank you to all who participated in the Rate Model Review sessions throughout the province. We appreciated your attendance and feedback.
The WCB conducted six education sessions in four locations around the province to educate employers and the public about the recommendations that have come from the Rate Model Review.
About Eckler: Eckler is one of Canada’s first actuarial consulting firms dating back to 1927, with offices located in major centres across Canada and the Caribbean. Over the years, the firm has evolved from a strictly actuarial firm to a fully integrated consulting practice spanning the full range of actuarial and related services, including financial services, pensions and benefits, investment, communications, and technology consulting. In addition, Eckler is a recognized expert in workers’ compensation in Canada.
As a Canadian independently owned and operated business, their advice is impartial and clients’ needs always come first. Eckler’s mission is simple: to consistently render informed, expert and timely advice and be recognized as the best in terms of service excellence, value and innovation.