The Generals - Spring/Summer 2011 - (Page 23)

feature Inevitable? By David Frame THE PRESSURE IS on to drive WSIB rates higher as a response to the Unfunded Liability (UFL) which has dropped to 52 percent of full funding. The Accident Fund has been crushed as costs of new accidents and poor investment returns have out-stripped revenue over the past three years. This past October, WSIB President David Marshall appointed Justice Harry Arthurs to conduct a Funding Review and make recommendations for a strategy to regain financial well-being. This move is supported by OGCA and the Construction Industry Task Force (CITF) as the existing funding strategy is no longer relevant and new ideas are needed. Arthurs will conduct his review and make recommendations in January 2012. There is great pressure on the board to address the financial challenges. The Provincial Auditor determined that the funding deficit could lead to an inability to pay claims. This would require the province to back the board, and potentially take responsibility for the UFL. The government’s response is contained in the recently passed Bill 135, which compels the WSIB to establish a funding plan that meets the funding standards in the Bill. In October, the Board of Directors passed the 2011 rates that increased the average rate by more than 4 percent. About one-third of employers maintained their 2010 rate and the remainder experienced increases based on accident and claim performance. It is clear that the days of moderate rate increases are over and the Board is preparing to move to a higher average assessment rate over a number of years. Arthurs’ recommendations will determine how that happens. General contractors and members of rate group 723 have fared well until now. At $4.35, the rate is unchanged for 2011 and is one of the lowest in construction. Its Lost Time Injury Rate (LTI) is a respectable 1.43 as a result of a 97 percent reduction over the past 11 years. Unfortunately, the cost of the LTIs has become a significant problem. The average cost of rate group 723’s LTI was $40,399 in 2004, but it doubled in cost to $80,945 by 2009. This trend is not only in the construction industry but across the WSIB sectors. The WSIB has increased the average construction rate by more than 5 percent and indications are there will be similar increases in 2012. With only minor changes to legislation and policy, there is no apparent reason why and how costs have doubled. It is clear why the provincial auditor, the government and the WSIB are so concerned with its financial fortunes. The accident fund established to pay existing claims is being drained to pay for new accidents. Assessment rates in the past five years have stayed level, while the recession has signifi cantly cut into revenue. Less income and an unexplained jump in costs is a recipe for failure in any business, and the WSIB needs to act quickly. The board faces two vital questions: how to raise the needed revenues, and how to spring/summer 2011 Are Higher WSIB Rates the generals 23

Table of Contents for the Digital Edition of The Generals - Spring/Summer 2011

The Generals - Spring/Summer 2011
Chairman’s Message
President’s Message
Member Milestones
Upcoming Events
The Women of OGCA
Infrastructure Ontario: The 10-Year Plan
Life AFTER Stimulus
Are Higher WSIB Rates Inevitable?
Let’s Take a Trip Down Memory Lane
Buttcon Ltd.: Earning Loyalty Through Fairness
Century Group Inc.: Providing Great Service to Clients
Index to Advertisers

The Generals - Spring/Summer 2011