Thank you for the opportunity to provide feedback on the WSIB s Preliminary Rate Framework Proposal.

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3 WSIB Rate Framework Consultation Ontario Power Generation Submission October 2, 2015 Workplace Safety & Insurance Board Consultation Secretariat 200 Front Street West, 17 th floor Toronto, Ontario M5V 3J1 Attention: Thank you for the opportunity to provide feedback on the WSIB s Preliminary Rate Framework Proposal. Ontario Power Generation (OPG) joined together with Bruce Power, Enbridge Gas Distribution, Hydro One and Union Gas ( The Group ) to provide a group submission on this matter. The group submission captures OPG s views on most all of the technical issues. We will take this additional opportunity to expand further on some of the other important issues. We also wish to offer suggestions on legislative, policy and administrative considerations that will help the WSIB build on its mission to provide employers with no-fault collective liability insurance and access to industry-specific health and safety information. OPG wishes to commend Board staff, particularly J.S. Bidal and Earl Glyn-Williams for the dedication that they have brought to considering The Group s views. They both generously made themselves available to meet with our group and others on several occasions and provided thoughtful and detailed responses to questions. It was clear that both J.S. and Earl were genuinely interested in the views and opinions of employers. This gives us confidence that the WSIB s final product will offer a fairer and more equitable process to set employer premium rates and more effectively reflect individual employer claims experience. About Ontario Power Generation Ontario Power Generation is Ontario's clean energy provider, producing more than half of the electricity that Ontario homes, schools, hospitals and businesses rely on each day. We are committed to ensuring our energy production is reliable, safe and environmentally sustainable for Ontarians today and for the future. OPG has a long-standing commitment to employee health and safety with an ultimate goal of zero injuries. To achieve this goal, OPG relies on a managed approach to health and safety, and on maintaining a strong safety culture with the support of workers and union partners. This commitment has resulted in OPG s safety performance being consistently in the top quartile of comparable Canadian utilities Page 1 of 5

4 Ontario Power Generation s Position The Importance of WSIB Autonomy The need for this rate reform process has its origins in the 2009 Annual Report of the Auditor General of Ontario. This report challenged the WSIB s funding policies and performance. The Auditor General s report expressed concern about the long-term financial viability of the WSIB given its apparent inability to reduce or eliminate its unfunded liability. Professor Harry Arthurs in turn pointed out that while the WSIB shared some of the responsibility by failing to adequately price new claims costs, the primary responsibility rested with the governments of the day. Arthurs stated that successive governments made a significant contribution to the UFL by legislating a standard of sufficient rather than full funding and by interfering in the rate setting process to keep rates below the level needed to achieve full or even sufficient funding. It is OPG s view that governments should not take a leading role in the affairs of the WSIB, except in the most urgent and exceptional of circumstances. A common feature of well-managed public organizations is the presence of governance structures which allow the Board and senior management the freedom to make decisions in the best interest of the organization. OPG recommends that WSIB look to the appropriate professional body to undertake a review of the adequacy of the WSIB s existing corporate governance structure. It may be that changes are required to support the WSIB s ability to better carry out its related functions and responsibilities. Transfer of Accountability to the Ministry of Finance By removing much of the WSIB s Safety functions and transferring these responsibilities to the Ministry of Labour, the government took an important step towards positioning the WSIB as a true insurance company. The government can continue down this path by transferring oversight for the WSIA and the WSIB from the Ministry of Labour to the Ministry of Finance. In our view the Ministry of Finance is more appropriately skilled to monitor a large and complex group insurance plan. The Ministry of Finance is likely better equipped with the competencies, experience and natural interest in the regulatory oversight of a large financial organization like the WSIB. The Need for Rate Reform OPG agrees with the need for premium rate and employer classification reform. The move to freeze premium rates over the past several years has resulted in some employers paying less than they would otherwise be required to pay, while leaving other employers paying more than the costs they were responsible for. This is clearly not a fair and sustainable funding model. This approach also hampers the ability of the Board to pay off the unfunded liability in a fair and equitable manner. NAICS Industry Categories The WSIB is considering an expansion from the initially proposed 22 Class structure to a larger 32 Class structure. OPG supports the expansion to the 32 class structure but we urge the WSIB to review the feasibility to expand the number of classes even further to minimize risk disparity. Page 2 of 5

