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This isn’t a policy, it provides supplementary information to illustrate how we’ll administer our Employer Level Premium Rate Setting policy and other policies addressing premium rate setting, in practice. If there is a conflict between this material and the Workplace Safety and Insurance Act, 1997 (WSIA) and/or WSIB policies, the decision-maker will rely on the WSIA and/or WSIB policy.
Introduction
The WSIA authorizes us to charge premiums to businesses in Schedule 1 to maintain our insurance fund. Collected premiums ensure benefits are provided to people who are injured or become ill in the workplace. They also fund the administration costs of our collective liability insurance.
Businesses receive an actual premium rate and a projected premium rate each year.
The actual premium rate represents how much a business will pay in a given year after taking into consideration risk band limitations, previous year(s) premium rates and collective costs.
The projected premium rate represents how much a business should pay to fund their share of costs as well as collective costs. A business won’t necessarily pay their projected premium rate for the upcoming year. However, it provides them with an indication of the premium rate they’re heading towards in subsequent years if their claims experience, insurable earnings and class experience remains relatively the same.
Our Employer Level Premium Rate Setting policy outlines how premium rates are determined and then communicated to businesses each year. This material supplements that policy and other policies that include information about premium rate setting. We provide further information about key features discussed in those policies that are used to determine a business’s actual and projected premium rate(s). As a result, this material should be read together with those policies.
This material does not address rules used to transition businesses to our current premium rate setting model, which came into effect on January 1, 2020. The transition rules are outlined in our Transition to the Rate Framework policy.
Premium rate setting features
Risk adjusted premium rates
Businesses are assigned a risk adjusted premium rate each year based, in part, on their individual experience, unless they are considered new employers.
Businesses with coverage in Schedule 1 for less than 11 months in the premium rate setting review period are considered new employers. New employers are assigned the class premium rate.
For the purpose of the 11-month threshold only, a business is considered to have continuous coverage from the day after their first business activity start date.
The policy includes special rules for businesses in Schedule 2 that transfer to Schedule 1. They’re initially considered new employers, but aren’t automatically assigned the class premium rate. Review our Employer by Application policy for more detail.
Actuarial predictability
Actuarial predictability (hereafter predictability) is a measure of the degree to which a business’s past experience can be relied upon to predict future outcomes. A business’s predictability determines the extent to which their premium rate is affected by their individual experience.
A business’s insurable earnings and claim count over the review period are considered and a predictability value is calculated for them.
The predictability value is used to assign businesses to a grouping on the predictability scale, which is included in the policy.
The predictability value is calculated using two components, insurable earnings predictability and claim count predictability, weighted at 75 per cent and 25 per cent, respectively.
- The insurable earnings predictability is the square root of:
- the total insurable earnings over the review period, divided by (12,000 × maximum insurable earnings of the premium year)
- The claim count predictability is the square root of:
- the total number of allowed claims over the review period, divided by 1,200
Businesses with the same risk profile, but different levels of predictability, could be assigned different premium rates.
Per claim cost limit
A business’s claim costs, subject to their per claim cost limit, are used to calculate their risk profile.
A per claim cost limit is assigned to each business based on their predictability grouping. The per claim cost limit is applied to each claim in the review period and is re-determined each year based on the business’s predictability grouping.
| Predictability grouping | 2.5% | 5% | 10% and 20% | 30% and 40% | 50% and 60% | 70% and 80% | 90% and 100% |
|---|---|---|---|---|---|---|---|
| per claim cost limit | 0.25 × maximum insurable earnings of injury year | 0.5 × maximum insurable earnings of injury year | 1 × maximum insurable earnings of injury year | 2 × maximum insurable earnings of injury year | 4 × maximum insurable earnings of injury year | 5 × maximum insurable earnings of injury year | 7 × maximum insurable earnings of injury year |
When calculating the per claim cost limit for a claim, the maximum insurable earnings is based on the injury year. For example, if the injury year for a claim is 2020, the maximum insurable earnings from 2020 ($95,400) is used to calculate the per claim cost limit for that claim’s costs.
