HomeMy WebLinkAboutCS 34/01
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REPORT TO COUNCIL
FROM:
Gillis Paterson
Director, Corporate Services & Treasurer
DATE: October 2, 2001
Baba Gajadharsingh
Division Head, Human Resources
REPORT NUMBER: CS 34-01
SUBJECT: Workplace Safety & Insurance Board (WSIB) Transfer from Schedule 1 to 2
RECOMMENDATION:
That Report Number CS 34-01 by the Director, Corporate Services & Treasurer and the Division
Head, Human Resources be received and that Council:
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2.
3.
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4.
5.
Approve the transfer from WSIB Schedule 1 to 2, retroactive to January 1, 2001;
Approve the establishment of a workers' compensation reserve fund, in compliance with the
requirements outlined in the Workvlace Safety & Insurance Act (WSIA);
Approve the purchase of occupational accident insurance coverage, deemed acceptable by the
Director, Corporate Services & Treasurer;
Approve the purchase of ParkIane WSIB Claims Management Software to fully automate the
WSIB claims management function; and
Provide authority to the appropriate official of the City of Pickering to give effect thereto.
ORIGIN:
The Director, Corporate Services & Treasurer and the Safety & Training Co-ordinator undertook
a WSIB Feasibility Study to assess the merits of transferring from WSIB's Schedule 1 to
Schedule 2, under the general guidance of the Chief Administrative Officer.
As the study involved both the Corporate Services Department and the Human Resources
Division and it affects the Corporation as a whole, it was thought best to submit this Report to
the Committee of the Whole for consideration.
AUTHORITY:
Wor/wlace Safety & Insurance Act, 1997, s. 68, 74
Municival Act. R.S.O. 1990, as amended, s. 163,252
FINANCIAL IMPLICATIONS:
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The net cost to transfer from Schedule I to Schedule 2, retroactive to January 1,2001, is $7,000.
(The total 2001 Schedule 2 costs for WSIB coverage and associated transfer costs of $317,000
less the total 2001 Schedule 1 costs for premiums and experience rating surcharge of $310,000
results in a net cost of $7,000.)
Report to Council CS 34-01
October 2, 2001
22 Subject: WSIB Transfer from Schedule 1 to Schedule 2, retroactive to January 1, 2001' Page 2
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The projected savings generated by the transfer to Schedule 2 are estimated to be in excess of
$190,000 per annum from the year 2002 and beyond.. The savings in 2002 and 2003 would be
directed to the reserve fund to pay for any catastrophic claim-related costs which may occur. It is
anticipated that the savings in 2004 and beyond would be transferred to the departmental
budgets.
A financial plan which outlines the projected costs, savings and disposition of savings IS
contained within the body of this report.
EXECUTIVE SUMMARY:
WSIB has two classifications for employers: Schedule 1 employers pay premiums to WSIB
based upon a percentage of their payroll expenses to cover pooled accident costs; whereas
Schedule 2 employers pay for their individual accident costs. The Corporation, which is
currently a Schedule 1 employer, is eligible to transfer to Schedule 2.
The Corporation retained the services of Heath Lambert Benefits Consulting to conduct a
comprehensive cost/benefit analysis on the merits of transferring to Schedule 2. In the [mal
report, Heath Lambert Consulting indicated the following:
. The net cost to transfer to Schedule 2, retroactive to January 1,2001 would be $7,000;
. The Corporation would be able to generate gross savings of $190,00 per annum (i.e. 60% of
its annual workers' compensation costs) by transferring to Schedule 2;
. The deadline to transfer to Schedule 2, retroactive to January 1, 2001 is November 5, 2001
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Staff within the Corporate Services Department and the Human Resources Division verified the
information contained in the consultant's report. The costs associated with transferring to
Schedule 2, along with the projected future savings, are accurate [mancial forecasts.
Accordingly, staff concur with the consultant's recommendation that the Corporation should
transfer from Schedule 1 to Schedule 2, at this time.
If the Corporation transfers to Schedule 2, then it will be even more important for employees, at
all levels of the organization, to continue to fulfill their responsibilities as outlined in the
organizational occupational health and safety and attendance management policies. The plan is
to place a more rigorous emphasis on pro-active health and safety measures and efficient
disability management, which will enable the Corporation to successfully minimize the
frequency and severity of occupational accidents and illnesses.
BACKGROUND:
1. W orkolace Safety & Insurance Board Overview:
The Workplace Safety & Insurance Act has established two classification Schedules for
employers in Ontario. Each employer is assigned to a Schedule which affects the manner in
which the firm funds accident costs on behalf of their employees. The City of Pickering is
registered as a Schedule 1 employer.
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Schedule 1 operates on the collective liability principle. Employers pay WSIB premiums which
are based on a percentage of their payroll. Premium rates are established each year based upon
pooled accident costs. Experience rating programs, which are mandatory for most Schedule 1
employers, provide rebates and surcharges to employers based upon their claims experience. In
the event of a catastrophic claim (i.e. fatality or serious disabling injury), WSIB limits the claim
costs charged to an individual employer. The remaining costs of the claim would be distributed
amongst the other employers in Ontario. There are about 200,000 private and public sector
employers in Schedule 1.
Report to Council CS 34-01
October 2,2001
23
Subject: WSIB Transfer from Schedule 1 to Schedule 2, retroactive to January 1,2001 Page 3
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Schedule 2 operates on the self-insured principle. Employers pay for their employees' actual
accident costs, plus an administration fee. The annual administration fee is established based
upon a review of the WSIB's administrative costs. There are no experience rating programs, as
employers pay for their entire claim costs. In the event of a catastrophic claim, the Schedule 2
employer would rely upon reserves and appropriate insurance policies to offset the
excessive costs of the claim. There are approximately 1,000 public sector employers in
Schedule 2. (Schedule 2 is restricted to public sector employers.)
The Workvlace Safety & Insurance Act permits public sector employers to transfer between
Schedules. Currently, the WSIB requires public sector employers transferring from Schedule 1
to Schedule 2 to pay a departure fee. 'This fee, which is the firm's calculated share of the
Schedule 1 unfunded liability, is calculated on the basis of the employer's contributions to
Schedule lover the years, and bears no relationship to the fIrm's claims experience.
Accordingly, as a public sector employer, the City of Pickering is eligible to transfer from
Schedule 1 to Schedule 2.
When the WSIB was initially established in 1915, all public sector employers were placed in
Schedule 2, due to their low risk of bankruptcy. During the 1970s and 1980s, a number of
municipalities and school boards transferred from Schedule 2, as it was believed that the
Schedule 1 premium costs provided a cost-effective method of providing insurance coverage for
catastrophic claim-related costs. There was a sense of "security in numbers".
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Unfortunately, when WSIB premiums began to rise sharply in the mid 1980s, Schedule 1 public
sector employers began to realize that there was a very high cost for Schedule l's collective
liability protection. WSIB's strategic plan to eliminate its $14 billion unfunded liability by 2014
required that all Schedule 1 employers pay increased premiums.
Commencing in the late 1980s, many of the larger Schedule 1 public sector employers
transferred back to Schedule 2, as they recognized that the cost of self-insurance, administration
fees, optional insurance, reserves, and the departure fee was lower than the increasing Schedule 1
premiums. In the late 1990s, mid-sized and smaller municipalities started to transfer back to
Schedule 2, as the WSIB Departure Fee and the costs for third party occupational accident
insurance costs were signifIcantly lower. It is expected that the trend for public sector employers
transferring back to Schedule 2 will continue as they recognize that they can a) effectively control
their WSIB costs and risks by implementing effective WSIB claims management and health and
safety programs and b) generate signifIcant savings by participating in WSIB's self-insurance
scheme and obtaining the appropriate insurance and reserves.
