WISB is killing us

While most general insurance principles and practices are the same for both Canada the USA, Workers Comp is definitely different between the two countries. First off, Canada has a more “socialist” approach and Workers Comp is government-run. You can’t buy true W/Comp coverage through the private insurance industry in Canada. It is all run through the WSIB and that is the only place to get it. The coding system is different as well. Example: Painters in the USA are classed 5474 under their NCCI system. Painters in Canada however are classed 719-02 and the coding system is known as ECM. So be very careful of advice based on the USA system, because it probably won’t apply to your Ontario business.

I am not a big fan of consultants. One of my favourite quotes is: “A consultant is like a guy that knows 1,000 ways to make love but he doesn’t know any women.” However, a W/Comp consulting firm could be a way to reduce your Comp costs. Most of these consulting firms are used only after there have been claims settlement problems, but they also have people on staff who offer services on reducing WSIB costs and apparently they can be very helpful for mid to large businesses re getting their WSIB costs under control since they know the system inside-out and they know all the loopholes, etc. They will even negotiate direct with the WSIB office to get you qualified for certain rate discounts. I am not sure if this is an option for you at this stage as I assume you only have one or two newly hired employees since you state you are growing and just got to the stage where you now must enroll in the system.

A common issue that results in paying too much is the use of wrong classification codes. Another issue is having all employees lumped together under one code rather than splitting them out. For example, clerical (office) code in Ontario is 958 and the current base rate is 0.38 (per $100 payroll). Interior painting code is 719-02 and the current base rate is 6.75. Obviously you don’t want your office clerk (if you have one) paying the 6.75 rate.

MAP (Merit Adjusted Premium) modification factors will give you discounts if your business doesn’t have claims, however, you have to be in business for a minimum of 3 years with no claims before you qualify for these rate reductions. Eventually though you can save between 5% to 10% under MAP. On the flip side, if you have a lot of claims, there are MAP surcharges, and WSIB won’t wait 3 years to stick you with those.

It is possible for low-hazard occupations to opt-out. In construction, however, there are no “low-hazard” jobs, other than your clerical office people. Be careful when you decide to save money by excluding your office people. Alternatives such as “Employers Liability” on your commercial insurance policy is nowhere close to being the same level of coverage. A better replacement choice for “opted-out” employees would be personal Accident & Sickness insurance, but this isn’t cheap and you might find that the government-priced WSIB premiums are a better choice than the private A&S coverage. A good employer will think not only of saving himself money on his business expenses, but he will also think of his employees and make sure that they have proper coverage and will be looked after if they are hurt on the job.

In case you are interested, here is the link to the current base rates for Ontario. Construction classes are in the 700 number series: http://www.wsib.on.ca/wsib/wsibsite.nsf/Public/premiumratespreliminary2010