5 Additionally, we suggest that the WSIB review the appropriate class financial thresholds i.e. the level of insurable earnings in a class to achieve the required level of predictability. It may be that the proposed standard of $1B is too high. Class Level Premium Rate Setting The Group provided detailed comments on - Employer Level Premium Rate Adjustments. This is an important aspect of the reform process and on the whole, OPG has no additional formal comments on the mechanics underlying these processes. But, OPG does wish to comment and raise questions on several points related to Class B Level Premium Rate Setting. This in our view is the most critical and important aspect of this endeavour. Calculation of Average Risk Band Rates We note that the July Rate Group Analysis Document, that detailed the Class B constituent rate groups 833, 835, 838 yielded what appears to be an unusual risk profile. A small number of employers moving to class B from these rate groups were placed above the average risk band rate of $1.27. But a significant majority of employers from these three rate groups were placed below the average risk band rate. And, in the case of employers in rate group 833 each employer was placed below the average. On this same theme, we also note an analysis document from the CME. It included figures for - Billed 2014 Premium Rates, and New Structure Rates. For rate groups 833, 835 and 838, the NCC component for 2014 billed premium rates are: $0.24, $0.39, and $0.30 respectively. But when these figures are mapped over to Class B the NCC figure is $0.41. The questions we have are as follows: How was the average risk band rate calculated for Class B? What accounts for an average NCC rate that is higher than what appears to be the constituent components that make up the rate? Are there other rate group employers moving to class B? Are there employers in rate groups 833,835 and 838 moving out of class B? Calculation of Administrative Costs Currently this is calculated on the basis of 50% Insurable Earnings and 50% New Claim Costs - for both the WSIB s Legislative Obligations and for the WSIB s General Administration Costs. Arguably the WSIB s obligation to fund legislative obligations are not connected to claim performance, whereas the WSIB s administrative expenses are highly influenced by the level of claim activity. The WSIB should consider the feasibility of calculating the Legislative Obligations fee based on insurable earnings, and the WSIB administration fee based on 50% I.E. and 50% NCC? This method would be more consistent with the principle of assigning costs based on individual employer performance. Long Latency Occupational Diseases (LLOD) In our Group submission we proposed that the cost of LLOD claims be shared equally by all employers across Schedule 1. This is a point that OPG wishes to emphasize. Page 3 of 5