It should be noted that WSIB's services to injured employees is identical for all claims,
regardless of the employers classifIcation Schedule. WSIB adjudicates and pays accident benefIts
for each injured/ill employee based on the merits of each claim.
II. Current WSIB Premiums:
The Corporation's 2001 Schedule 1 WSIB premium estimate is $290,000. It is anticipated that
the Corporation will be required to pay an additional $20,000 experience rating surcharge in the
Fall of200l, which is based upon its claims experience in 1998 - 2000. It should be noted that
60% of the Corporation's current WSIB premium (i.e. $174,000) is directed towards the payment
of the unfunded liability and WSIB's overhead costs.
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For 2002, the WSIB premium estimate is $312,000. This increase is based upon the
Corporation's increased payroll expenses and a premium increase of 7.6% for the general
municipalities rate group. The WSIB experience rating surcharge that would be levied in the fall
of 2002 is estimated to be $20,000, which would be based upon its claims experience in 1999 -
2001.
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Report to Cotmcil CS 34-01
October 2,2001
Subject: WSIB Transfer from Schedule 1 to Schedule 2, retroactive to January 1,2001 Page 4
If the Corporation transfers to Schedule 2, then its annual workers' compensation costs will
substantially decrease. Based on the current WSIB claims experience, then it could expect to pay
a total of $137,000 per annum for its workers' compensation and related expenses. This
represents gross savings in the amount of $194,000 per annum. (Reserves would have to be
offset from this total.)
III. Staff Actions:
In May 2000, the Chief Administrative Officer requested that a Feasibility Study be undertaken
to assess the merits of transferring from Schedule 1. to Schedule 2. The Director, Corporate
Services & Treasurer and the Safety & Training Co-ordinator conducted a preliminary Feasibility
Study and determined that the Corporation would be able to generate significant savings in the
area of workers' compensation by transferring from Schedule 1 to Schedule 2.
In August 2000, the Corporation retained the services of Heath Lambert Benefits Consulting to
conduct a comprehensive Schedule 2 Feasibility Study on a contingency basis. This arrangement
operates on the premise that the Corporation would only be charged a consulting fee for this
study if it transferred to Schedule 2, effective January 1, 2001. (A copy of Heath Lambert's final
report is enclosed as Attachment 1.)
As part of the Feasibility Study, the Corporation informed the WSIB of its intent to assess the
merits of moving from Schedule 1 to Schedule 2, effective January 1, 2001.
In July 2001, WSIB advised that should the Corporation choose to transfer to Schedule 2,
retroactive to January 1,2001, it would have to pay a departure fee in the amount of$179,583.29
by November 5, 2001. This payment would be offset by WSIB premiums which have already
been paid in 2001. WSIB provided the Corporation with a one-time extension from the original
deadline of September 7,2001. Interest would be charged for payments made after September 7,
2001.
The Safety & Training Co-ordinator conducted an assessment of the current WSIB claims
management program. It was determined that the current manual system should be replaced with
an efficient computerized program. The Parklane WSIB Claims Management Software would
enable Human Resources staff to significantly improve its WSIB claims administration process,
verify WSIB costs and analyze trends associated with WSIB claims. In-depth accident/incident
analysis would in turn, provide the Corporation with the necessary tools to identify those areas of
the health and safety program which require improvement. The Manager, Information Systems
has confirmed that this Software is compatible with the Corporation's existing computer system.
DISCUSSION:
As indicated in the enclosed report, Heath Lambert Benefits Consulting has shown that the
Corporation would generate over 60% savings in its workers' compensation costs by transferring
from WSIB's Schedule 1 (the collective liability scheme) to Schedule 2 (the individual liability
scheme). These significant savings are based on the fact that as a Schedule 2 employer, the
Corporation would no longer be subsidizing the accident costs of other employers in Ontario and
paying for WSIB's unfunded liability and second injury and enhancement fund. In addition,
calculation of the payments made to WSIB would be closely aligned to the actual costs for each
claim, as opposed to the inflated WSIB Schedule 1 costs which are based on (a) reserves that the
WSIB would have to set aside to cover future claim costs and (b) WSIB overhead charges which
are calculated as a percentage of the actual and future daim costs.
In recent years, the Corporation adopted a strong WSIB claims management program, which
successfully returns injured employees to modified duties as soon as they are able to do so. Over
the past 2 years, the Corporation has successfully assisted over 90% of WSIB claimants in
returning to work within 4 weeks of the injury/iIIness. In prior years, the Corporation struggled
in returning WSIB claimants with minor injuries to work in a timely manner.
Report to Council CS 34-0 I
October 2, 2001
Subject: WSIB Transfer from Schedule 1 to Schedule 2, retroactive to January 1, 2001 Page 5
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In spite of the current successes, the Corporation's Schedule I WSIB costs have increased. This
is primarily due to the changes that WSIB has made in its experience rating charges, the severity
of injuries sustained, and an aging workforce. The WSIB is currently making changes to the
experience rating program which would make it even more difficult for Schedule 1 employers to
contain WSIB costs in future years.
Since the Corporation is considering a retroactive transfer to Schedule 2, it has a unique
opportunity of reviewing its actual WSIB costs in both Schedules for the year of the transfer.
In 2001, the Corporation has experienced an increase in the number of serious injuries that have
occurred. Within a six month period, there were 5 employees who sustained significant knee and
back injuries and were absent from their physically demanding positions for over 8 weeks.
In Schedule 1, the Corporation haS already paid $145,000 for its WSIB premiums from January
1 - June 30, 2001. In addition, the claim costs (calculated in excess of $300,000) will expose the
Corporation to experience rating surcharges of at least $20,000 in 2002 - 2004.
In comparison, the Schedule 2 fee for 2001 claims, up to June 30, 2001, has been estimated by
WSIB to be $43,486. (This total is comprised of the actual claim costs and the Schedule 2
administration fee.)
Accordingly, based on actual 2001 claim costs, the Corporation would generate gross savings of
$101,514 for its workers' compensation coverage if it were in Schedule 2, instead of Schedule 1,
for this six-month period. This is consistent with the consultant's forecast that the Corporation
would generate approximately $194,000 in gross savings by transferring to Schedule 2.
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The time-limited window to transfer to Schedule 2, retroactive to January 1, 2001, provides the
Corporation with an excellent opportunity to generate significant savings in the area of workers'
compensation now and in the future.
FINANCIAL PLAN:
1. Proiected Cost Summary:
Proiected Costs:
WSIB Schedule 1 Departure Fee:
Consultant Fee (Heath Lambert Benefits Consulting):
2001 Schedule 2 Claim Costs (projected, based on actual costs to June, 2001):
2001 Administration Fee (projected, based on actual costs to June, 2001):
2001 Occupational Accident Insurance Costs (October - December 2001):
Parklane WSIB Claims Management Software:
$183,000
$ 10,000
$ 75,000
$ 24,000
$ 5,000
$ 20,000
$317,000
Sub-total:
Offset by:
2001 WSIB Premiums
2001 NEER Surcharge (projected, based on 2001 NEER Statements)
$290,000
$ 20,000
Sub-total: $310,000
Net projected cost to transfer to WSIB Schedule 2, retroactive to January 1,2001:
$ 7.000
The above cost estimates are based upon the Corporation's actual WSIB claims experiences up to
June 30, 2001. They are subject to final confirmation.
