If you’ve read Clear Path’s most recent blog, you know that WSIB is heading toward fundamental change, not only to its method of business classification, but also to its application of premium rates.
So many questions to consider with these new changes. Will my business’ classification change? Will my premiums change? Will I still receive a rebate? We plan to explore all of these questions and more in our three-part blog series that will focus on the new method of Employer Classification (part one), Class Level Premium Rate Settings (part two) and Employer Level Premium Rate Adjustments (part three).
Will my Business’ Classification Change?
The answer to that questions is….maybe. One of the key goals of the proposed Preliminary Rate Framework is to implement a “streamlined and simpler classification structure”. The word “simpler” is key! In order to determine premium rates, WSIB’s current system groups businesses into nine Classes, 155 Rate Groups and 840 Classification Units. The proposed new system would replace this with a simplified 34 Class Structure.
With the elimination of the 155 Rate Groups, WSIB plans on grouping businesses based predominantly on business activity. This change is key!
Unlike the current system, the new system will determine a company’s predominate class (fit) by the largest percentage of your insurable earnings. For example, your company makes cabinets (manufacturing) and 80 per cent of insurable earnings are dedicated to its production. However, you also install cabinets (construction) and 20 per cent of insurable earnings are dedicated to this business activity. Under the new system, your cabinet making company would be classified only under manufacturing. Seems simplified, right? Maybe. But what are the implications to your company?
This change will likely not affect smaller companies who have only ever been classified under one Classification Unit in the current system. However, in the case of the above cabinet making company, WSIB will use the last three years of insurable earnings to determine the company’s predominate class.
If you are a company with multiple business activities, you may wish to think about how your “predominate class” may be categorized. Will this significantly change where you fit in the 34 Classification Structure? Did you move from manufacturing to construction and will one of these categories have primarily higher premiums? Or perhaps you moved to a different classification with historically lower premiums and yet it’s likely you may have higher claims costs simply due to the nature of one of your business activities. How might this affect your experience? Will this be a positive or negative change for your company?
Part Two will explore how WSIB plans to address these potential pitfalls through the implementation of Class Level Premium Rate Settings. Check back soon for that update!
We want to hear from you! Should WSIB consider other factors when determining a predominate class? What about risk? What do you think? Contact Anna Aceto-Guerin from Clear Path Employer Services with your opinion or any questions on how the Proposed Rate Framework’s classification method.
Want to learn more about how to get yourself in a prime position on your NEER prior to the implementation of this new system? Join us at one of our spring NEER workshops to learn more.
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