Example
A business in the 30 per cent predictability grouping would have a per claim cost limit of two times the maximum insurable earnings of the relevant injury year.
| Claim number | Year costs incurred: 2019 | Year costs incurred: 2020 | Year costs incurred: 2021 | Year costs incurred: 2022 | Year costs incurred: 2023 | Total | Per claim cost limit |
|---|---|---|---|---|---|---|---|
| Claim one (2019 injury year) | $50,000 | $60,000 | $70,000 | $35,000 | $45,000 | $260,000 | 2 × 2019 maximum insurable earnings ($92,600) = $185,200 |
| Claim two (2019 injury year) | $15,000 | $15,000 | $15,000 | $10,000 | $5,000 | $60,000 | 2 × 2019 maxiumum insurable earnings ($92,600) = $185,200 |
| Claim three (2020 injury year) | $0 | $50,000 | $60,000 | $70,000 | $20,000 | $200,000 | 2 × 2020 maximum insurable earnings ($95,400) = $190,800 |
The claim costs for claim one and three are greater than the per claim cost limit, meaning the per claim cost limit is used as the new total for that claim’s cost calculation. Claim two has not reached its per claim cost limit so the actual total costs are used in its calculation.
| Claim number | Year costs incurred: 2019 | Year costs incurred: 2020 | Year costs incurred: 2021 | Year costs incurred: 2022 | Year costs incurred: 2023 | Total |
|---|---|---|---|---|---|---|
| Claim 1 (2019 injury year) | $50,000 | $60,000 | $70,000 | $5,200 | $0 | $185,200 |
| Claim 2 (2019 injury) | $15,000 | $15,000 | $15,000 | $10,000 | $5,000 | $60,000 |
| Claim 3 (2020 injury) | $0 | $50,000 | $60,000 | $70,000 | $10,800 | $190,800 |
Allocating claim costs
In certain situations (e.g., partial transfer of costs), claim costs may be allocated between non-associated businesses. In such cases, each business’s per claim cost limit is fully applied to the claim costs apportioned to them.
Example
The costs of a 2019 injury year claim are allocated between two non-associated businesses. If both businesses are in the 10 per cent predictability grouping, each will have a per claim cost limit of $92,600 (1 × 2019 maximum insurable earnings: $92,600).
If the claim had a total cost of $200,000, and it is allocated equally between the businesses, each would be allocated $100,000. The per claim cost limit of $92,600 would then be used for each business for the claim.
Cost relief
All approved cost relief is taken into consideration before a business’s premium rate is calculated.
In cases where 100 per cent cost relief is applied to a claim (e.g., 100 per cent Second Injury and Enhancement Fund relief or 100 per cent of a claim’s costs are transferred or removed), the claim is not considered when calculating a business’s predictability factor or any other element used to calculate their premium rate.
Risk profile
Weighting experience
We determine an adjusted risk profile for a business to calculate its premium rate. It’s based on two components, employer risk profile and class risk profile.
- The employer risk profile incorporates the business’s claim costs and insurable earnings over the six-year review period and greater weight is placed on the three most recent years. Specifically, claim costs and insurable earnings paid in each of the three most recent years are weighted at 2/9 per year and claim costs and insurable earnings paid in each of the three oldest years are weighted at 1/9 per year.
- The class risk profile incorporates the weighted claim costs and weighted insurable earnings of businesses in the class.
The employer risk profile and class risk profile are weighted based on the business’s predictability grouping to produce their adjusted risk profile.