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Report to Council CS 34-0 I
October 2,2001
Subject: WSIB Transfer from Schedule 1 to Schedule 2, retroactive to January 1, 2001 Page 6
II. Proiected Savings Summary;
Proiected Schedule 2 Costs:
2002 Claim Costs
2002 Administration Fee
Occupational Accident Insurance
Investment in Health & Safety Training Program
$ 75,000
$ 24,000
$ 19,000
$ 20,000
Sub-total: $138,000
Offset by Schedule 1 Costs:
2002 Schedule 1 WSIB Premium Cost
2002 Schedule 1 NEER Surcharge (projected, based on 2001 NEER Statements)
Sub-total:
$312,000
$ 20,000
$332,000
Projected annual savings. generated by transfer to Schedule 2
$194.000
Based on the foregoing and the information contained within the Heath Lambert Report, it is
anticipated that annual savings from $180,000 - $200,000 would be realized by transferring to
Schedule 2.
III. Disposition of Savings:
If the Corporation transfers to Schedule 2, then the projected savings generated in 2002 and 2003
would be directed to a workers' compensation reserve fund. This fund, which is required by the
WSIA for all Schedule 2 employers, would enable the Corporation to access additional funds in
the event of any claims which result in permanent impainnent or death. Commencing in 2004,
when the reserve fund is fully funded, the projected savings would be transferred to the
departmental budgets. It is anticipated that, at the recommended level of funding, the fund would
be self-sustaining.
A portion of the projected workers' compensation savings ($20,000 per annum) would also be
allocated to the health and safety program. This investment would enable the Corporation to
improve its accident prevention program and provide more effective training to its employees in
priority subject areas (i.e. employee orientation, chainsaw, and confined space). This would
result in a more rigorous emphasis on health and safety at all levels of the organization. During
each budget period, the Safety & Training Co-ordinator will specifY how the additional health
and safety funds would be utilized to reduce the frequency and severity of work-related injuries
and illnesses. These expenditures will be included in the annual budget for the Human Resources
Division.
ATTACHMENT:
1. Workers' Compensation Transfer from Schedule 1 to Schedule 2 Report, prepared by
Heath Lambert Benefits Consulting, dated September 2001
Report to Council CS 34-0 1
October 2, 200 1
27
Subject: WSIB Transfer from Schedule 1 to Schedule 2, retroactive to January 1,2001 Page 7
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Prepared By:
Approved / Endorsed By:
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Debra A. Wight
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Gillis A. Paterson
Approved I Endorsed By:
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Baba mgh
Approved / Endorsed By:
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DW
Attachment
Copy: Director, Operations & Emergency Services
Director, Planning & Development
Recommended for the consideration of Pickering
City Council
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ATTACHMENT#LrOREPORT# t:.S 31/.cl
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O H h L b I Benefits Consulting
- eat am eft Experts conseils en avantages sociaux
305 - 191 The West Mall
Toronto, ON M9C 5K8
Telephone: 416-620-0779
Ton Free: 1-877-HEATH.TO
1-877 -432-8486
Fax: 416-620-9416
www.heathlambert.ca
THE CORPORATION Of
.THE CITY Of PICKERING
WORKERS' COMPENSATION
Transfer from Schedule 1 to Schedule 2
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September, 2001
Heath Lambert Benefits Consulting Inc.lExperts conseils en avanlages sociaux inc.
VANCOUVER
WINNIPEG
TORONTO
OTTAWA
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INTRODUCTION
By letter dated August 24, 2000, The Corporation of the City of Pickering informed the WorlcpIace Safety and In-
surance Board ofits wish to assess the merits ofleaving Schedule I and being added to Schedule 2, with effeCt from January I,
200 1, as pennitted by Sec. 74 of the Wor.koIace Safety and Insurance Act . It retained Heath Lambert Benefits Consulting
to assist in assessing and, if appropriate, in implementing such a move.
Heath Lambert agreed to prepare a cost benefit study (projeclcd cosls under ScheduJe 2 CODlrlISted wilh those under Scbcdule I),
identifying the options available to the City, the recommended process to follow and the associated costs, and including an
evaluation ofthlrd party alternatives, and supplementary options such as the payroll tax reductions available.
The fee for the project is $10,000, payable only if the City becomes a Schedule 2 employer. The company caD offer a
"contingent" fee because it acts in this matter for a significant number of school boards, colleges, municipalities, public Iibrary
boards, municipal utilities and public 'health units.
THE CONSULTANT
Heath Lambert Benefits Consulting is a firm of employee benefits consultants with offices in Toronto, Ottawa,
Vancouver, Calgary and Winnipeg. It was formed in 1998 by the merger of CANADIAN ACTUARIAL AND CONSULTING
GROUP and The Shasta Consulting Group of Vancouver. CANADIAN ACTUARIAL AND CONSULTING GROUP was found-
ed in 1979, and is recognized in the public sector as the consultant to the OSBEB group benefits plan for school boards.
Donald G. (Don) Timmins is a Senior Consultant, engaged in the workers' compensation project He is a graduate of
McMaster University (BA '66) and of Queen's University at Kingston (M.Ed. "76). He joined the company in 1992 following his
early retirement from the position of Superintendent of Finance (chiefflnancial officer), The Metropolitan Toronto School Board.
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DEFINITIONS
SCHEDULE 1: the collective liability pool in which most employers are required to participate under the Worlcolace Safety
and Insurance Act Employers are grouped into rate groups, and are assessed on a pooled basis. There are about 200,000 em-
ployers in Schedule 1.
SCHEDULE 2: a list of "industries", the employers in which are individually liable to pay compensation to, and medical aid
on behalf o~ their injured employees. Those "industries", as defined in O.Reg. 175/98, are municipalities, public utilities and
other municipal commissions or boards (but excluding hospital boards), public horary boards, school boards, railways, fedemIly
regulated telephone compames,telegraph, navigational shipping, and railway express companies, trans-border bridge author-
ities, the provincial government, and airlines that provide regularly scheduled international passenger service. With the ex-
ception of the airlines, this list has n,ot changed since it was created in 1913. There are nearly 1,000 employers in Schedule 2.
A Schedule 2 employer may request placement in Schedule I and, in fact, most municipaIities did so many years ago.
SPECIAL ASSESSMENT: a lump sum payment that must be made by the employer at the time of its transfer. It is a calcu-
lated share of the unfunded liability as of the effective date of exiting Schedule 1. It is calculated on the basis of the employer's
contributions to Schedule I (and thus its "contribution" to the lIIlIIcrliincnn over the years, and bears no relationship whatever to its
claims experience. Recently the Board has begun using a new tenn - "departure fee".
NEER: the New Experimental Experience Rating Plan that, interestingly, is neither new nor experimental. Introduced in
1986, NEER provides partial refunds to Schedule I employers with better-than-average claims records, and surcharges those
whose records leave something to be desired. Tho ently of various rate groups was phased; most of the municipal sector enter-
ed with the final phase in January, 1995. Adjusting premiums after the fact, it is a retrospective experience rating plan.
MAP: the Merit Adjusted Premium Plan, the new; "simplified financial incentives programme for smaIl employers", those
whose annual premiums (tluee-ycaravcragc) are between $1,000 and $15,000. Introduced in 1998, it adjusts premium rateS based
on the employer's claims record over the preceding three years. Thus, unlike NEER, it is a prospective experience rating pian.
The Corporation of the City of Pickering
Workers' Compensation
Transfer from Schedule 1 to Schedule 2
September, 2001, Page 1
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HISTORICAL DATA
The records suggest that the Cityffownffownship became a Schedule 1 employer effective January I, 1974.
We have obtained from the Workplace Safety and insurance Board, and from the City, the following information in-
respect of the City's cash flow history in Schedule 1. Transit is included.
