In Manitoba, the rate model used to calculate employers' individual rates had not been reviewed in many years. As a result of both an internal and external review, employers were asked to provide their feedback about what changes, if any, they'd like to see.

Because of this process, the WCB began introducing changes to the rate model to improve the fairness and flexibility of WCB premiums for employers of all sizes. This process began in 2016 and will continue through 2020. The following are key features of the new rate model. Features marked with a check are fully implemented for setting your 2018 rates.

Previously, all employers' rates were calculated using similar factors regardless of their size.

However, payroll is a significant factor in rate calculation: if your payroll is relatively small, the costs of even one claim could drive your rate up quite dramatically over a very short period of time. This was considered unfair and even potentially punitive to smaller employers.

One of the primary objectives of the new rate model is to reflect the different realities for different sized employers. Employers are now grouped according to payroll size for the purpose of rate calculation:

  • Small employers - payroll less than $750,000
  • Medium employers - payroll of more than $750,000 and less than $7.5 million
  • Large employers - payroll of $7.5 million or more 

In the previous rate model, all employers were provided a rate within the standard rate range regardless of their payroll size. Rates could be as high as 200 per cent above their classification's risk category base rate and could drop as low as 40 per cent below. If an employer's injury costs increased, the rate also increased significantly year after year. Smaller employers' rates could climb very quickly to the top of the rate range based on the costs of only one claim. 

We've now implemented narrower rate ranges for all employers to ensure that rate changes are less volatile and can't climb as high as they once did. The rate ranges are also based on payroll size as described below:

 

Previously, an employer's rate could move up at an ever increasing pace if they had high claims costs. For example, after three years of ongoing claims costs, their rate would increase by 30 per cent, after four years 40 per cent, and after five years 50 per cent. As their experience improved, their rate would decrease much more slowly. Under the new rate model, annual rate changes are capped at a maximum of 15 per cent up or down.

The previous rate model treated every employer the same, regardless of size.  Whether they employed five workers or 5,000 workers, their claims costs carried exactly the same weight. 

With our new rate model, employers' experience will carry different weight based on their size. A large employer's individual costs will have a greater impact on the premiums they pay, whereas for small and medium employers, the industry classification they are in will have a greater impact on what they pay.

  Small Employers
Less than $750,000 in annual payroll
Medium Employers
Between $750,000-$7.5 million in annual payroll
Large Employers
More than $7.5 million in annual payroll
The percentage of your individual experience used to calculate your rate 20% 30-40% 40-100%
The percentage of your classification's experience used to calculate your rate

80%

60-70% 0-60%

 

This refers to the period of time during which claim costs are accumulated to calculate an employer's experience. Under the previous rate model, the experience period was 12 months of costs for claims incurred in the previous five calendar years.   

Under the new rate model, the time frame will be three calendar years of costs for claims incurred in the last three calendar years. This approach is more effective in ensuring a balance between prevention and disability management. 

This new approach will be fully implemented by 2020. The calculation of rates will consider costs paid from January 1, 2016 to December 31, 2018 on claims that occurred during the same time frame. A calendar year of claims will be used to keep claim data consistent with other data reports available from the WCB. 

Both classifications and large employers can move between risk categories as their claims experience changes over a period of years.

Under the new model, there will be more risk categories and more frequent movement between these categories to more accurately reflect the historical injury costs in classifications and large employers. We will establish and monitor clear criteria for category movements to ensure they reflect real changes in the underlying risk. 

When calculating WCB premiums, we use the past to predict the future. By 2020, additional risk categories will be fully in place and we will actively monitor classifications to ensure they are in the correct category.

The WCB along with SAFE Work Manitoba are working on strategies to help employers achieve safer workplaces and improved disability management programs as part of our SAFE Work Certified Program (SWCP). The SWCP is administered by SAFE Work Manitoba, a separate arm of the WCB responsible for prevention programs and services.

 

Here's a Snapshot of the New Rate Model as of 2020

 

Small Medium Large
Payroll Size Up to $750,000 $750,000 - $7.5 million Over $7.5 million
Experience Factor 20% 30-40% 40-100%
Risk Category Range 10% below to 30% above category range 20% below to 60% above category range 40% below to 120% above category range
Annual Basic Rate Change Limit + / - 15% + / - 15% + / - 15%
Experience Period 3 years of costs on 3 years of claims 3 years of costs on 3 years of claims 3 years of costs on 3 years of claims

 

Rate model transition chart

 

More Information about Premiums and Rates

Your WCB Premium

How Premiums are Set

Your 2018 Rate Letter Can Tell You a Lot

Did your Rate Change in 2018? This May Be Why.