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WCB reports operating surplus and record low injury rate
in 2003
Richmond,
B.C., April 29, 2004 — The Workers' Compensation Board achieved
an operating surplus of $155 million in 2003, compared to an operating
deficit of $571 million in 2002 as a result of a lower injury rate, shorter
duration of injuries to injured workers, lower benefit costs and strong
investment returns. This change marks a return to positive operating results
following two years of operating deficits in 2001 and 2002.
During the year, the injury rate — the primary measure of workplace health and safety in B.C. — was reduced to an all-time low of 3 short-term disability claims paid per 100 person-years of employment. This was almost 7 percent lower than 2002 and 42 percent lower since 1994. The reduction from 2002 to 2003 alone translated to approximately 4,000 fewer workers suffering time-loss injuries, $60 million lower claim costs, and 190,000 more productive work days for the economy.
"Injuries drive our costs," said WCB President and CEO David Anderson. "Successful reduction of the injury rate is a result of workers, employers, unions, employers' associations and the WCB all working together to make B.C. workplaces safer and healthier. Through lower injuries, the province realizes important economic benefits; but more importantly, thousands of workers and their families are spared unnecessary pain."
WCB's operating income increased $229 million to $1.57 billion as investment and premium income both increased over 2002 levels. Operating expenses decreased by $261 million to $1.49 billion to reflect lower claim costs across all claim categories.
Investment income rebounded strongly in 2003, bolstered by robust market returns and a continuing prudent investment strategy. The Board's investment portfolio yielded a market value return of 13.4 percent or 11.8 percent in excess of inflation and 2.6 percent in excess of the portfolio benchmark. Prudent hedging of the WCB's US dollar exposure prior to the decline of the US dollar was the primary contributor to the return out-performance.
Total gross administration expenses decreased by $23 million (7.1 percent) in 2003. Administrative expenditures compare well with other jurisdictions across Canada.
"At the end of 2003, the WCB is fully funded," said Chief Financial Officer Sid Fattedad. "While being fully funded means overall rate stability, we want to build towards a more robust funding level so that there is some cushion in the future against volatile financial markets or economic expansion that may exert pressure on injuries and costs."
Employer premium rates remained relatively stable in 2003 from 2002, with a modest 2 percent increase in the aggregate premium rate to $1.921 per $100 of assessable payroll. In 2004 the average base premium rate has remained virtually unchanged, in sharp contrast to many other jurisdictions across North America where rates for workers' compensation and general insurance are rising dramatically.
"The strong investment performance of the WCB combined with a lower injury rate and reduced operating costs have translated to lower premium rates for the majority of B.C. employers in 2004," said Fattedad. "Further declines in employer premium rates will primarily depend on lowering the injury rate, reducing fatalities and serious injuries, and improving return-to-work outcomes for injured workers."
Other highlights
The average short-term disability claim duration was 46.5 days in 2003,
down from 47.2 days in 2002. This was a continuation of a trend that has
seen the average short-term claim duration fall annually since reaching
a high of 51.6 days in 1999. The shorter duration was partly attributed
to improved support, counseling, and return-to-work services offered by
the WCB to injured workers earlier in the claims process.
The total number of claims first reported to the WCB declined by 3 percent to 154,443 in 2003 from 2002, reflecting a continuing decline in which the number of new claims has fallen by more than 16 percent since 2000.
To match the lower volumes of claims, and to provide improved service to stakeholders, the WCB underwent major internal restructuring in 2003 and implemented substantial legislative changes, including the creation of a new, more streamlined appeal structure. The changes were part of a continuing reorganization process designed to improve efficiency, enhance accountability, and improve front-line service to workers and employers.
"Through consultation with our customers and staff, we've identified many areas where improvements can be and are being made," said Anderson. "In this context, we will continue to realign our business functions and programs in 2004 to enhance customer service for all of our stakeholder communities. The most important "customer service" improvement we could hope to achieve would be to help our workplace partners drive down the number of serious injuries and deaths in the workplace. These injuries continue at an unacceptable rate and together we need to correct that trend. Finding ways to do that will be a major focus in 2004 and beyond."
The WCB's 2003 annual report is available online. For copies of the executive summary, please contact amaxwell1@wcb.bc.ca.
Serving nearly two million workers and about 173,000 employers, the Workers' Compensation Board of B.C. is a provincial statutory agency governed by a Board of Directors. The WCB is committed to a safe and healthy workplace, to providing return-to-work rehabilitation and legislated compensation benefits to workers injured as a result of their employment, and to being responsible, accountable, and financially sustainable.
1After transition and surplus.
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