Years Premiums Claims Paid Loss Ratio
pre-1995 $3 507960 $1415250 40.34%
1995 333 225 95 515 28.66%
1996 329421 (41031) (12.46%)
1997 329 829 21 767 6.60"10
1998 272938 162087 59.39%
1999 325 966 529 154 162.33%
2000 322 507 17953 5.57%
Totals S5 421 846 $2 200 695 40.59%
Loss Ratio
Rate 845
75.18%
116.15%
DOt available
oot available
not available
not available
not available
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EXPERIENCE RATING
The City has been in the New Experimental Experience Rating Plan (NEER) since 1995. The following table, a
"what-if' analysis,
a) attempts to demonstrate the NEER refunds and penalties that have accrued to the City to date, and
b) compares the results with the projected financial impact of the accidents that occurred during each of those years if the
City had been a Schedule 2 employer. Transit is included in 1995 and 1996 only; it is not possible to exclude it because it-
was not moved to- Rate 580 until 1997.
Schedule 2 is the ultimate in experience rating. Note that individual NEER costs change over time.
- Schedule 1 Schedule 2
PrtlDium NEER NetJGross Year Put SIEF Future AdmiD. wlUllIlee Tolll1
Awards Cos1S Fees
S 333 22S $ (61 610) $ 211 615 1995 S 16452 $ 5609 $ 2156 $ 3514 $ $ 21131
329 412 2508 331920 1996 53 154 49208 _ 14853 111215
227 709 (26 995) 200 114 1991 9018 2091 2852 2026 15 981
191 845 llrn 203 618 1998 40 018 33 018 18 600 11872 109 568
235TI4 (22 914) 212800 1999 I- 13 351 5980 3674 230ll
256156 56 388 313 144 2000 32281 104 531 25 99S 162 813
S 1 574 711 S (40 919) S 1533811 Total $164186 S 49118 S 183m 561934 S S 456 325
Net Cost, Schedule 1 with NEER. $1,533,811
Total Cost, Schedule 2 - 456.325
Difference ("hindsiBhtsavlugsj $1.077.486 or 70.2%
Note the NEER "overhead tiIctor" - 45% in 2001,59% in 2000, up from 39% in 1998 and 1999, and 26% in 1996
and 1997. This "mark-up" contrasts sharply with the currerit Schedule 2 administrative fee rate of 31.540/0, up from 19% in -
1999 and 2000.
The Corporation of the City of Pickering
Workers' Compensation
Transfer from Schedule -1 to Schedule 2
September, 2001, Page 2
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TIlE SPECIAL ASSESSMENT (Departure Fee)
The City will be required to pay a special assessment ("departure fee) before leaving Schedule 1. The special assess-
ment is a calculated share of the pooled unfunded liabilities of Class H, "Government and Related Services", at the date of
transfer (December 31, 2000). The WorlcpIace Safety and Insurance Board provided a "provisional" calculation, based on the
Board's 1999 year-end financial data, and a recaIculation.following the release of the Board's 2000 year-end finan-cial data
Note that Trarisit has been excluded.
Class H
A Liabilities, December 31, 2000 $1209 071 000
B Assets, December 31,2000 1 063 518000
C Unfunded Liability (A-B) $ 145 553 000
D AssessmentslPremiums to 2000 $4 673 914 $3 715353 199
E Proportional Share (Dl+D2) .12580%
F Special Assessment (CxE) S183105.67
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The special assessment is only 63% of the estimated Schedule I premiums for 2001 ($290,000). Monthly payments of
the 200 I premiums will be credited towards this special assessment
Note that the Board'~ calculation contains a mathematical error. The figure in line D(S4,583,914) is $90,000 less than
the correct figure. Accordingly, its calculation of the special assessment is only $179,58329. Although the City should pay
the lesser amount, be aware that the Board may claim the additional $3,522.38 if the error is discovered subse-quentIy. To be
conservative, in this report we will use the correct calculation. .
If required, financing is available at a rate of "prime less y"%".
Under the provisions of the WorkoIace Safety and Insurance Act, the Board's unfunded liability is a liability of the in-
dividual employers in Schedule 1. Under changes to Generally Accepted Accounting Principles (GAAP), contained in the new
Section 3461 of the CICA Handbook - Accounting, a corporation's financial statements will be required to disclose its lia-
bilities for employee future benefits. This could be interpreted to include a Schedule I employer's share of the Board's un-
funded liability. In other words, under Section 3461 the City's 2000 financial statements might have been required to disclose
a liability 0[$183,106 in respect of the Board's unfunded liability (cxcludingTl3IISit).
The special assessment is. 73% less than- that which would have been calculated only four years earlier. In 1998 the
Board announced that. . . the passage of Bill 99 will have an effect on the unfunded liability of each class as of December 31,
1997. In recognition of this,. the. . . calculation of the special assessment has been reduced. . . Although that reduction was
25%, subsequent information indicates that the actuaI impact was closer to 29%. The next two years saw further significant re-
ductions of the unfunded liability of Class H; we attribute them to a significant increase in the number of transfers to Schedule
2, many of them ''forced'' by municipal and school board restructurings.
The Corporation of the City of. Pickering
Workers' Compensation
Transfer from Schedule 1 to Schedule 2
September, 2001, Page 3
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INSURANCE
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As stated previously, Schedule 2 is the ultimate in "experience rating". On becoming a Schedule 2 employer, the City
will become totally responsible for the costs of its employees' workers' Compensation claims, will have no responsibility for
the costs of other employers, and will be relieved of future responsibility for the unfunded liability of Schedule 1.
Most employers entering Schedule 2 wish to maintain some level of protection - to ''layoff'' some of the risk:. In-
surance companies do just that, and the reinsurance industry exists as a result It would not be reasonable to insure I 00% of the
risk; in fact, if such coverage were available, it would be prohibitively expensive, and there would be little advantage in leaving
Schedule 1. However, it is reasonable to seek protection from the financial impact of a catastrophic loss.
We are pleas:d to offer our clients two types of coverage. When combined appropriately, they offer the Schedule 2
employer excellent protection against serious losses.
The first product is "excess of loss" or "stop-loss" insurance, known more correctly as "Excess Indemnity". In return
for payment of a modest premium,. the insurer will cover all of the costs of an individual workers' compensation claim (or of two
or more claims arising from a single accidcot) that exceed a predetennined amount, usually $250,000 (the self-insured ICtCDIion or "de-
ductiblej, although it can be higher or lower. The insurer's maximum liability under this policy may be limited to SIO,OOO,OOO
per accident, although S15,OOO,000 and $20,000,000 limits may be available as well, and also a "statutory" limit (no limit). The
cost of this coverage has been quoted as low as .073% of assessable eamings (7.3~ per SI00).
The second product is Occupational Accident insurance. This is not the traditional AD&D insurance that employers
offer within their employee benefit plans. Rather, this product is "accidental death and disablement" insurance. The owner of
the policy, and the beneficimy thereunder, is the City. The insurer will pay the principal sum if the City is exposed to a work-
related death or permanent disability (50010 in the case of a pennanent partial disability).AIthough coverage can be purchased up to
S500,ooo, it would be inappropriate - and wasteful - to purchase coverage in excess of the self-insured retention (deductible)
under the excess indemnity policy. The annual cost of occupational accident insurance is S2.40 per S50,000 of coverage per
full-time equivalent (FTE) employee for the City, and only 95~ per FfE for-the Library and the Museum. Accordingly, the
selection of coverage at the $250,000 level will cost $12.00 per year per FIE City employee, and only S4.75 per FIE Lib~
or Musewn employee. .
