WorkSafeBC Announces Increase in Workers' Compensation Premiums for 2014
WorkSafeBC recently announced that there will be rate hikes again in 2014. This will mean that most employers in British Columbia can expect to pay higher premium costs for the second year in a row. WorkSafeBC projects that employers will pay an average base premium rate of 4.8% more in 2014. This is close to the increase employers experienced last year (5% in 2013). In dollar terms, this means that on average, the 2014 average premium rate will be $1.70 for every $100 of assessable payroll (which is up 7 cents from $1.63 in 2013).
WorkSafeBC reports that the two main causes for the increase in rates are (i) increased claims costs (largely related to an increase in the volume of long-term disability awards, and increasing health care costs, and (ii) poorer than expected returns on WorkSafeBC’s investment portfolio. According to WorkSafeBC, this means that a small business with a payroll of $500,000, with an average premium rate, will experience a rate increase of $400 for 2014 (for an annual premium of $8,500) - a monthly increase of about $33.
WorkSafeBC is taking $319 million from its capital reserve and certain other accounts to keep the “required increase” in the base premium rate below 5%. Without this subsidy, the average base premium rate next year would be $1.85 per $100 of assessable payroll (15 cents higher). WorkSafeBC has also decided to limit the maximum premium increase for individual industries to 10% for 2014 (the normal cap is 20%).
The Business Council of British Columbia (“BCBC”) issued a Business Alert noting that although this is the second consecutive rate hike, it will be only the second year of rate hikes in a decade. According to BCBC, British Columbia has a good record of managing claims costs and premiums compared to most other workers’ compensation jurisdictions in Canada and the US. BCBC also noted that employers fund the full cost of the system and, in aggregate, paid $1.16 billion in premiums in 2012 – equivalent to about half of the total provincial income tax payments made by businesses operating in the province.
Given that premiums amount to a significant annual payroll expense, it is worth checking WorkSafeBC’s assessment for your organization from time to time to ensure that you have been assessed in the right industry and that the correct claims history has been applied.
For more, see WorkSafeBC’s announcement: http://www.worksafebc.com/insurance/premiums/2014_prelim_rates/default.asp
Insurance workers compensation