Members of the Ontario General Contractors Association (OGCA) recently got some good news from Ontario’s Workplace Safety and Insurance Board (WSIB) — a lower premium rate.
"WSIB is a significant overhead cost so anything that can be done to reduce those overheads is both going to make construction costs more reasonable and potentially help with the profitability of our industry which runs on very narrow margins," said David Frame, director of government relations for the OGCA.
At its annual general meeting (AGM) in September, the WSIB announced average premium rate reductions of five per cent for 2017, but in October it identified an error in the calculations.
"When the 2017 target premium rates for Schedule 1 were calculated, a higher Past Claims Cost was used than necessary, resulting in the published rates not being accurately determined," indicates a release issued by the WSIB at the end of October. "The WSIB has taken swift action to correct this error by recalculating all premium rates for 2017. The overall reduction to the average Schedule 1 rate is 6.2 per cent, compared to the five per cent previously announced."
After five years of no rate reductions in order to get the unfunded liability under control, the WSIB reported that it had reduced it considerably at the AGM. Therefore, for 2017, they announced they were going to use target rates, which are based on performance, as a guidance to set new rates.
"They weren’t going all the way to target rates but they generally wanted a five-per-cent reduction and so the worst you could do was no change and the best you could do, based on performance, was actually a 14-per-cent reduction," explained Frame. "It was, therefore, a surprise to us that when premium rates were announced in September, the WSIB determined our target rate had gone up and the ICI construction rate (number 723, which applies to general contracting) would remain at $4.55."
Frame teamed with workplace safety and insurance expert Les Liversidge, representing the Mechanical Contractors Association of Ontario, and approached the WSIB concerning the calculations. In the six years since target rates last were used to determine premiums, the ICI construction lost-time injury rate had dropped by 44 per cent, and yet the WSIB assigned higher costs for both past claims and administrative overhead, Frame noted.
"OGCA tracks the performance of not just our members but our rate group as well which is number 723 — ICI construction — and we knew from tracking back to when the WSIB had last produced target rates, that our numbers had significantly improved, but the numbers they showed us at the AGM showed that our target rate had actually gone up," Frame said. "We ran some of our own numbers and we met with the WSIB at one of our quarterly meetings and we notified them that we didn’t think their math added up and that our own analysis said that our target rate should be down, not up."
WSIB responded to the OGCA’s objections by promising to organize a meeting with staff to do a "deep dive on the calculations," Frame said. On Oct. 27, WSIB chair Elizabeth Witmer and president Tom Teahen issued a letter to the Construction Advisory Council members advising them of the error.
"We got an announcement from the board that they had identified problems in their rate calculations and they reissued a number of the rates including ours which now had a reduction," said Frame.
As a result, the General Contracting rate number 723 will be $4.40 for 2017, a 3.3-per-cent reduction.