Document name

Disaster Reserve

Document number

POL 18/2025

Cost relief means the process of moving claims costs from an employer’s claim cost experience to a reserve (i.e., collective cost pool shared proportionally among all industry rate codes).

1. The Workers’ Compensation Board’s (WCB) premium rate setting model (POL 13/2017) is based on the principle of collective liability. Employers, as a group and those within the same industry premium rate group, are jointly responsible for all workers’ compensation costs.
2. WCB’s experience rating program (POL 27/2016) adjusts premium rates to reflect an employer’s claims and claims cost history. To minimize the impact of a large or catastrophic injury event, individual claims costs are capped at the maximum assessable coverage amount in a given year.
3. The Workers’ Compensation Act, 2013 (the “Act”) grants the WCB authority to establish reserves to meet losses from any disaster or other circumstance the liability for which would, in the opinion of the WCB, unfairly burden the employers in any class (Section 145).
4. The WCB has established the Disaster Reserve to protect employers from high cost claims and firm premium rate volatility caused by exceptional circumstances that are considered a disaster.
5. The funding level of the Disaster Reserve is established through POL 16/2023, Sufficiency.

1.  In situations considered a work-related disaster, the WCB may provide cost relief to employers by charging total or partial claims costs to the Disaster Reserve if:
   1. A claim’s costs reach a specific threshold related to the maximum wage rate, or
   2. WCB determines a work-related event is a disaster and claims costs would unfairly burden an employer or group of employers.
2. The WCB considers a work-related disaster to be an event or circumstance that may unfairly burden an employer or group of employers and demonstrates one or more of the following characteristics (but not limited to):
   1. Affects numerous workers.
   2. Affects numerous employers.
   3. Results in excessive impairment or loss of life.
   4. Results in excessive claims costs.
   5. Major catastrophe (i.e., infrequent, unexpected, massive and considered a catastrophe by a reasonable member of Canadian society).
   6. An event that prompts a state of emergency (local or provincial state of emergency such as a public health emergency).
3. The workers’ compensation system is based on the Meredith Principles, which provide for a no-fault compensation system. Therefore, an injury claim involving alleged negligence by another covered employer or the workers of another covered employer is not typically considered a disaster unless one or more of the above factors are also present.

Disaster Reserve threshold

4. The WCB will charge a portion of a claim’s costs to the Disaster Reserve when a work-related disaster would unfairly burden an employer due to excessive claim costs:
   1. For one claim, the portion of costs exceeding 10 times above the maximum wage rate at the time of injury will be charged to the Disaster Reserve.
   2. For one incident resulting in injury to two or more workers of the same employer, the portion of costs exceeding 20 times above the maximum wage rate at the time of injury will be charged to the Disaster Reserve.

Unfair Burden

5. The WCB may consider cost relief from the Disaster Reserve in work-related circumstances that would unfairly burden an employer or group of employers but that do not meet the thresholds related to the maximum wage rate.
   1. WCB will consider a burden as unfair when it imposes disadvantages other employers would not face in similar circumstances or when the impact is clearly unwarranted for the situation.
   2. In these situations, WCB may provide cost relief to one employer, a group of employers, an industry premium rate group, or all employers.
   3. When determining if claims costs should be charged to the Disaster Reserve, the following factors will be considered (but not limited to):
      1. Nature and scope of the disaster, including any of the characteristics outlined above in point 2.
      2. Effects the claim(s) may have on the employer’s, or group of employers’, experience rate or the industry premium rate group.
      3. Number of employers and/or industries affected.
      4. Fairness for employers and collective responsibility.
      5. Steps taken to prevent the injuries (including expected safety measures) or control claims costs.
      6. WCB’s funding percentage and responsibility to finance its activities and all obligations under the Act.
6. The board members delegate responsibility for determining when a circumstance will be considered a disaster to the disaster reserve review committee.
7. The disaster reserve review committee consists of WCB’s Vice President of Operations, Vice President of Prevention and Employer Services, and the Chief Financial Officer. Other WCB senior management may provide additional expertise in matters coming before the Committee. The committee will determine:
   1. If the circumstance is considered a work-related disaster.
   2. Cost relief eligibility (i.e., which employers may be eligible).
   3. Amount or level of cost relief (i.e., total or partial cost relief).

Appeals

8. Employers may appeal a decision of the Disaster Reserve Review Committee to the Board Appeal Tribunal (POL 13/2024, Appeals – Board Appeal Tribunal).
9. Where an employer provides new information that was not available when the decision being appealed was made, this information must first be considered by the disaster reserve review committee before progressing to the Board Appeal Tribunal.

Experience Rating

10. If an employer receives cost relief on a claim, a credit will be applied to the employer’s claims costs in the year cost relief was applied. Employers may request to have their previous years’ experience rating reviewed (POL 27/2016, Experience Rating Program – Discounts or Surcharges).