It should be noted that, while the excess indemnity will pay on the basis of the costs of claims as adjudicated by the
Board, the occupational accident insurance will not. Payment under the former will be triggered by the cost of a claim, while
payment under the latter will be triggered by the event - the death or disability. The occupational accident insurance will pay
in full even in a case where the cost of benefits faIls short of the principal sum.
Heath Lambert is pleased to offer these insurance products at competitive cost. At this time the recommended car-
riers of excess indemnity are American Re-Insurance Company (a member of the Munich Re Group, the world's largest reinsurance
~nsortium) and Employers Reinsurance Corp. (a member of the General Electric group of companies, and now Canada's thinl-llIrJesllCin-
surance company); the recommended carrier of occupational accident insurance is Chubb Insurance Company of Canada.
Be assured that we continue to explore the insurance and reinsurance markets, and that we will always offer the best products.
available at the most favourable cost
The Coxporation of the City of PiCkering
Workers' Compensation
Transfer from Schedule. 1 to Schedule 2
September, 2001, Page 4
-
o
-
COMMENT
33
During some recent years the rate group's Schedule I premiums increased by some 7% to 18% annually, a combin-
ation of salary and rate adjustments, increased assessable earnings ceilings, and the switch to the "cPP method" of calculating
premiums. Recently some rates have decreased - Rate 845 was decreased by 29.4% between 1996 and 1998, but was in-
creased again by 20.5% in 1999 and 2000. .
Year
Rate 580
Tarpt Staadard
Rate Rate
$7.00 $4.36
6.11 5.00
6.05 5.50
5.91 5.50
5.61 5.55
4.48
4.31
3.04
3.64
3.94
MaxImum
Aaessable
Eandap
$52 500
53900
55400
55 600
56 100
58200
59200
59300
60600
64600
The table to the left displays the rate
history from 1993 through 2002 Al-
though the Board "froze" the rates for
1993, and again for 1995, and in spite of
apparent "overcharging" in some rate
groups, the underfimding continues. Ac-
cordingly, Schedule I premiums might
be increased again in future years. With
the introduction of NEER. some muni-
cipalities might have experienced sig-
nificantly larger cost increases.
Further, most municipal rate groups are in Class H with other employers of a municipal or quasi-municipal nature _
including electric and gas utilities, hospi1a.ls.and nursing homes. Effective January I, 1993, the Board "shared" (pooled) the un-
funded liabilities of the fIfteen rate groups in Class H. Rate 580 (f1llllSit) is in Class E, similarly "shared".
During 1993 some Board officials stated publicly that they favour one rate for all employers, as is the case with em-
ployment insurance. This would be a major change from the current rate group structure; given that the average rate in 2002
will be $1.11, it would represent an additional cost increase to municipalities (Rare 84S) of approximately 35%.
These signals make a strong case for leaving Schedule 1 now.
Although the New Experimental Experience Rating Plan (NEER) provides refunds and surcharges for favourable
and unfavourable claims experience, they are only partial; the maximum refund is only one-half of the maximum surcharge.
With the provision of appropriate insurance arrangements, as a Schedule 2 employer the City will be protected against catas-
trophe while benefitting fully from its favourable experience.
In an effort to assess the validity of the special assessment, we attempted to analyze the unfunded liability of the rate
group and of Classes H and E. We were unable to do so because of a lack: of data available from the Board.
The Board will require that the special assessment be paid within sixty calendar days following its notification.
Already 154 clients have left Schedule I and transferred to Schedule 2. Notwithstanding that they have paid off S51
millions of the unfunded liability, most achieved significant net savings within a year or two.
,,~""
DIRECT PAYMENT - A NEW "DEDUCTIBLE"?
Although it is not in Bill 99, contained within New Directions for Workers' Compensation RefOrm (!be 1996 report oflbo
Bon. Cam Jacbon,M'urister Without Portfulio Rcspoasible tor Worbrs' Cilmpcnsation Rcfunn) is a proposal for "Direct Payment'. It was pr0-
posed that every employer of twenty employees be required to pay directly - and to fundJ - wage replacement benefits for the
first six weeks of each claim. lit effect this would create a significant "deductible". In many cases this "deductible" would rep- .
resent the bulk: ofan employer's claims costs.
It was suggested that the implementation of this proposal "might" lead -eventuaIly - to an average 4% reduction in
Schedule I premiums.
The Co~orlltion of the City of Pickering
Workers' Compensation
Transfer from Schedule 1 to Schedule 2
September, 2001, Page 5
-
34
A FINANCIAL PLAN
. .
The fellowing table, which excludes Transit, ilIlistr.Ims the projectedfinmcia1 impact of _decision to ttaDsfer 10
Scbedule 2, with paymeat oflbe spccial---.n"Ut OD or befDn November 6*. AIdJougb. Schedule 1 premiums mialtt be m.
creased again, we have used a COIISCI'VIIIivc flG-1iDe projccdOD. ThiI plaD is Dot .. ac:tuarialsbldy. ~er, it is . n;spousi-
ble forecast of the City's cash tlDw requiremems for WCJdcers' c:ampeusation. ODe 1hIt provides as well for modest reserves.. .
2000 1001 2001 1003 2004 . 2005 2006 2007 2001 2009 2010 Total
CllDD) CllDD) CllDD) CllDD) CllDD) - IIlIlIl C1lDD) C1lDD) C1lDD) CllDD) .-
Special Assasment S $ 183.1 $ $ S S S S $ S $ $ 183.1
ScbeduIe 1 PremilDD 266.0 266.0
Oaims * 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 750.0
WSlB AdmilIis1ndive Fees 23.7 23.7 23.7 23.7 23.7 19.7 19.7 19.7 19.7 19.7 217.0
bisunace ClIIAt-....., 4.7 lLli ILIi 18.6 18.6 11,6 18.6 11.6 11.6 11.6 172.1
CoasuI_ """ 10.0 10.0
Aaaual Totab S 266.ll S 196.5 S 117.3 S 117.3 S 117.3 S U7.3 51W SIW 5113.3 S UJ.J 5 IIJ.J 515tL2
SdIedale I PRmi\llll 266.0 290.0 312.0 312.0 312.0 312.0 312.0 312.0 312.0 312.0 312.0 3 364.0
Sa..;_ NO 5 (605) 5 1!14.'1 5 1,...'1 5 1"'.7 S D4.7 S Ul.7 S Ul.7 S In.7 Sln.7 S In.7 51 7s.a
SUqeswl '"JIescnocs" 50.0 25.0 25.0 10.0 10.0 10.0 10.0 10.0 10.0 UIO.o
Nor NB S (6.5) S 1"'7 S 1".7 S 1".7 S 114.7 5111.7 $111.7 $ 111.7 5 111.7 5 111.7 51 fII5.I
,~,~
· This line (Claims) excludes costS ofpre-2001 injuries, not chargeable in Schedule 2. When the City hBs paid dills sbBre of
the unfunded liability, it will be released from tinancial.respo1lSibility for accidents that 0CCIIII'ed while it WlIS _ Schedule I
employer.
Note that this finaDcial plaD excludes any impact of NEER refunds aDd/or surcharges.
"Writing oft" the special assessment immediately, this plan provides savings commencing in 2002, while at the 5lIIDe
time building modest reserves for f111"tlllrrinns in claims costs.
Its m:ord indicates that the City will benefit significantly by becoming a Schedule 2 enxployer. However, two other
aspecIS should be c:oosidered carefWly in additiOll to the financial analysis. The more important is having or JllIUiD& in p1aco ..
effective claims maoaaCllle.at proaramme. Sound accident reporting and investigation. when combined with 1I1ClI1IiDpIl
modified work praclice lIIId OIIIOina c1aims monitoring, will reduce significantly the financial risks of self-insuriDc- The
second is timing. City ofticials should e.asare that DO major claim has occurred during 2001 prior to the pun:base of in-
SUIlIDCC protection. AIlbough the llIDSfer will be retroactive, the protection afforded' by insur.mce coverage will Dot.
