Experience rating programs are primarily intended to achieve greater insurance equity in premium pricing for Schedule 1 employers based on their accident and claim cost experience in comparison to the industry rate group average. Experience rating also plays a role in reducing accidents and occupational diseases.
There are three experience rating programs.
- Merit Adjusted Premium (MAP)
- New Experimental Experience Rating (NEER), and
- Council Amendment to Draft #7 (CAD-7)
All experience rating programs automatically exclude the costs of claims arising from the following long-latency diseases from its calculations: Acquired Immune Deficiency Syndrome (AIDS), carcinoma, chest diseases due to aluminum and cadmium exposure, chronic noise exposure, chronic obstructive lung disease, pneumoconiosis due to asbestos, silica, talc, hard metal (cobalt) and other mineral dust, and Scleroderma. The rate group shares the costs of these claims.
All of the experience rating programs are currently under review.
MAP is the merit incentive program for all employers, including construction employers, with annual premiums between $1,000 and $25,000 excluding any adjustment by any of the WSIB’s experience rating programs. Once you qualify for MAP you will remain in MAP for at least 3 years, despite premium fluctuations below $1,000 and over $25,000.
MAP reviews the number of claims with more than $500 in costs over a three-year period. Claims over $500 are included in your accident record, while claims under $500 are not included. Employers who have no claims with costs over $500 during the period in review will receive a 5-10% discount off their premiums. Employers who have one or more claims with costs over $500 during the period in review will receive a premium increase of up to 50%. Any claim costing over $5,000 will result in an automatic 10% surcharge on the employer’s premium rate, plus any other MAP adjustment.
A fatality claim will automatically result in a 25% surcharge on the employer’s premium rate, plus any other MAP adjustment.
A MAP adjustment for a claim involving a third party is determined by pro-rating the claim costs and any special adjustments according to the percentage of liability of the parties involved.
NEER is the experience rating program for non-construction employers that pay annual premiums over $25,000. NEER compares the employer’s actual claim costs over a four-year period to the expected costs for the size and type of business. If the actual claim costs are lower than expected, the employer is eligible for a refund. If the actual claim costs are higher than expected, the employer is eligible for a refund. If the actdual claim costs are higher than expected, the employer receives a surcharge.
To protect employers from unlimited claim costs, there is a limit on the maximum cost assessed for any one claim (“claim cost limit”), and also on the total amount assessed by NEER for all your claims (“firm cost limit” or “organization cost limit”). The firm cost limit is four times the expected cost. The maximum surcharge is three times the maximum rebate. The claim cost limit is five times the maximum insurable earnings.
In the year a traumatic fatality occurs, a premium increase equivalent to the NEER refund an employer is entitled to receive is applied to the employer of the deceased worker – in effect eliminating the NEER rebate for that year.
CAD-7 is the experience rating program for construction employers that have annual premiums over $25,000. CAD-7 compares the employer’s actual number (frequency) of claims over two years, and claim costs over five years, to the expected frequency of the rate group and costs associated with the size of the workforce.