Actuarial Predictability is a process where the WSIB determines the degree to which past claims cost can be relied upon to predict future outcomes and therefore fairly and accurately set premium rates. Also referred to as actuarial credibility.
Class Actual Premium Rate is the premium rate that is set by the WSIB, taking into consideration risk band limitations, previous year(s) premium rates, as well as the collective experience of all employers in that class.
Employer Actual Premium Rate is an adjusted premium rate that represents how much each employer would pay taking into consideration risk band limitations, previous year(s) premium rates, minimum premium rate, as well as the collective experience of all employers in that class.
Employer Level Premium Rate Adjustment is a process where the Class Target Premium Rate is adjusted for an individual employer based on their risk relative to the Class Target Premium Rate, to arrive at their individual risk band position and corresponding Employer Actual and Target Premium Rate.
Employer Target Premium Rate is an adjusted premium rate that represents how much an employer needs to pay in order to fund their fair share of costs, as well as the collective costs of their class.
Net Premium Rate represents the premium rate, for a class, rate group or individual employer, comprised of the published premium rate combined with any premium adjustments resulting from the existing experience rating programs, as applicable.
Predominant Class is the class that represents the largest percentage of the employer's annual insurable earnings.
Risk Adjusted Premium Rate Setting is a two-step process that includes setting the Class Premium Rate and Employer Level Premium Rate Adjustments.
Risk Bands are hierarchical series of divisions within each class. Each division represents a different level of risk where employers would be placed relative to the Class Target Premium Rate. In each class, risk bands are subject to limitations, such as the premium rate of the minimum risk band ($0.20), and the maximum risk band will not exceed about three times the Class Target Premium Rate. Each risk band represents approximately 5% increments in premium rate.
Risk Disparity is when claims experience or premium rates vary significantly from the average experience of the class.
Risk Profile is a step in determining the allocation of the costs to the system between the classes and/or individual employers, and is based on an employer's (or a class') claims costs relative to their insurable earnings.