The CO%pClrat.1oa of the City of P1CUriag
Workers' c:o.peuatiOD
Transfer fraa Schedule 1 toScbedu1e 2
September, 2001, Page ,
-
o
35
HANDLING CLAIMS IN SCHEDULE 2
How are workers' compensation claims handled in Schedule 2? Basically, very little will change following a transfer
from Schedule I to Schedule 2. In fact, the only change visible to employees will be new account and firm numbers.
Accidents will continue to be reported to the Workplace Safety and Insurance Board on Form 7, and the $250 penalty
for failing to do so will continue to apply. Who actually pays wage replacement benefits need not change. If it has been the
practice to pay benefits "covered by advances" with salary top-ups, and to claim. reimbursement from the Board, that practice
may continue although, following confirmation of transfer to Schedule 2, of course there will be no reimbursement of those ad-
vances. Conversely, if it bas been the practice to permit the Board to pay some or all benefits, that may continue. Many em-
ployers have some of each.
NEL (Non-Economic Loss), FEL (Future Economic Loss) and pension benefits, when awarded, will be paid directly by the
Board. When such a benefit is awarded, the Board will capitalize the award, and will request a lump sum "Section 90" deposit
That occurs in Schedule 1. as well, except that the capitalized value is charged in a lump sum to the employer's Schedule 1 ac-
count
All costs paid by the Board, including 'physicians , fees and rehabilitation, etc., will be invoiced to the employer week-
ly. . Invoices should be paid within thirty days to avoid late payment penalties; the current rate is 2% monthly.
The Board levies administrative fees, currently at the. rate of 31.54%, on all awards, whether paid by the Board or by
the City. Those fees will be invoiced monthly. Note that the administrative fees include the cost of membersJrip in the
Municipal Health and Safety Association (MHSA) and the Education Safety Association of Ontario (ESAO); 2.86% goes to
fund the various safe workplace associations (SWAs).
In addition the Board issues month-end statements that summarize all transactions posted during the calendar month.
Every Schedule 2 employer is required to maintain with the Board a "Section 92" (working capital) deposit, based on the
average weekly cost of benefits paid by the Board. The size of the deposit will be affected by the employer's payment pattern;
consistently late payment of invoices will lead to a larger deposit requirement
-
The Corporation of the City of Pickerihq
Workers' Compensation
Transfer from Schedule l' to Schedule 2
September, 2001,' Page 7
-
36
--.
THE TRANSfER PROCESS
On your behalf we filed the City's letter of application with the Workplace Safety and Insurance Board on October
31 ", 2000. In effect that placed your foot in the door, and entitles the City to a 200 1 transfer to Schedule 2. The letter of appli- -
cation does not cominit the City to a transfer. You should have received a letter of acknowledgement from the Schedule 2 In-
dustry Sector of the Board..
You received another letter, dated July 9lh, that acknowledges that, indeed, the City is eligible to transfer to Schedule -
2. Enclosed therewith was an "information package" that outlines the administrative process and. funding requirements for
transfer, and the administrative guidelines and funding requirements after transfer. You are asked to confirm your under-
standing and acceptance of those requirements.
The Board documented, in its "Funds Required to Transfer Calculation" letter, a "provisional" calculation of the
amount of the payment (the special assessment) required to transfer from Schedule I. Subsequently it issued a revised calculation, _
much lower, based on the its 2000 year-end financial data.: Although the funds must be paid to.the Board within sixty calendar
days following the date thereon if the City intends to transfer, on the City's behalf we sought, and were granted, a sixty-day
extension, to November 6th - with interest.
The "Funds Required. . ." letter includes an "Initial Payment Requirement" - a deposit of $43,486 to cover the ap-
proximate cost of known 2001 claims and the Board's administrative fees therefor, and also a Section 92 (working capital) deposit
of$9l5.
,4':'.-
Following a decision to transfer from Schedule 1 to Schedule 2, the City will be required to prepare its cheque for the
special assessment 2001 premiums paid to date should be netted out, and no further premiums should be paid. We will de-
liver your cheque, and the required letter of understanding and intent, on the deadline date.
Insurance coverage should be purchased immediately, and will be put in place with effect from 12:01 am on the day
following the receipt of your authorization.
.Accidents that occurred during 2000 will remain the responsibility of Schedule I. The City will become responsible
. for the costs of accidents that occur after 2000.
Based on previous years' experience, some time after having paid the special assessment the City will receive a com-
munication stating that the retroactive transfer has been completed, and providing new account and firm numbers. Prior to the
receip~ of that notice, operations should be continued just as before - in Schedule 1 - except that no further premiums should
be paid.. Following the receipt of the notice, the City will be in Schedule 2, and it should begin to use its new account and firm -
numbers.
Again, some time later the City will receive a "catch-up" invoice for costs paid in respect of accidents that occurred
after 2000, and a second for the administiative fees therefor. Those invoices should be paid within thirty days to avoid late
payment penalties. Thereafter invoices will arrive at regular intervals - weekly for the cost of benefits, and monthly for the
administrative fees.
Accordingly, following a decision to transfer, and payment of the special assessment, it will be several weeks before
every aspect of the transfer has been comPleted.. Patience is required.. However, during that time the City will have the ad-
vantage of positive cash flow, while it "sits on" funds that will be paid to the Board eventually.
The corporation of the City of Pickering
Workers' Compensation
Transfer from Schedule 1 to Schedule 2
September, 2001, Page 8
-
o
31
-
ADMINISTRATION
Although Schedule 2 employers may pay their own compensation awards - and some do - it might not be advan-
tageous to do so. Workers' compensation benefits are not subject to income tax irrespective of how they are paid, but they are
subject to other taxes if they are paid directly by the employer - payroll taxes such,as employment insurance premiums. Ac-
cordingly, in some circumstances it might be beneficial to have payments made by a third party. However, benefits may be
paid by the Board itself at no additional cost
For those that may wish to use the services of a third party payor, we recommend Ceridian Canada Ltd.
A CO-OPERATIVE SELF-INSURANCE ORGANIZATION
School boards have created - and incorporated - a co-operative self-insurance organization, the School Boards' Co-
operative Ine. (SBCI). The potential advantages of working together are numerous - the collective purchase of stop-loss in-
surance, the review of claims and awards and the appeal of some, the collective purchase of services (n:habilitalion, investment
management, actuarial,legal, audit, etc;), and the ability to speak with one voice to the Workplace Safety and Insurance Board and the
Government of Ontario. Each member's claims record can be improved further by the use of techniques that can be. acquired
by membership in such a co-operative.
Our proposals to the Board have stated that, in transferring to Schedule 2, our clients intend to reserve responsibly for
their self-insured workers' compensation liabilities. We provided actuarial services to the Co-operative, so that mem~ school
boards had authoritative actuarial counsel to enable them to do so. Actuarial services are available to municipalities, either in-
dividually or collectively.
IN SUMMARY
-
A decision to become a Schedule 2 employer, with effect retroactive to January 1,2001, will require the payment
ofa special assessment of $183,105.67 (or $179,583.29 as calculated by the Board). However, that payment will be reduced by the
Schedule 1 premiums paid for coverage during 2001; 2001 premiums are estimated at $290,000. Accordingly, no net ad-
ditional funds will be due to the Workplace Safety and Insurance Board during 2001.
