The WSIB maintains an insurance fund that is made up of annual premiums paid by Schedule 1 employers. An employer’s premium payments are based on the WSIB’s classification of the employer’s business activity (which determines the premium rate) and the employer’s total insurable payroll. The annual premium paid by an employer is equal to its annual insurable earnings (payroll costs), multiplied by the premium rate, and divided by 100.
Each fall, the WSIB sets the premium rate for each rate group, and announces the maximum insurable amount of workers’ earnings, for the following calendar year. Employers pay premiums only up to the maximum insurable amount.
Schedule 2 employers pay the full cost of accident claims filed by their workers, plus an administration fee that is adjusted annually.
Additional costs and penalties you could incur
- failing to register your business within 10 days of hiring your first worker
- failing to get a clearance from each contractor or IO performing construction work, and keeping all clearances for three years
- failing to report an accident
- discouraging or preventing a worker from filing a claim for WSIB benefits (“claim suppression”)
- influencing or inducing a worker to withdraw or abandon a claim for WSIB benefits (“claim suppression”)
- not reporting, or incorrectly reporting, your premium information
- underestimating your earnings
- knowingly making a false or misleading statement or representation to the WSIB
- wilfully failing to inform the WSIB of a material change in circumstances, and contravening rules regarding the disclosure of confidential information
If found guilty under the WSIA, individuals may be fined up to $25,000 and/or imprisoned for up to six months for each offence. Corporations are liable to a fine of up to $500,000 for each offence.
Employers who are determined by the WSIB to have engaged in claim suppression may be charged an administrative penalty of $5,000 for each of the first three occurrences, $7,500 for each of the next three occurrences, and $10,000 for each occurrence after that.
Employers who are found in breach of their work reintegration (WR) and/or re-employment obligations are also subject to financial penalties that are outlined in the WR and re-employment sections of this website. These penalties can equal an amount up to the worker’s actual annual earnings.
The WSIB also charges interest for non-compliance regarding any/all WSIA obligations.
Experience rating programs
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 occupational diseases from their 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.
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 three 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 on 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 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 of your claims (“firm cost limit”). The claim cost limit is five times the maximum insurable earnings. The firm cost limit is four times your expected costs for the accident year. The maximum surcharge is three times your maximum rebate.
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 which, in effect, eliminates 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.
In the year a traumatic fatality occurs, a premium increase equivalent to the CAD-7 refund an employer is entitled to receive is applied to the employer of the deceased worker which, in effect, eliminates the CAD-7 rebate for that year.
How to control the size of your rebate or surcharge
The best way to control the size of your rebate or surcharge is to reduce claim frequency and claim costs through prevention, WR, and cost relief measures. The most effective way to reduce claim frequency is through prevention, which can be as simple as complying with employer obligations under the Occupational Health and Safety Act (OHSA). Once an injury has occurred it is important to return the injured worker to work as quickly and safely as possible. More prevention assistance can be obtained from the Infrastructure Health & Safety Association.
Second Injury and Enhancement Fund (SIEF), cost transfer, and third party cost relief are three cost relief methods that Schedule 1 employers may use to reduce the cost of a claim. The WSIB either grants or denies cost relief based on the merits of each request.
SIEF transfers loss of earnings (LOE) benefits and health care costs from a Schedule 1 employer to the employer’s rate group. Employers may receive SIEF relief when a worker’s pre-existing condition or prior disability contributed to the work-related injury, or prolongs or enhances the period of the work-related disability. You can apply for SIEF relief by sending a written request to the WSIB Case Manager that includes the claim number and an outline of the worker’s pre-existing condition(s). The WSIB may grant relief based on the supporting information in the claim file. The amount of relief granted depends upon the severity of the injured worker’s pre-existing condition and the severity of the injury. The amount granted could be between 25% and 100%.
Cost transfers allow employers in Schedule 1 to apply to have the claim costs transferred to another Schedule 1 employer due to negligence on the part of the other Schedule 1 employer or worker. A request for a cost transfer should be made in writing to the Case Manager.
Third party cost relief allows a Schedule 1 employer to ask the WSIB to recover the accident costs for the employer’s injured worker if the injury is caused by a third party who is neither another Schedule 1 employer, nor a Schedule 1 worker. Any money recovered from the third party will be used to offset the injury employer’s costs. The OEA can assist an employer with its SIEF request.
Schedule 2 employers can directly sue anyone, other than their own employees, who may have caused the injuries to the Schedule 2 worker. They do not need the WSIB to initiate legal action.