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NEER & MAP Overview & Financial Impacts

NEER & MAP Overview & Financial Impacts. HCHSA Safety Group 2005. Prevention Division Phone: (416) 344-1016 Toll Free: 1-800-663-6639 FAX: (416) 344-3493 Web site: www.wsib.on.ca. Experience Rating. What is it? Modifies an employer’s premium based on accident experience

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NEER & MAP Overview & Financial Impacts

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  1. NEER & MAPOverview & Financial Impacts HCHSA Safety Group 2005 Prevention Division Phone: (416) 344-1016 Toll Free: 1-800-663-6639 FAX: (416) 344-3493 Web site: www.wsib.on.ca

  2. Experience Rating • What is it? • Modifies an employer’s premium based on • accident experience • Through refunds/surcharges (NEER) or rate group • premium rate adjustments (MAP) • Purpose? • Encourage employers to promote workplace • health and safety

  3. How MAP Works 1994

  4. MAP Table of Adjustments Average Premiums 1,000-1,499 1,500-1,999 2,000-2,499 2,500-4,999 5,000-9,999 10,000-14,999 15,000-19,999 20,000-25,000 0 Claims -5% -5% -5% -5% -6% -7% -8% -10% 1 Claim 0% 0% 0% 0% 0% 0% 0% -5% 2 Claims +8% +8% +7% +7% +6% +5% +3% 0% 3 Claims +20% +19% +17% +15% +13% +11% +8% +5% 4 Claims +40% +38% +34% +30% +26% +22% +16% +11% 5 Claims +50% +50% +50% +50% +44% +38% +30% +22% 6 Claims +50% +50% +50% +50% +50% +50% +46% +35% 7 + Claims +50% +50% +50% +50% +50% +50% +50% +50% An additional 10% increase applied for each claim with costs > $5,000 An additional 25% increase applied for fatalities Maximum increase is 50%

  5. How NEER Works OrganizationsActual Claim Cost Components of Gross Premium Rate Pooling ChargeUnfunded Liability (Retired by 2014) NEER Insurance Pooling Charge (LLOD / Claim Limits /Firm Limits / SIEF) NEER Insurance Pooling Charge(LLOD / Claim Limits /Firm Limits / SIEF) NEER Actual Claim Cost NEER Expected Claim Cost Compared Overhead(WSIB/MOL/SWA/LEG.) Overhead(WSIB/MOL/SWA/LEG.) Projected Future Cost (Reserves) Expected Cost of New Claims Benefit Payments to Date Refund $or Surcharge $ Surplus (EC>AC) or Deficit (EC<AC) Rating Factor X =

  6. 3rd Final review 3rd qtr 3rd qtr 3rd qtr 2002 2003 2004 2005 Accident Year Projected Costs NEER Three-Year Review 1st review 2nd review Actual Claims Costs

  7. NEER Return-to-Work Examples Injury Date: May 1, 2004 Weekly Benefits: $500 Overhead Factor 47% Past Awards to: 30Sep05

  8. A Financial Business Casefor Health & Safetyin Ontario Workplaces A Simple Costing Tool using your NEER Statement

  9. Part 1: Calculating the Financial Business Case for Health & Safety Using NEER Information

  10. Acc. Year Premiums ($) Exp. Cost Factor (%) Expected Costs ($) NEER Costs ($) Rating Factor (%) Perf. Index 2001 550,000 43.13 64.48 237,215 300,300 1.27 Cost Sheet 1: Maximum Rebate 300,000 300,000 $237,215.00 1. Expected Costs: 2. Rating Factor: 3. Max. Potential Rebate: 64.48 % $152,956.23

  11. Acc. Year Premiums ($) Exp. Cost Factor (%) Expected Costs ($) NEER Costs ($) Rating Factor (%) Perf. Index 300,300 2001 550,000 43.13 64.48 237,215 1.07 Cost Sheet 2: Actual Rebate/Surcharge 300,000 300,000 300,000 4. NEER Costs: 5. Expected Costs: 6. Difference: X Rating Factor: 7. Rebate/Surcharge: $300,300.00 $237,215.00 $63,085.00 64.48 % $40,677.21 DR

  12. Cost Sheet 3: Unrecovered Rebateand Surcharge Per Claim 8. Unrecovered Rebate and Surcharge (Line 3 + Line 7): Max Rebate $152,956.23 CR Line 3: Actual Line 7: $40,677.21 DR Unrecovered Line 8: $193,633.44 DR 9. Average Unrecovered Rebate and Surcharge Per Claim: Unrecovered Rebate (Line 8) ÷ No. of Claims = _______________ = _______________ $193,633.44 ÷ 15 $12,908.90

  13. 10. Unrecovered Rebate (Line 8): 11. Company Profit Margin: 12. Gross Sales Required: (Line 10 ÷ Line 11): Cost Sheet 4: Determining Gross Sales Required to Recover NEER Costs $193,633.44 6 % $3,227,224.00

  14. Part 2: Calculating the Financial Business Case for Health & Safety Using Total Costs of Injuries (NEER Information & Company Information on Direct/Indirect Costs of Injuries)

  15. Cost Sheet 5: Determining Approx. Total Cost Per Injury/Illness $193,633.44 13. Unrecovered Rebate (Line 8): 14. Determine Direct/Indirect Costs: $882,825.00 $1,076,458.44 15. Add Line 13 and Line 14: 15 16. Determine No. of Claims: 17. Divide Line 15 by # of Claims: = Approx. Total Cost per claim $71,763.90

  16. Cost Sheet 6: Determining Gross Sales Required To Recover From Overall Costs of Claims $1,076,458.44 18. Overall Costs (Line 15): 6% 19. Company Profit Margin: 20. Gross Sales Required (Line 18 ÷ Line 19) $17,940,974.00

  17. Web site: www.wsib.on.ca NEER Cost Tool Where? Prevention - Incentives and Training - New Experimental Experience Rating (NEER) Program - NEER Cost Tool Map Cost Tool Where? Prevention - Incentives and Training - Merit Adjusted Premium (MAP) plan for small business - MAP Cost Tool How much do workplace injuries cost? (NEER) Where? Prevention - Incentives and Training - New Experimental Experience Rating (NEER) Program - NEER Cost Fact Sheets

  18. Reminders Questions? Call 1-800-663-6639 or (416) 344-1016 Drive Safe, Work Safe, Play Safe Be Safe!

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