Examples
If a business has claim costs and insurable earnings over the full six-year review period, the risk profile calculation would consider all six years.
| Risk profile calculation component | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | Total |
|---|---|---|---|---|---|---|---|
| Insurable earnings | $9,000 | $9,000 | $9,000 | $9,000 | $9,000 | $9,000 | $54,000 |
| Claim cost | $135 | $135 | $135 | $45 | $45 | $45 | $540 |
| Weighting | 1/9 | 1/9 | 1/9 | 2/9 | 2/9 | 2/9 | Not applicable |
| Weighted insurable earnings | $1,000 | $1,000 | $1,000 | $2,000 | $2,000 | $2,000 | $9,000 |
| Weighted claim cost | $15 | $15 | $15 | $10 | $10 | $10 | $75 |
If a business has claim costs and insurable earnings over four years of the six-year review period, the risk profile calculation would only consider the four years with experience.
| Risk profile calculation component | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | Total |
|---|---|---|---|---|---|---|---|
| Insurable earnings | $0 | $0 | $27,000 | $18,000 | $36,000 | $45,000 | $126,000 |
| Claim cost | $0 | $0 | $180 | $720 | $540 | $810 | $2,250 |
| Weighting | 1/9 | 1/9 | 1/9 | 2/9 | 2/9 | 2/9 | Not applicable |
| Weighted insurable earnings | $0 | $0 | $3,000 | $4,000 | $8,000 | $10,000 | $25,000 |
| Weighted claim cost | $0 | $0 | $20 | $160 | $120 | $180 | $480 |
Calculating the index value
After a business’s adjusted risk profile is calculated, it’s compared with the class risk profile to produce an index value. The index value is the ratio of the business’s adjusted risk profile and the class risk profile. It’s an indication of how the business’s experience compares to its class.
Within each class there are a series of risk bands that represent different levels of risk in relation to the class risk profile. A single premium rate is assigned to each risk band and a range of index values are associated with each risk band. To determine a business’s projected risk band and premium rate, the risk band that contains their index value is located.
Example
A business has an adjusted risk profile of 0.96. The business’s class risk profile is 1.00. The index value for the business is 0.96÷1.00 = 0.96. Based on the sample risk band table below, that index value falls under risk band 59, which contains index values from 0.931 to 0.98.
| Risk band | Risk band change from class rate | Risk profile index: from | Risk profile index: to | Risk band rate |
|---|---|---|---|---|
| 62 | +2 | 1.071000 | 1.12455 | $2.37 |
| 61 | +1 | 1.020000 | 1.071000 | $2.26 |
| 60 | class rate | 0.980000 | 1.020000 | $2.15 |
| 59 | -1 | 0.931000 | 0.980000 | $2.04 |
| 58 | -2 | 0.88445 | 0.93100 | $1.94 |
These premium rates are for illustration purposes only.
Risk band movement
Generally, businesses move a maximum of three risk bands each year from their prior year risk band towards their projected risk band, which contains their employer projected premium rate. As a result, businesses may not reach their projected risk band in a given year.
The prior year risk band is the risk band that contains the premium rate closest in value to the actual premium rate the business was last assigned.
Each risk band contains a range of prior year premium rates that correspond to a range of index values (the risk profile section discusses the index values). When determining the risk band that contains the premium rate closest in value, the prior year premium rate ranges of the risk bands are considered, not the single premium rate assigned to each risk band.
Example
If a business is assigned a premium rate of $2.05 in 2025, that value would be used to determine their prior year risk band when their premium rate in 2026 is calculated.
Based on the sample risk band table for 2026, $2.05 is contained within the prior year premium rate range for risk band 59. As a result, risk band 59 would be the prior year risk band used in the 2026 premium rate calculation.
| Risk band | Risk band change from class rate | Risk profile indix: from | Prior year rate range: to | Prior year rate range: from | Prior year rate range: to | Risk band rate |
|---|---|---|---|---|---|---|
| 62 | +2 | 1.071000 | 1.12455 | $2.30265 | $2.41778 | $2.37 |
| 61 | +1 | 1.020000 | 1.071000 | $2.19300 | $2.30265 | $2.26 |
| 60 | class rate | 0.931000 | 1.020000 | $2.10700 | $2.19300 | $2.15 |
| 59 | -1 | 0.931000 | 0.980000 | $2.00165 | $2.10700 | $2.04 |
| 58 | -2 | 0.88445 | 0.93100 | $1.90157 | 2.00165 | $1.94 |
These premium rates are for illustration purposes only.
