Further to Morneau Shepell's analysis on the current issues associated with the three experience rating programs, the WSIB assessed the impacts that today's premium rate setting process has had on employers. Specifically, the WSIB evaluated the number of employers who are paying too much or too little, to determine if more equity can be provided among employers. In this regard, the WSIB noted a number of issues that will need to be addressed (beyond the more recent across the board premium rate adjustments).
Using the 2014 premium rates as the basis (for comparative purposes), the premium rate that the classes should be paying based on their new claim costs may be quite different from what the classes are currently paying.
Assessment of Employer Premium Rates
| Category | Number of Organizations |
Percentage of Organizations |
Balance in Premiums ($M) |
|---|---|---|---|
| Employers paying the same Rate | 30 000 | 3 | -0.27 |
| Employer paying too little | 77 000 | 31 | 363 |
| Employer paying too much | 137 000 | 56 | -369 |
| Total | 244 000 | 100 | -6 |
As you will note in the above table, 56% of employers are overpaying by approximately $369M in premiums, and 31% of employers are underpaying by approximately $363M, resulting in classes that are not paying their fair share of new claim costs.
This raises fairness concerns because all Schedule 1 employers are required to subsidize a portion of the rebates and premium rate decreases that a smaller group of employers receive within and across industry sectors.