If you think the Dean Commission and OHS reform is big news in Ontario, just wait until you see what goes on with workers’ comp. Here’s a quick overview of what’s happening and what to expect.
The Current State of Workers’ Comp in Ontario
As you all probably know, workers’ compensation is a mandatory insurance scheme that provides benefits to workers who suffer work-related injuries and illnesses regardless of fault. This way, workers don’t have to (and aren’t allowed to) sue their employers for negligence like they did in the bad old days.
Employers fund the scheme by paying premiums. In Ontario, the average premium is $2.35 per $100 assessable payroll, among the highest in Canada. But despite the high premium rates, the system is running an enormous $11.7 billion deficit and won’t have enough money to pay claims unless something is done.
The WSIB system in Ontario has also come under public criticism for awarding rebates and premium breaks to large employers with poor safety records.
Workers’ Comp Reform & the Arthurs Commission
So the WSIB has formed an expert panel headed by Professor Harry Arthurs to review the situation and recommend reform. The Arthurs Commission is essentially the workers’ comp equivalent to the Dean Commission on the OHS side. Only the crisis the Arthurs panel faces is more immediate.
On Jan. 19, the Arthurs Commission issued a Green Paper outlining the situation and what it intends to do about it. The Paper outlines the 6 big issues the panel wants to look at:
- Funding: How much money does the system need and where will it come from?
- Premium Rates: How should the formula for setting premiums be changed?
- Rate Groups: Is the current structure whereby employers in different industry classes pay different premium rates appropriate and how should it be changed?
- Incentive Programs: How should incentive programs be changed?
- Occupational Diseases: What occupational diseases should workers’ comp cover and how should these fastest growing claims be funded?
- Indexation of Partial Disability Benefits: What indexation formula should be used to adjust the benefits of workers who are partially disabled?
What’s Going to Happen & When
The Commission will hold hearings through the spring and make recommendations “at the end of 2011”—probably in the fall.
Meanwhile, the WSIB is exercising its own initiatives to raise money. Among other things, the WSIB wants to expand the New Experimental Experience Rating (NEER) window that it uses to assess workers’ comp rates from 3 to 4 years. WSIB compares actual claim costs over the window period to an expected rate. Employers with costs above the benchmark must pay a surcharge; employers with lower costs are eligible for refunds. Extending the window to 4 years, which would be retroactive to claims after Jan. 1, 2008, is essentially a hidden rate increase since the longer the window, the greater the likelihood that claims will be experienced.
The wildcard in all of this are the provincial elections to be held Oct. 6. After 8 years of rule, many believe that Ontario’s Liberal Party will have a hard time staving off a Tory challenge. While workers’ comp reform isn’t likely to become a major issue in the election, the Torries are known for being the party of business and generally opposed to regulation.
How recommendations from Arthurs—and its cousin, the Dean Commission—fare in this political environment is impossible to predict.
One thing is sure: Ontario’s workers’ comp system is in financial crisis and somebody is going to have to fork over a lot of money to restore it to viability. One way or another, employers are going to be asked to provide most if not all of that money.