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Contractors to profit as WSIB announces premium cut

Don Wall
Contractors to profit as WSIB announces premium cut

At long last, Ontario’s non-residential contractors will benefit from a major drop in Workplace Safety and Insurance Board (WSIB) premium rates, savings they’ve been anticipating for years.

After a decade of declining injury rates, with the WSIB’s unfunded liability (UFL) paid off a few years ago and the non-residential contractors now in a separate employer class from their more injury-prone colleagues in residential construction, the non-residential contractors will see a drastic rate cut in 2022.

“The change is very significant,” said David Frame, director of government relations for the Ontario General Contractors Association (OGCA).

“For many years we were paying the highest premiums in Canada, in order to get the unfunded liability paid down. Now the unfunded liability is paid down and we’re being rewarded for that.”

The OGCA has calculated that over nine years the lost-time injury (LTI) rate for construction has gone from 1.43 to 0.96. That’s roughly a one-third improvement in the construction LTI performance.

“Construction went from an LTI frequency in 2019 of 1.12 to a frequency of 0.96 in 2020, a 15-per-cent reduction in one year,” Frame pointed out.

Ten years ago, OGCA contractors were paying premiums of approximately $4.50 per $100, Frame said. In 2019, with the non-residential contractors still lumped in with the residential contractors in the WSIB’s G1 class, G1 paid $2.30. In 2021 G6 was created for the non-residential builders but premiums were frozen and G6 and G1 both paid the same, $2.30.

On Oct. 6, it was announced that the G6 class will pay $1.79 in 2022 while the residential rates rise to $2.63.

“It’s a substantial change, 51 cents on every $100 of premium,” said Frame. “It’s at a time when costs are a huge concern for the whole industry. Here we have one cost, it’s actually going down.”

For a non-residential worker earning $100,000 a year, the annual WSIB premiums were $2,300; next year they will be $1,790.

Details of the new WSIB rate projections were released by Minister of Labour, Training and Skills Development Monte McNaughton. Overall, the WSIB is cutting premium rates by $168 million in 2022.

Other construction classes will see the following changes in premium rates between 2021 and 2022: G2, infrastructure construction, from 2.31 to 2.10; G3, foundation, structure and building exterior construction, 4.45 to 4.11; G4, building equipment construction, 1.84 to 1.70; and G5, specialty trades construction, 2.47 to 2.36.

WSIB board chair Elizabeth Witmer praised the performance of the construction sector. She noted construction represents one of four advisory committees the WSIB meets with regularly to discuss various issues and “they provide very good advice.”

“I’ve been very impressed by the construction sector,” she said. “I think they’ve been truly and sincerely focused on reducing injuries and illnesses in their workplace.”

There could be even more rewards coming for employers in future, McNaughton also announced. The government plans to introduce legislation that would allow for a portion of the WSIB’s current reserve, currently valued at $6.1 billion, to be distributed to safe employers.

Witmer noted when she assumed her role in 2012 the reserve fund had a UFL of $14.1 billion; premiums were raised across the board to pay off the liability, and in 2018 the WSIB announced the UFL was paid off. Now, she said, the surplus sits at close to 20 per cent.

McNaughton said the government will introduce legislation this fall to enable the WSIB to disperse some of the surplus. A government statement said the legislation may allow the WSIB to distribute funds when the fund reaches a 115-per-cent surplus and require the WSIB to distribute funds when the surplus reaches 125 per cent.

Ian Cunningham, president of the Council of Ontario Construction Associations, thinks the threshold is too high.

“This is the surprising thing, when the government brags about returning funds to employers,” he said. “At this level, at 115 to 125 per cent, it should be much lower so that those funds could be in the hands of employers, creating jobs and growing the businesses.

“That’s the advice the government heard from I think every employer-side representative over the summer when they consulted on this surplus distribution model.”

Frame noted the WSIB’s financial situation looked dire a year ago with lockdowns and other factors reducing premium payments, and the WSIB deferring payments to accommodate employers.

“But they came out of that situation in very good shape. They had net positive revenues, they continue to grow the accident fund, despite the fact that premiums were off by 19.2 per cent,” he said.

 

Follow the author on Twitter @DonWall_DCN.

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