The City will be required to reimburse the Board for the costs of claims arising from 2001 accidents, and it will be
responsible for the cost of the insurance policies that will protect it from cataStrophic losses, and also for the one-time con-
sultant fee (SI0,OOO). We have projected 2001 claims costs at $98,700, and 2001 insurance premiums at $4,700. Further, we
suggest that, in 2002, a first contribution of at least $50,000 be made to a reserve to protect the City from fluctuating claims
costs in the future.
The net impact of the above is a short-fall in 2001, projected at only $6,500. This short-fall may be financed at a
rate of "prime less 0/.%", and will be recovered readily from projected savings of$194,700 in 2002.
RECOMMENDATIONS
It is recommended that The Corporation of the City of Pickering (excluding Transit) transfer from Schedule 1 to
Schedule 2, with effect retroactive to January 1,2001, and that it pay to the Workplace Safety and Insurance Board the re-
quired special assessment ofS179,583 29 (as calculated by the Board).
It is recommended further that the City protect itself against financial exposure to a catastrophic loss or losses by the
purchase of insurance coverage - both excess indemnity and occupational accident insurance - at an appropriate level.
The Corporation of the City of Picke~in9
Workers' Compensation
Transfer from Schedule 1 to Schedule 2
September, 2001, Page 9
-
38
,....
APPENDIX
The following arc examples of how, as a Schedule 2 employer, the City would handle the costs of a significant acci-
dent - a death or a pemianent disability arising from a worlcplace accident
Example 1
Survivor Benefits awarded as the result of a death S 90,000
Proceeds of the occupational accident insurance 250.000
Net Cost to the City $(160.000)
In this case it has been assumed that an employee has been killed on the job; consequently no wage replacement bene-
fits would be awarded. Likely the insurance proceeds would be received prior to the Board's request for payment of a Section
90 deposit to cover the survivor benefits.
Example 2
Wage Replacement Benefits, Medical and Rehabilitation, and Pension Award S 750,000
Proceeds of the excess indemnity 500.000
Sub-total S 250,000
Proceeds of the occupational accident insurance 250.000
Net Cost to the City S --1!i!
In this case it has been assumed that an employee has been injured seriously on the job, and has received wage re-
placement benefits for some time. Rehabilitation and medical costs would be significant additions. Eventually, likely up to six
years after the accident, and based on an assessment of permanent disability, pension benefits would be awarded, and the
Board would request a Section 90 deposit to cover the "present value" of that award.
Because the occupational accident insurance policy provides for an assessment of permanent disability twelve months
after the accident, the insurance proceeds would not be received until after that assessment has taken place. Accordingly, the
City would have to finance the costs of benefits during that one-year period.
If the excess indemnity insurer has been notified properly of the existence of a potential claim, the City would receive
prompt reimbursements of claims costs awarded in excess of the self-insured retention (deductible).
The Corporation of the City of Pickering
Workers' COIIIpeIlSation
Transfer trom Schedule 1 to Schedule 2
September, 2001, Page 10
,-
39
City of Pickering
-
Schedule 2
2001 01 01
Special
Assessment
$183,000
'"
~
-
2001
Schedule 1
Premiums
$290,000
\.. J
,..
Projected Future Sa, ing..
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-- . 42
WS'-B Workplace Safety &
~.! Insurance Board
OIVTA"'O.. . ..
CSA~m- Commission de la secunre
. professiannelle et de l'assurance
. & contre les accidents du travail
T oranta Office
Bureau de Toronto
200 Front Street West
Toronto ON MSV 3J1
200. rue Front Ouest
Toronto ON M5V 3.11
-
July 9,2001
COpy
Telephone:
4161344-3067
1-800-387-8638
Telephone:
4161344-
1-800-387-8638
Fax:
(416}3#-2140
Debra A. Wight
The Corporation of the City Pickering
One The Esplanade
Pickering ON LlV 6K7
See below
When Writing the Board
please quote the above
file number.
Indiquez Ie nuinero de de
dans toute correSpondar
avec la COmmission.
- Dear Ms. Wight:
Re: Request to Transfer to Schedule 2
Schedule 1 Acct. No. 1623796
This is further to your letter of August 24, 2000, the addition of Classification Unit (CU)
8551-000, for your Museum operation, and our subsequent telephone conversations.
I am confirming that the business activities of your organization meet the classification criteria
defmed in Schedule 2 of Regulation 175/98 of the Workplace SafetY & Insurance Act.
Therefore, your organiZation is eligible to transfer to Schedule 2 effective January 1,2001.
-
I further understand that your transit operations under CU 4571-001 will remain in Schedule 1
under account 9124888.
To assist you in your decision to transfer to Schedule 2, please find enclosed:
1. An Information Package for a Request to Transfer to Schedule 2, which includes:
. the Administrative Process & Funding Requirements Before the Transfer to Schedule
2 call occur
. A sample Letter of Understanding and Intent Regarding the Transfer to Schedule 2
(Attachment A)
. Administrative Guidelines, Funding Requirements and Other Employer Obligations
as a Schedule 2 Employer
2. The provisional Departure Fee (formerly the Special Assessment) calculation
3. The Schedule 2 Working Capital (formerly the Schedule 2 Prepayment Requirement)
calculation.
4. A summary of premiums used to calculate your Provisional Departure Fee based on a
table of Workplace Insurance Premiums Paid provided by Donald Timmins of Heath
Benefits Consulting Inc.
-
43
--
Your provisional Departure Fee is baSed upon 1999 financial information and your premiums up
to December 31, 1999 (excludin~ urban transit premiums).
An adjusted Departure Fee will be calculated upon receipt of the 2000 financial information
from our Actuarial Branch and your premiums up to December 31, 1999.
You are responsible for payment of the difference, if any, between the provisional and adjusted
Departure Fees.
If, after reviewing and understanding all the enclosed inforrnation, your organization wishes to
proceed with a transfer to Schedule 2, please ensure the following is received by the Workplace
Safety & Insurance Board (WSffi) within sixty (60) caleIlqar days of the date of this letter.
1. Your letter of understanding and intent
This will serve as confirmation that your organization understands the schedule transfer
process and requirements and also serves as confirmation that you wish to proceed with
the transfer.
2. Your letter of agreement
This will serve as confirmation that your organization understands that should the urban
transit operation under account 9124888 ever wish to transfer to Schedule 2, additional
Class Epreri1iUIps of$691,384 will be added to the premiums under account 9124888 to
calculate the Departure Fee for account 9124888.
-
3.
Yourpaymentof$ 171,717.10
Ensure that your cheque, payable to the Workplace Safety & Insurance Board, is sent to
Carol Carbery, Manager, Revenue Support, 2nd floor. The payment was calculated as
follows:
Schedule 1 Account balance at July 9, 2001:
Provisional Departure Fee:
Adjustmen~ required to revise 2001 Premiums to SO.OO
Schedule 2 Prepayment Requirement
$
4,991.08 Cr
260,753.29
1 28,446.11Cr.
44.401.00
171,717.10
$
Any questions you may have about the Departure Fee Calculation should be addressed to Carol
Carbery at (416)344-3323. Questions about the Schedule 2 Prepayment Requirement
calculation should be referred to Fay Tomlinson, Sr. Schedule i Specialist, at (416)344-3462.