6 The adjudication of occupational diseases poses particular challenges to WSIB staff. The WSIB regards the last exposure employer as the employer of record. But it is also evident in many cases that the last exposure employer is not necessarily the responsible employer. Many workers are exposed in many different workplaces across multiple rate groups and classes. One approach in these cases, when the worker was employed in exposure employment with more than one Schedule 1 employer across different classes, would be for the WSIB to apportion the costs between the various classes. But as a practical matter, and given the evidentiary challenges posed in the adjudication of occupational disease claims, it may be more fair and cost effective to simply allocate the cost across the whole of Schedule 1. This is OPG s position. Additionally, the group suggested that a different process is required to consider entitlement for new and/or emerging occupational diseases. OPG recommends that the WSIB review the recommendation from the 2005 Occupational Disease Advisory Panel (ODAP) report. Employer groups raised concerns with respect to setting up any kind of a permanent body, but OPG is of the view that an appropriately constituted nonpartisan, no-stakeholder and professional/ scientific body, with no permanent staff or budget would prove beneficial in this regard this regard. OPG would be pleased to offer further details on how this might be implemented. Nonpartisan Body to Consider New Areas of Entitlement The rate reform paper acknowledges the significant impact that presumptive legislation has had on the finances of the system. The 2005 Final Report of the Chair of the Occupational Disease Advisory Panel made the following recommendation with respect to considering adding disease processes to schedule 3: Where the disease outcome is common in the general population and is often attributable to non-occupational factors and the work-relatedness of individual claims is often rebutted, it is preferable not to use Schedule 3 (our emphasis). The recommended standard for listing in schedule 3 was Strong and consistent epidemiological evidence supporting a multi-causal association with the disease, one cause being occupation. OPG is concerned that that appropriate standard of review for adding or removing disease processes to Schedule 3 is not in place in Ontario. As an example, presumptive legislation for firefighter was introduced in 2007 and again in But, we note that the link between cancers and firefighter remains controversial. As recently as 2013, a study published in the Occupational and Environmental Medicine journal found a correlation but no direct causal link between firefighting and cancer. The study s authors concluded that while firefighter exposures were possibly carcinogenic, no direct causative link was conclusively established. OPG recommends that an independent and suitably qualified arms length organization be appointed to consider any future move to add disease processes to schedule 3. A suitably appointed expert body will bring greater confidence to both workers and employers that a decision to add disease processes to schedule 3 is based on sound scientific and epidemiological principles. Page 4 of 5

7 SIEF It is probably not an exaggeration to say that - no employer in Ontario knows how much they pay, in their annual premium, for SIEF coverage. And, it is probably also true that some employers would be surprised to know that they pay anything at all. In our group submission we suggested that the WSIB consider the feasibility of allowing individual employers to opt out of SIEF coverage. But, more generally the WSIB should provide employers with details of the premium cost with respect to how much they pay for SIEF coverage. Such information would result in a more consider debate about the value effectiveness of SIEF coverage. On this same theme, the WSIB should consider developing an annual premium statement for employers that detail how much of their premium dollars are allocated to different claim cost types and program categories. Fatality Policy We expect that the WSIB s current fatality policy will be rescinded in the new rate reform scheme. The revised prospective experience rating program will not pay out rebates to employers so the foundation for the Fatality policy will no longer exist. During the consultation process the WSIB asked for input with respect to options to replace this policy with new measures. OPG agrees that the existing policy should be repealed, but we question the need for developing any type of new policy at all. OPG agrees that there is a place for reasoned debate on the adequacy of the Provincial and Federal sanctions that are brought to bear on employers whose actions, or inaction, contribute to a workplace fatality. But we do not believe that it is appropriate for the WSIB to play a role in delivering these sanctions. Employers can look forward to due process in both the provincial and federal forums. But, the WSIB is not equipped, nor should it seek to be able, to provide the same level of consideration to employers. And in the absence of any such consideration, the imposed penalties become arbitrary and do not contribute to improvements in Safety measures necessary to prevent fatalities. Need to Imbed Insurance Principles into the WSIB. Finally, OPG agrees with the opinion expressed in paper 2 at page 4 that the Ontario s Workers Compensation System should be considered an insurance scheme and not a payroll tax. But, we are less inclined to agree with the statement that worker's compensation is based on principles similar to those of insurance products in the private market. The WSIB may wish to consider that the sentiment among some stakeholders that WSIB premiums are a payroll tax - comes from the absence of the structures and operating principles that distinguish payroll tax program from insurance based operations. A number of other stakeholders, over the years, including CME, COCA and the Ontario Chamber of commerce have voiced these concerns in different forums. OPG echoes those same comments. OPG agrees that reform is necessary to bring more innovation into the WSIB s insurance products. But we are not taking a particular position on the best way to achieve these objectives. We urge the WSIB to make available a wide range of data and information about claim rates, duration and costs. This information would enable employers to formulate suggestion on these matters. OPG would certainly be willing to contribute towards those objectives. Page 5 of 5