Changes to an employer’s business
This section provides further information about content in our Employer Level Premium Rate Setting, Closures and Reinstatement of Accounts policies related to the premium rate impacts of changes to an employer’s business.
Predominant class change
The predominant class, used for premium rate setting purposes, is generally a business’s class with their largest share of insurable earnings over the most recent three years of the six-year review period, if available.
A business’s predominant class may change for the upcoming year due to insurable earnings changes. In such cases, an adjusted prior year risk band is determined to calculate their premium rate for the upcoming year.
If a risk adjusted premium rate has already been calculated for the business, the adjusted prior year risk band is the risk band in the new predominant class that contains the premium rate closest in value to the actual premium rate they were last assigned (the risk band movement section provides additional detail).
If a risk adjusted premium rate hasn’t already been calculated for the business (i.e., they’re a new employer assigned the class premium rate), the adjusted prior year risk band is the class risk band of the new predominant class.
Examples
- A business in Class A has a risk adjusted premium rate of $1.65 in 2025. In 2026 they move to Class B. To determine the business’s prior year risk band used to calculate their premium rate in 2026, the risk band in Class B with the premium rate closest in value to $1.65 is located, based on the prior year premium rate ranges of the risk bands.
- A new business in Class A is assigned the class premium rate of $2.00 in 2025. In 2026, the business is first eligible for a risk adjusted premium rate and they also move to Class B. The prior year risk band used to calculate their premium rate in 2026 is the class risk band of Class B.
The same rules are applied if there’s a mid-year classification change that changes a business’s predominant class. If the premium rate is revised, it’s applied from the effective date of the classification change.
Closure of a premium rate setting component
General
A business may be assigned multiple premium rates if they perform multiple business activities and meet the criteria outlined in our Single and Multiple Premium Rates policy. In such cases, each component of their operations assigned a separate premium rate is assessed separately for premium rate setting purposes.
A component may include one or more business activities. For example, a business may perform two construction business activities and one manufacturing business activity. We may determine the business is eligible for two premium rates - one for their construction operations and one for their manufacturing operations. In that case, the two construction business activities would be grouped under one component and the manufacturing business activity would be grouped under another component for the purpose of calculating separate premium rates.
The claims experience and insurable earnings associated with each business activity a business performs is reported under a six-digit classification code. If all the business activities grouped under a component close, the component is closed and the codes, and their associated experience, transfer to the remaining open component.
If there is more than one remaining open components, each six-digit classification code transfers to the component identified according to the following steps (whichever is first met). However, there may be exceptions based on the unique facts of the case.
- To the component that contains an active six-digit classification code with the same subclass, or the same class when the code is in a class that does not contain subclasses.
- To the component that contains an active six-digit classification code with the same class when the code is in a class that contains subclasses.
- If there are multiple matches based on steps one or two, the component (derived from steps one or two) with the active six-digit classification code with the highest insurable earnings reported the prior year is selected.
- If there are no matches based on steps one or two, the component with the active six-digit classification code with the highest insurable earnings reported the prior year is selected.
The transfer rules aren’t used to transfer a six-digit classification code to a component assigned a non-exempt partners and executive officers in construction premium rate, or to transfer a code from one associated employer to a non-shared component of another associated employer.
If a closed six-digit classification code transfers to a component, the component's premium rate is re-calculated and then applied from the effective date of the transfer.
Temporary Employment Agencies (TEAs)
A TEA is generally assigned a separate premium rate for the business activity of supplying labour and for each premium rate setting class/subclass to which they supply labour.