Upon receipt of the above, your transfer back to Schedule 2 will be reflected by the closure of
your Schedule 1 account and the establishment of a new. Schedule 2 file. Following fulfillment
of your payment obligation to Schedule 1 and Schedule 2, any overpayment will be either
refunded or transferred to your Schedule 2 account'
-
44
---
As well, the transfer of claims tinder firm 2221 15A lincler ctJ's 8321-099 General
MunicipallRegional Operations, 8541-000 Library Services, and 8551-000 Museums and
Archives to your Schedule 2 firm number effective J aUuary -I, 200 i wilLbe initiated.'," .-
If your letter and payment are not received, I will contact you to confirm that you do not Wish to
proceed with the transfer to Sthedu!e 2 and to advise that any subsequent requests t6 transfer
will be treated as new.
Sincerely,
\~
C/f)/- for..
- Mrs. Beverly Read
Account Manager
Municipal, Electrical Utilities and Education Sector
Operations
Enclosures
c. C. Campbell,. Director, MEE Sector .
C. Carbery, Manager, Revenue Sector Support
K. Wang, Director, Schedule 2 Industry Sector
D. Timmins, Heat~ Benefits Consulting Inc.
-
-
** clO.38tJd ~J.Ol **
45
y-
-, '
IA~ !'forkp~$aIety6: 2OOPnmt5treetWest' . .' .
I'Nm ~Iloanf . . TonxituON th"V3JI . .
rimMT~.~il\il'Jlrrom~.' Adjusted Departure. Fee
\iriIrIftI allI1eleimidiiiilS ;llllonllfON~" ."
C'orp'Q!ation of the CityQf Pickering
AcconntNQ: 1623796
FirmNo: 222115A
. These calculations have been made producing a Adjusted Departure Fee of
1 . .
$179,583.29
$1,209,071,000.00
-
. A- Liabilities of91ass' H as'ofDeceml?er 31, 200Q
B. Assets of Class Ii as of December 31, . 2000
. . ,
C. . Unfunded liability of Class H as of December 31, 2000
(A-In
D. R~venueof~loyerunder'ClaSs'. H since' OlJan1974
,E, Lifetime revenue-OfClass H sinee January I, 1958
F. Employer's respo~sibiliyto ClassR .
(D/E)
G. Empl!Jyer's contribution toward unfunded liability of H .
(CxF) . " .
, H. Employers Contribution towards umeserved co~ting~cies
. I. Employer's departuCefee to Class B
(G+H)
$1,063,518,000.00 .
. $145,553,'000.00'
, $4,1$83,914;16
$3.715,353,199.00
0.0012338 .
$179,58329
$0.00
$179,583.29
-
-... . ~ 6 18 Workplace Safety &
. ~.! Insurance Boara .
ONTARIO. . .
CS'A~~l. Commission de la secunte
. . professionnelle et de l'assurance
. contre leS accidents du travail
EMPLOYER
CORPORATION OF THE CITY OF PICKERING
TRANSFER EFFECTIVE
JANUARY 1, 2001
FIRM NUMBER
222115A (1623796)
RE
SCHEDULE 2 WORKING CAPITAL
EXCEPT RA Tf: 580
CALCULATION BASED ON SCHEDULE 1 ACCIDENT COST FOR-F./RM # 222115A
AS AT: June30, 2001
PREPAYMENT - SECTION 92.
Estimated aJst of Claims with Accident Dales After January 01. 2001
$ 33,059.00
Estimated Administra60n Fees
($33,059.00
X 31.54%) =$10,426.81
$10,427.00
Deposit Required
- Experience on Schedule 1 account
'.
= $ 915.42
$ 915;00
;0' ~
($ 69,572.00 + .76 weeks)
(Benefit costs Inc:urred for claims since 01JAN2000 Divided
-
By * of weeks Irom 01JAN2000 To dale of Schedule 1 costs}
- Experience on Schedule 2 Rrm #
(Base on review period num
-Required $
-On Hand .l
To
CR
$ .00
Overdue Balance Under SectIon 92 as at
PREPAYMENT - SECTION 90
$
$ .00
Depostt for Pension Claims on Schedule 1 account
wilh'accident daleS after June 30, 2001
~~~~~to.o'
f"JlI\ Tomfin-on
oUy03. 2001
-
-
fI1\ H h L b I Benefits Consulting .
~ eat am ert Experts conseils en avantages sociaux
47
305 -191 The West Mall
Toronto, ON M9C 51<8
August 2, 2001
Workplace Safety and Insurance Board
200 Front Street West
Toronto, Ontario
MSV 3J1
Telephone: 416.620.0779
Toll Free: 1-877-HEATH-TO
, 1-877.432.8486
Fax: 416.620.9416
www.heathlambert.ca
Attention: Carol Carbery
Manager, Industry Sector
Revenue Support Centre
Dear Carol,
Writer's Direct Dial Number: (416) 620-1993, m.. 226
Writer's e-maIl Address:!ltlmmlns@haltla.ca
,,-..
The Corporation ofthe City of Pickering
Account No. 1623796; Firm No. 22211SA
I acknowledge the receipt of copies of two letters from Beverly Read, in respect of the potential
transfer of om client from Schedule 1 to Schedule 2. As the first letter is dated July 9th, in effect it
establishes a sixty-day decision/payment deadline date of September 7th,
Unfortunately, as in many previous instances, this deadline requires decisions to be made
during the summer vacation season and, as usual, that has proven to be difficult - likely impossible. It
appears that the matter cannot be dealt with by Council's Executive Committee,until September 24th,
and the Committee's recommendation will go to Council for decision on October lot.
Respectfully I request an extension of the deadline date imposed on the City of Pickering. Six-
ty days should be sufficient; I anticipate that a decision will be reached a month earlier. '
Thanking you, and anticipating yom quick response, I remain,
Cordially,
&~-
Donald G. (Don) Timmins,
Senior Consultant
cc: City of Pickering
WSIB - 3rd Floor
RECEIVED ON
AUG - 3 ZOUl
J. LEONE
Heath Lambert Benefits Consulting IncJExperts consefls en avantages sociaux Ine. '
VANCOUVER
WINNIPEG
TOR 0 'N T 0
OTTAWA
-
-
WSIB Workplace Safety &:
A 0 . lWf.! Insurance Board"
'1: .'" ONTARIO
CSPlJAT Commission de Ia 5l!a.ui~
~et de l'assuraru:e
amtre 1es accidents du lravail
Taranto Office
Bureau de Toronto
200 Front Street West
Toronto ON MsV 3J1
200, rue Front Ouest
Toronto ON MSV 3J1
August 10, 2001
Telephone:
(416) 344-3323
1-800-387-8638
Telephone:
(416) 344-1013
1-800-387-8638
Transmitted by Facsimile to
dwioht@citv.oickerino.on.ca
d.timmins@TORONTO.HEATH.CA
TTY: ATS:
1-800-387-8638 1-800-387-0050
Fax: Telecopieur:
(416) XXX-lOCO( (416) XXX-lOCO(
Mr. Donald G. Timmins, Consultant
Heath Lambert Benefits Consulting
191 The West Mall, Suite 305
Etobicoke, Ontario
M9C 5KB
When writing to board please Indiquez Ie numero de doss!
quote the above file number. dans toute correspondanee
avec la Commission.
Dear Mr. Timmins
Re: Corporation of the City of Pickering - Account 1623796
This letter is further to your August 2, 2001 letter, requesting an extension of your client's due
date for submission of their departure fee, required for transferring to Schedule 2.
I have agreed to an extension of 60 days, from the previous deadline date noted on WSIB's
letter to your client, dated July 9, 2001. Please be aware that this deadline will not be further
extended and, in addition, interest will be charged from the original deadline date until payment
is received.
-
Sincerely,
C!Md. ~
Carol Carbery
Manager
Revenue Sector Support
c Corporation of the City of Pickering
Bev Read, Account Manager, WSIB
Fay Tomlinson, Senior Schedule 2 Specialist, WSIB
-