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CIFFA participated in a recent webinar conducted by full-service law firm Wilson Vukelich, LLP, summarizing the recent changes to WSIB rates.
Earlier this year, CIFFA members received a Premium Rate Summary Statement from WSIB.
This statement indicated: members’ Current Rate, Premium Rate, NAICS Code and Subclass Description.
In CIFFA’s case, the association’s rate is projected to increase 296% above the current rate level.
It has been explained that the WSIB will change from their current experience rating program (NEER, CAD-7 and MAAP) to the North American Industry Classification System (NAICS), which is current used by the United States, Mexico, Statistics Canada and the Canada Revenue Agency.
The significance of this change is that the WSIB will move from its current 155 rate classification groups to 34 classes, or sub-classes, which will be updated every five years. Under this new system, the WSIB will be adjusting each employer’s premium rate over a rolling pro-rated six-year period, based on past experience ratings (most current three-year period represents 66.6% of the rating with 33.3% based on the previous three-year period.
The full list of NAICS classes and rates can be found at: https://www.wsib.ca/en/2020premiumrates.
Once the business is properly classified, the second step is to assess how the individual claims history compares to the rest of the businesses within the same class. Individual premium rates will be based on:
1 – Insurable Earnings, 2 – Number of claims, and 3 – Claims cost.
What remains unchanged is that businesses with more than one business activity will be classified according to the predominant activity of the business with the highest amount of insurable earnings.
If the WSIB have established that a business is carrying on distinct business activities that are recognized as separate classifications, it is imperative that:
- separate payroll records be maintained,
- the activity must not form an integrated operation with the employer’s other business activities,
- the business activity must be significant enough to warrant a separate payroll.
As mentioned above, each business has been assigned a starting point rate and projected premium rate based on previous rates, claims experience, size of business and NAICS classification.
In 2021, businesses will only be required to move up at most one risk band (5%). For those projecting a decrease, as there are no limits, the business would be moved to the indicated classification rating. In 2022, business that have yet to reach their projected premium rate will be moved up two risk bands above their 2021 rate (10%). In 2023 and thereafter, business will be affected by three risk bands (15%) until the projected rate level is reached.
It is important that businesses review their classification to ensure that they are properly positioned.
For additional information, employers can request an extended statement from WSIB that will provide details on how the individual premium rate was calculated, the adjustments made on your business claims experience and a breakdown of your claims costs.