If a TEA stops performing the business activity of supplying labour or stops supplying labour to an individual class/subclass, the relevant component of their operations is closed. However, the six-digit classification code(s) grouped under it don’t transfer to another component until at least 12 months have passed from the effective date of the closure.
If the component is not re-opened within the 12-month period, each six-digit classification code may transfer to the component identified according to the general transfer rules outlined previously, except components that contain supply of labour codes are given priority over components with non-supply of labour codes.
Non-exempt partners and executive officers in construction
A business may be assigned a separate premium rate for non-exempt partners and executive officers in construction.
If a business’s non-exempt partner and executive officer in construction six-digit classification code is closed, it’s not transferred to another component of their operations. As a result, its claims experience and insurable earnings do not impact the premium rates of its other components.
Combining/splitting a premium rate setting component
Combining a component
If two or more corporations merge or amalgamate, a premium rate is calculated for them based on their combined claims experience, insurable earnings and prior year premium rates. It’s then applied from the effective date of the merger or amalgamation.
The same process is followed to calculate a premium rate when two or more businesses become associated or a business is no longer eligible for multiple premium rates.
Example
Two businesses, each with a single premium rate, merge in 2026. To calculate a single premium rate for the merged business, their combined prior year premium rate in 2025 is calculated based on their 2025 premium rates and 2024 insurable earnings (the most recent year in the review period).
Business one had a premium rate of $4.40 in 2025 and $200,000 in insurable earnings in 2024.
Business two had a premium rate of $6.90 in 2025 and $300,000 in insurable earnings in 2024.
The $4.40 premium rate is weighted at 40 per cent ($200,000÷$500,000) and the $6.90 premium rate is weighted at 60 per cent ($300,000÷$500,000) to produce a combined premium rate of $5.98 (4.40 × 0.40 + 6.90 × 0.60). The combined premium rate would then be used to calculate the prior year risk band used in the 2026 premium rate calculation.
Splitting a component
In some cases, a premium rate-setting component will need to be split. For example, when a business assigned a single premium rate becomes eligible for multiple premium rates, or when associated employers disassociate.
Generally, the prior year premium rate of the single component is used to determine the prior year risk band of each component that splits. However, if both components are considered new employers, each would be assigned the relevant class premium rate.
Example
In 2025 a business has a single premium rate of $1.90. In 2026 the business is assigned two premium rates. To calculate the premium rates for 2026, $1.90 is used to determine the prior year risk band of both components. The individual experience of each component is then used to calculate a projected premium rate for each component. Each component would then move from the prior year risk band, towards its projected premium rate, based on the risk band movement rules.
Reinstating a premium rate
When an account is reinstated, we’ll review the reinstated account for classification and premium rate setting purposes.
We may also review any associated employer's accounts that are associated with the reinstated account.
If all of the business’s accounts are closed and one or more accounts are reinstated within four full calendar years of the year of reactivation, the business's applicable insurable earnings and claims experience will be used for premium rate setting purposes. Specifically, a risk adjusted premium rate will be calculated based on their experience within the six-year review period. The last premium rate they paid will be used to determine the prior year risk band in the calculation. If there were multiple business activities, a weighted average premium rate will be calculated by using the insurable earnings in the last year the business was last active.
The business's prior insurable earnings and claims experience isn’t used if an account is closed and reinstated beyond four full calendar years of the year of reactivation. Instead, they’re treated like a new business and assigned the class premium rate.
Example
Business A is assigned a premium rate of $4.00 in 2020. The business completely closes on February 1, 2020 and reactivates their account on February 1, 2024, after three full calendar years have passed (2021-2023). Their last premium rate of $4.00 would be used to determine their prior year risk band. They’d then move from that risk band towards their projected premium rate, which would be calculated based on their experience in the review window for 2024 premium rate setting.
If Business A instead reactivates their account on February 1, 2025, four full calendar years would have passed (2021-2024). As a result, they’d be assigned the class premium rate.