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Transition: Assessment

99/08/24-04

THE WORKERS' COMPENSATION BOARD OF BRITISH COLUMBIA

RESOLUTION OF THE PANEL OF ADMINISTRATORS

Re: Transition: Assessment

WHEREAS:

Pursuant to Section 82 of the Workers Compensation Act, RSBC 1996, Chapter 492 and amendments thereto (the "Act"), the Panel of Administrators (the "Panel") must approve and superintend the policies and direction of the Workers’ Compensation Board (the "Board") including policies respecting compensation, assessment, rehabilitation and occupational safety and health and must:

82(a)(ii)   review and approve operating policies of the Board,
82(a)(iii)   approve operating and capital budgets of the Board,
82(a)(v)   approve major programs and expenditures,
82(a)(vi)   plan for the future of the Board;

AND WHEREAS:

Section 39(1) of the Act authorizes the Board to assess, levy on, and collect from independent operators and employers in each class, by assessment rated on payroll, sufficient funds to meet the financial needs of the Board;

AND WHEREAS:

Section 39(2) of the Act authorizes the Board to make assessments in the manner and form and by the procedure the Board considers adequate and expedient;

AND WHEREAS:

Section 39(2) of the Act authorizes the Board to make special assessments applicable to an industry or part or department of it;

AND WHEREAS:

The Panel has approved the implementation of an assessment system featuring a new classification system and experience rating plan;

AND WHEREAS:

During the transition to the new assessment system some employer's assessments may increase by a substantial amount;

THE PANEL OF ADMINISTRATORS RESOLVES THAT:

      1. The new assessment system will be implemented, as much as possible, according to the attached document entitled The Transition: Assessment Rules (the "Transition Plan").
      2. If an employer's rate is being affected by the transition plan and the employer reorganizes in such a way that the employer's experience rating transfers in accordance with Assessment Policy 30:50:50, the effect of the transition plan is to be transferred to the reorganized employer.
      3. Retroactive adjustments to an employer's net rate are to apply to an employer's net rate as determined under the transition plan.
      4. Employers who register with the Board while the transition plan is in effect will be assessed, during the year that they register, at the base rate for the rate group in which they are classified.
      5. The shortfall in funding created by the existence of the transition plan will be funded using excess investment earnings over a period of five or more years. If the Board does not earn sufficient excess investment earnings, the shortfall will be funded by raising the aggregate base rate for all employers and independent operators.
      6. This resolution constitutes a policy decision of the Panel of Administrators.
      7. This resolution is effective January 1, 2000.

DATED at Richmond, British Columbia, October 13, 1999.

  By the Workers' Compensation Board
  DON COTT, CHAIR
PANEL OF ADMINISTRATORS

 

THE TRANSITION: ASSESSMENT RULES

GLOSSARY OF TERMS

Base Rate:

the rate for the Rate Group or Classification Unit published in the Classification and Rate List

Experience Rating:

the surcharge or discount which adjusts the base rate for a firm according to the Experience Rating Plan

Target Rate:

Base Rate adjusted by Experience Rating for a firm

Net Rate:

the rate a firm is charged including capping of the Target Rate as a result of any transition plan

THE TRANSITION RULES FOR 2000

Transition Plan Qualification Rules:

A firm will only qualify for the Transition Plan for 2000 where the following conditions apply:

  • the Target Rate for 2000 is more than $2 higher than the firm’s Net Rate for 1999; or,
  • the Target Rate for 2000 is more than a 40% increase over the firm’s Net Rate for 1999 (i.e. the Target Rate for 2000 is more than 1.4 times the Net Rate for 1999).

Where a firm does not qualify for the Transition Plan, the Net Rate for 2000 equates to the Target Rate for 2000.

Transition Plan Rules:

Where a firm qualifies for the Transition Plan for 2000, the following rules shall be applied in determining the Net Rate for 2000:

  1. The Net Rate for 2000 shall equal 1.4 times the Net Rate for 1999 where:
    • the Target Rate for 2000 for a firm is less than or equal to 2.744 times the firm’s Net Rate for 1999 (i.e. the Target Rate for 2000 would be achieved within a 3 year timeframe through a compounding 40% increase per year (NB: 1.43=2.744)); and,
    • 40% of the Net Rate for 1999 is less than or equal to $2.00.
  2. The Net Rate for 2000 shall be the compounding percentage required to achieve the Target Rate for 2000 over a 3 year period where:
    • the Target Rate for 2000 for a firm is more than 2.744 times the firm’s Net Rate for 1999 (i.e. the Target Rate for 2000 could not be achieved within a 3 year timeframe through a compounding 40% increase per year); and,
    • the compounding percentage increase would not result in an increase of more than $2.00 over the Net Rate for 1999 for the firm.

