Experience rating
What is "experience rating"?
Experience rating is a system created by the private insurance industry in the U.S. Introduced into Ontario in the late 1980s after intense lobbying by the private sector, it is a tool to adjust what an individual employer pays into the general workers' compensation fund from which injured workers' claims are paid.
Under our collective liability system, compensation costs are spread across groups of employers in the same class of industry or occupation. The "assessment rate" or "premium" is based largely on the average accident rate and duration (costs) of claims for that class. Experience rating, through penalties (surcharges) or rewards (rebates), raises or lowers the premium for each employer according to their record of injury claims.
Experience rating is promoted as an economic incentive for employers to improve workplace safety and design better return to work programs - however it measures only frequency of injury and employee lost time, not a company's action to prevent accidents and reduce risk.
It's not working.
So what's the problem?
Experience rating creates incentives for employers to hide or not report accidents, fight claims, and put injured workers at risk of re-injury by forcing them back to work before they have had time to properly heal. Rather than investing in real occupational health and safety changes with long-term financial benefit to the company, many employers' resources are being diverted to seek immediate gains through claims management strategies. 'Employee reward' programs for lower accident rates can add to this adversarial and stressful environment when injured workers are pressured by co-workers to return to work too soon or to not file a claim.
Experience rating harms not only injured workers but the compensation system as a whole by undermining collective liability, particularly at the expense of smaller employers. Over the past twenty years, according to the WSIB's annual report statistics, $3 billion have been returned to employers in rebates. The Accident Fund is being drained by employers who know how to play the experience rating game.
Injured worker' advocates and unions have repeatedly urged policymakers and the government to address the problems of experience rating. Front-page headlines in the Toronto Star's 2008 investigative series "Walking wounded" drew public attention to the disconnect between experience rating and health and safety - one so great that companies who had been heavily fined by the Ministry of Labour due to workplace death, were getting in some cases more than double the money back in rebates from the WSIB/WCB.
If it's not effective in addressing workplace safety or employment of injured workers, what's being done?
Experience rating is one of the issues now being considered by the WSIB Funding Review (2010-2012). Meanwhile, despite all the criticisms of experience rating, its use is being expanded in the Board's new Work Reintegration Strategy!