O/Os will be hit hard by WSIB premiums: OTA

by Dean Askin

TORONTO, Ont. – As the new year starts, Workplace Safety and Insurance Board (WSIB) premiums for Ontario’s trucking industry have jumped 5.9 per cent, and the Ontario Trucking Association(OTA) says that’s enough to drive some owner/operators underground when it comes to paying WSIB premiums.

“It’s not good. These are tough times, which is never a good time for a six per cent increase. Three or four years ago, the industry could absorb it,” says Doug Switzer, manager of government relations for the OTA.

Owner/operators paying their own premiums will especially be hard hit, Switzer says. “This increase could drive more drivers out of the system and they’ll stop paying premiums.”

The WSIB 2003 premium for the provincial trucking industry is $5.94 per $100 of insurable earnings, up from $5.61 last year.

The industry had been facing a steeper 11 per cent increase, but the OTA battled the Ministry of Labour and managed to have the premium increase limited to 5.9 per cent.

Switzer says although the increase for Ontario trucking and the possibility that some O/Os will stop paying premiums doesn’t mean WSIB will stop paying out on accident claims, it “escalates” the problem of making sure everybody who should be paying WSIB premiums, is paying them. “They’ll start looking for someone to pay the premiums. It’s a shared risk issue.”

“I’d have to echo what the OTA is expressing,” says Ralph Boyd, president of the Atlantic Provinces Trucking Association (APTA). “It could really hurt some companies and smaller owner/operators.”

He says the APTA is “seeing an increase” despite that New Brunswick has a “fairly stable and financially sound board.” At press time, New Brunswick had not released its new premium rates for 2003.

Ontario and other provinces that have raised their workers’ compensation premium rates for 2003 cite increasing health care and medical costs, resulting higher claims costs, and declining investment returns as the reason for rate increases.

In its 2001 annual report, the Ontario WSIB reports total revenues for the year were $3.5 billion, $408 million less than in 2000. Its 2001 premium revenues were $2.7 billion, or $5 million less than the previous year.

The WSIB says it has unfunded liability, which means it doesn’t have enough funds to pay for the full life of all current claims. The board is aiming to wipe out that unfunded liability by 2014 according to its latest annual report.

Ontario truckers actually got off lucky for 2003 compared to their counterparts in Alberta. WCB premiums there have risen a whopping 25 per cent to $6.18, and specialized trucking has seen an increase of nine per cent, to $6.12.

The Ontario WSIB says it’s facing an average lost-time injury cost of $14,333 in 2003, up from $12,223 last year. More than 90 per cent of the increase is directly related to rising health care costs, the board says.

Costs and rates are going up in Ontario, but the WSIB notes in its latest annual report that customer satisfaction with its overall services has also increased.

In 1999, only 55 per cent of employers reported they were satisfied with WSIB service levels, but that increased to 70 per cent in 2001. Injured workers’ satisfaction climbed from 63 per cent to 68 per cent over the same period.

“I met with the president of the Manitoba WCB a few weeks ago and we were told that there would be no increases for 2003. I was very pleasantly surprised. I was hoping for nothing.”

He says the Manitoba WCB has been practicing good claims management and has been very proactive on its expenses. “We’re always putting pressure on them to do better, but they’re doing well.”

Dolyniuk notes, however, that Manitoba’s truckers took a mid-year hit last July of 4.7 per cent that the MTA knew was coming, when other provinces didn’t have a rate increase.

In addition to being against a rate increase, the OTA was also upset that it had only a few weeks instead of months to deal with it. “The arguments for the increases are fair enough, but they didn’t give us much time to examine what’s a paper loss and what’s a real loss,” says Switzer.

The OTA questions whether premium increases in Ontario are really necessary, or whether they are passed on to end users to compensate for high overhead and administration costs.

“The WSIB has one of the highest overhead costs in Canada,” says Switzer.

Compensation boards’ overhead rate is part of every rate, with 12 per cent going towards overhead costs, notes Brian Field, manager of assessment programs at the Workers Compensation Board of Nova Scotia.

Premium rates for 2003 have actually dropped significantly for truckers in that province. The Nova Scotia rate for general trucking and forest products is down seven per cent to $4.95 from $5.30. Premium rates for bulk liquid and sand and gravel haulers decreased from $3.91 to $3.38, a 14 per cent drop.

Field says the Nova Scotia WCB spends less on administration than other boards, and is very conscientious about keeping its administration costs under control. “We’re accountable to the public, so we want to make sure we’re spending employers’ money effectively.”

PEI truckers are also faring well. Average workers’ compensation rates climbed from $1.97 to $2.29 between 1998 and 2002, while general trucking rates have dropped from $3.33 to $3.14 with only one spike in between. The trucking decrease is attributed to good performance in accident claim exposure.

The OTA’s Switzer says the WSIB is putting a revenue shortfall on the back of an industry that can’t afford it. “Just because your investment rates have dropped, it doesn’t necessarily mean you’re losing money,” he says.

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