The WCB to Distribute $281 Million Surplus to Employers

Eligible employers to receive 100% of excess surplus in 2016

REGINA, SK – Today, the Saskatchewan Workers’ Compensation Board (WCB) announced a $281.5 million surplus will be distributed to employers in 2016 as part of the 2015 surplus announced at its annual general meeting in May.

At the WCB’s 2015 year end, the funded position was 144.7 percent, which exceeded the 105 to 120 percent funding policy target range, resulting in a surplus of $281.5 million. The surplus will be distributed to eligible employers in two instalments in July and December of 2016.

Chairperson Gordon Dobrowolsky said, after seeking input from both worker and employer representatives, and weighing several factors, the Board made the decision to distribute 50 percent of the 2015 surplus to employers in July 2016 and the remaining 50 percent by the end of this year.

“As a Board, we are legislated to ensure the present and future financial security of the compensation system in our province,” Dobrowolsky said. “We carefully weighed our decision on behalf of both employers and injured workers. We considered market uncertainties and investment return volatility, a funding policy review, cash flow requirements, economic uncertainty, and changes in accounting and actuarial standards as well as the potential impacts of the Committee of Review recommendations.
   
Dobrowolsky said the increase in the 2015 funded position is substantially due to investment income.

“We are pleased to see that there will be a distribution to employers, which will help grow the economy,” said Don Morgan, Minister of Labour Relations and Workplace Safety and Minister Responsible for the Workers’ Compensation Board. “WCB has done an excellent job managing their investments and we thank them for the work they do on behalf of the working women and men of Saskatchewan.”

Employers are eligible for the 2016 surplus distribution if their net premiums were greater than their claims costs over the three-year period from 2012 to 2014. A three-year period was chosen to ensure employers were not disqualified based on one or two years of higher claim costs. The amount of the distribution that each eligible firm receives was determined based on their 2014 base premiums because 2014 is the most current year of assessed actual payroll.

The WCB’s funded position is impacted by the WCB’s investment performance, which fluctuates depending on world economic activity. The last similar surplus distribution from the WCB was in 2015 based on the 2014 funded position.


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C.O.R. RECOMMENDATIONS 2015

Who we are:

The Saskatchewan Hotel and Hospitality Association is a not-for profit organization representing members that contribute over half a billion dollars of payroll to the provincial economy.    

 

Why recommendations for change are necessary:

For many years our industry has had serious concerns with the policies, procedures and activities of the Saskatchewan WCB.  The root cause of concern for our industries frustrations lie in the ineffective oversite of the Administration.  Oversite responsibility of the Administration and its activities are that of the WCB board.  The WCB Board has been remiss in providing the oversite needed for an organization of this size and complexity.  As a result the board has allowed the administration to act with impunity and remain deaf to the concerns of the employers that fund WCB operations.

 

The Saskatchewan WCB has congratulated itself for dropping injury rates and decreasing premiums but failed to address the ineffective way in which they achieved this success.  A fundamental shift in the governance model and structure of the Saskatchewan WCB is required if true overall operational effectiveness is to be achieved.      

 

Recommendations:

Primary:               Board Governance

·         Create a Policy Governance Results-Based Board. 

·         Increase number of board directors to 9.

·         Board directors are to be voluntary, part-time directors.

·         Create Appeals Tribunal separate from board responsibilities.

 

Secondary:         Administrative Oversite               

·         Mandate the creation of stakeholder’s advisory committee. 

·         Legislate mandatory, regularly scheduled employer stakeholder committee consultation sessions.  Committee would review and make recommendations related to policies, procedures and board and chairperson appointments. 

·         Committee of Review Recommendations Process:

1.       Recommendations submitted to the Minister of Workplace Health and Safety.

2.       The Minister of Workplace Health and Safety reviews and directs WCB Board on implementation of changes. 

3.       WCB Board directs Administration to implement recommended changes. 

4.       Quality Assurance process will occur after recommendations have been implemented by the Administration.  Q.A. will consist of consultation with stakeholders committee or Committee of Review Members and the Minister of Workplace Health and Safety.  Both parties review and ensure that all changes implemented meet mutually agreed upon standards. 

·         Review of current Rate Setting Model as per Asset Liability Study.  Regular reviews of the rate setting model should be mandated by law and performed by an external stakeholder committee.  This committee will also review all management assumptions and the committees decisions will be binding. 

·         Review of Funding Policy.

1.       Funding range of 100% to 120% targeted percent of 110%. 

2.       Determine the percentage of surplus distributions in considering its risk tolerance level.  Funds exceeding 120% are to be refunded, in whole, immediately.  

3.       The Disaster and Second injury and re-employment reserves be eliminated, and the circumstances that give rise to cost relief for employers be maintained and determined through a cost relief policy.

4.       Consider the treatment of unrealized gains and losses on investments as well as the impact of a market related rate of return on the benefit liabilities and claim cost expense.  

·         Review of Safety Associations Funding Agreement and recommendations for addition to the act:

1.       146 (3) the WB Board shall maintain fiduciary responsibility to ensure the association remains in compliance with subsections (1) and (2)

2.       146 (4) The association’s Board of Directors shall maintain primary fiduciary responsibility of the association.

3.       146 (5)  Directive authority of the association shall lie with the association’s Board of Directors and ultimately with the employers of the classes that comprise the association. 

4.       146 (6) A survey of the employers of the classes that comprise the association, for the purposes of determining continued funding of a safety association, can only be triggered at the request of 51% of industry class.  Such reviews can only be held once a year. 

 

Oversite and direction of the Safety Associations activities are the responsibility of the Safety Association Board of Directors.  Industry owns the safety associations not the WCB.  The WCB is to ensure that funds are collected in compliance with legislation as directed by the Board of the safety associations (which are composed of industry representatives).  The WCB does not have any other oversight role, nor should they.  

As safety associations pay WCB premiums they are entitled to advocate and lobby for effective change of WCB Legislation, Policies and Procedures.  Any reference to “advocacy” and “lobbying” must be struck from Safety Association Funding Agreements. 

·         Legislative compliance of Section 134 (1) a - c.  The current model used by WCB is in direct contravention of the act as it spreads fatality costs across all industries.  Cross-subsidization is allowed for administration or health and safety program costs but does not allow for cross-subsidization for fatality claims. 

Conclusion:

We know that the root cause of many of our challenges is the current WCB board structure.  We believe that the implementation of a governance, results-based board will have a positive effect on the overall effectiveness of the WCB and through appropriate policies provide the administration with the direction it needs to be successful.    

On behalf of the SHHA Board of Directors, we would like to thank the Committee of Review members for their time and consideration of these recommendations.  As we are to our membership, you have now become our voice with government.  As an outcome and irrespective of industry, we all want the same result, a WCB with effective oversite, operational effectiveness at all levels, transparency and above all, trust.  

The WCB Distributes Surplus to Employers

Eligible employers to receive $141 million of excess surplus

REGINA, SK – The Saskatchewan Workers’ Compensation Board (WCB) announced that cheques and credits totaling $141 million will be distributed by mail to employers this week as part of the excess surplus distribution first announced in May.

Letters were sent on Friday, July 17 to employers who are receiving a credit to their account. Cheques will be mailed to the remaining eligible employers this week. All eligible employers are expected to have received their portion of the excess surplus by the end of the month.

Chairperson Gordon Dobrowolsky announced in June that employers would receive 100 percent of the excess surplus. Dobrowolsky said, “The WCB has an investment portfolio that performed well in 2014 resulting in positive investment earnings. The WCB funding policy targets a funding position of 105 to 120 percent. By December 31, 2014 our funding, due to positive investment returns, grew to 132.2 percent exceeding the upper threshold of the Board’s funding policy.” As a result, the WCB Board approved the distribution of the excess funded position to employers.

Employers are eligible for the 2015 distribution if their net premiums were greater than their claims costs over the three-year period from 2011 to 2013. A three-year period was chosen to ensure employers were not disqualified based on one or two years of higher claim costs. The amount of the distribution that each firm receives was determined based on their 2013 base premiums because 2013 is the most current year of assessed actual payroll.

The WCB’s funded position is greatly impacted by the WCB’s investment performance which fluctuates depending on world economic activity. The last similar surplus distribution from the WCB was in 2001 based on the 2000 funded position and the funding policy.-30-

Media contact:

Carolyn Van der Veen – WCB Director, Communications

306 787-4386
1-800-667-7590 ext. 4386
cvanderveen<at>wcbsask.com</at>

WCB Refunds Your Money

As most SHHA members already know, many employers from across the province have received a cheque in the mail! In large part because of the efforts of the SHHA and the Stakeholders Advisory Committee to WCB, the WCB reversed an earlier decision to withhold $60 million of surplus funds and returned the entire amount of $141 million of YOUR money.  

WCB over-collection and management of premiums has been a pressing issue of our members for many years and it is encouraging to finally see a positive response to our concerns.  This is only one small part of a much larger issue as we continue to demand that WCB review its current RATE SETTING MODEL.  The model used to determine your rates, is antiquated, unresponsive and seriously overcharges employers, particularly hotels, for their premiums.

The WCB has stated in their 2015 Strategic Plan that a review will be conducted in the fall of this year.  The SHHA and the Stakeholders Advisory Committee is very interested in being a part of the review process and anticipates, that through a collaborative approach, there will be positive outcomes to our working with WCB regarding the rate setting model issue.

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