NB: The compounding percentage is determined as follows:
Multiplier = (Target Rate2000 ¸ Net Rate1999) 1/3

Compounding Percentage = (Multiplier-1)*100

  1. The Net Rate for 2000 shall be the Net Rate for 1999 plus $2.00 where either:
    • 40% of the Net Rate for 1999 for a firm is greater than $2.00;

    or:

    • the Target Rate for 2000 for a firm is more than 2.744 times the firm’s Net Rate for 1999; and,
    • the compounding percentage increase would result in an increase of more than $2.00 over the Net Rate for 1999.

THE TRANSITION RULES FOR 2001

Transition Plan Qualification Rules:

A firm will only qualify for the Transition Plan for 2001 where the following conditions apply:

  • the Transition Plan was applied to the firm in determining the Net Rate for 2000;

and:

  • the Target Rate for 2001 is more than $2 higher than the firm’s Net Rate for 2000; or,
  • the Target Rate for 2001 is more than a 40% increase over the firm’s Net Rate for 2000 (i.e. the Target Rate for 2001 is more than 1.4 times the Net Rate for 2000).

Where a firm does not qualify for the Transition Plan, the Net Rate for 2001 equates to the Target Rate for 2001.

Transition Plan Rules:

Where a firm qualifies for the Transition Plan, the following rules shall be applied in determining the Net Rate for 2001:

  1. The Net Rate for 2001 shall equal 1.4 times the Net Rate for 2000 where:
    • the Target Rate for 2001 for a firm is less than or equal to 1.96 times the firm’s Net Rate for 2000 (i.e. the Target Rate would be achieved over 2 years (the remaining 2 years of the core transition period) through a compounding 40% increase per year (NB: 1.42=1.96)); and,
    • 40% of the Net Rate for 2000 is less than or equal to $2.00.
  1. The Net Rate for 2001 shall be the Net Rate for 2000 plus the compounding percentage required to achieve the Target Rate for 2001 over a 2 year period where:
    • the Target Rate for 2001 for a firm is more than 1.96 times the firm’s Net Rate for 2000 (i.e. the Target Rate for 2001 could not be achieved within a 2 year timeframe through a compounding 40% increase per year); and,
    • the compounding percentage increase would not result in an increase of more than $2.00 over the Net Rate for 2000 for the firm.

NB: The compounding percentage is determined as follows:
Multiplier = (Target Rate2001 ¸ Net Rate2000)1/2
Compounding Percentage = (Multiplier-1)*100

  1. The Net Rate for 2001 for a firm shall be the Net Rate for 2000 plus $2.00 where either:
    • 40% of the Net Rate for 2000 is greater than $2.00;

    or:

    • the Target Rate for 2001 for a firm is more than 1.96 times the firm’s Net Rate for 2000; and,
    • the compounding percentage increase would result in an increase of more than $2.00 over the Net Rate for 2000.

     

THE TRANSITION RULES FOR 2002

Transition Plan Qualification Rules:

A firm will only qualify for the Transition Plan for 2002 where the following conditions apply:

      • the Transition Plan was applied to the firm in determining the Net Rate for 2001; and,
      • the Target Rate for 2002 is more than $2 higher than the firm’s Net Rate for 2001.

Where a firm does not qualify for the Transition Plan, the Net Rate for 2002 equates to the Target Rate for 2002.

Transition Plan Rule:

Where a firm qualifies for the Transition Plan:

    1. the Net Rate for 2002 shall be the Net Rate for 2001 plus $2.00.

 

THE TRANSITION RULES FOR 2003

Transition Plan Qualification Rules:

 

A firm will only qualify for the Transition Plan for 2003 where the following conditions apply:

    • the Transition Plan was applied to the firm in determining the Net Rate for 2002; and,
    • the Target Rate for 2003 is more than $2 higher than the firm’s Net Rate for 2002.

Where a firm does not qualify for the Transition Plan, the Net Rate for 2003 equates to the Target Rate for 2003.

Transition Plan Rule:

Where a firm qualifies for the Transition Plan:

    1. the Net Rate for 2003 shall be the Net Rate for 2002 plus $2.00.

 

THE 2004 NET RATE FOR ALL FIRMS WILL BE THE 2004 TARGET RATE.