Good News for Employers from the WSIB
On November 21st two announcements relating to the Workplace Safety and Insurance Board (WSIB) were made:
- That the average premium rate for 2025 will be $1.25 per $100 of assessable payroll; and
- That a surplus distribution in the amount of $2.0 billion (similar to the $1.2 billion surplus distribution that was made prior to the last Ontario general election in 2022) will be made in February 2025
For the Government’s news release, click on the following link:
Average Premium Rate
The average premium rate reduction is great news for the provincial workers compensation system. The premium rate is made up of two components:
- the cost of new injuries (CNI) which includes an additional contingency or safety factor in the event that the estimation of the CNI is insufficient
- the cost of administering the system (which to its credit, the WSIB has been doing its best to reduce, including the head office move from downtown Toronto to London, Ontario and continuing investments in new technology)
It should be understood that $1.25 is the average premium rate for employers in all classes. Individual employers’ rates will vary depending on their class within the system and their own performance. Again, this is an average rate and not every employer’s rate will decrease, some will increase and others will decrease. But the average rate for all employers in the system will be $1.25 per $100 of assessable payroll.
The process to determine the final rate goes something like this:
- The WSIB’s actuarial team thoroughly evaluates the risk that they are insuring and determines a range of premium rate options, from a very conservative rate option with more contingency margin built into the CNI, to a less conservative option with no contingency option
- The chief actuary presents the range of options to the senior management team for discussion and to determine their recommendation to the WSIB’s board of directors
- The WSIB’s board of directors makes the final determination of the rate option
We will have to wait until the WSIB’s 2025 financial statements are published to see how accurately the CNI was calculated and the results of the WSIB’s cost reduction initiatives. We have no reason to believe both will not show positive impacts and that the WSIB will at least break even on its insurance operations (excluding investment account gains or losses) in 2025.
Although there was no announcement to this fact, curiously employers had access to their own 2025 premium rates about a week before the November 21st announcements.
If you think November 21st is very late in the year for employers to be notified of their rates for the next year, you are correct. In years past, rates for the year to come have been announced as early as mid-September.
WSIB observers will be well aware the workers compensation benefits are determined by the Ontario legislature and premium rates are determined by the WSIB. It was interesting that these announcements were made by Premier Ford.
Surplus Distribution
Premier Ford also announced the distribution of the WSIB’s excess surplus, totalling $2 billion, to qualifying employers in February 2025. The impact of the strong performance in financial markets on the WSIB’s investment fund had pushed the organization’s sufficiency funding ratio beyond upper limits of its own target policy range of 110% – 120% and dangerously close to the 125% level at which it would have to divest of funds sufficient to bring the ratio down to 115.1% and distribute those funds to employers within 30 days.
To qualify to receive a share of the distribution, employers must:
- have an active account and premium payment obligations as of November 1, 2024
- had premium obligations in 2023
- have not been convicted of a Workplace Safety and Insurance Act or an Occupational Health and Safety Act offence in a proceeding under Part III of the Provincial Offences Act, in 2024 or in 2025 up to and including the date the WSIB issues a surplus rebate
- have not been convicted in more than one such proceeding under the Workplace Safety and Insurance Act, or have not been convicted in more than one such proceeding under the Occupational Health and Safety Act, between 2020 and 2025 up to and including the date the WSIB issues a surplus rebate
- have not had a traumatic workplace fatality attributed to the organization in 2024 or in 2025 up to and including the date the WSIB issues a surplus rebate, or have not had more than one traumatic workplace fatality attributed to the organization between 2020 and 2025, up to and including the date the WSIB issues a surplus rebate
- must not be affiliated through common ownership with a business that:
- is ineligible to receive a surplus rebate based on the convictions criteria outlined, and
- has a traumatic workplace fatality attributed to them between 2020 and 2025, up to and including the date the WSIB issues a surplus rebate
For more information on the surplus distribution, click on the following link:
