Published on: May 24, 2020

Richmond, B.C. — WorkSafeBC is committed to sound financial management in order to ensure the long-term financial sustainability of the system for workers and employers.

To increase financial stability — and avoid rate volatility during economic and investment downturns — WorkSafeBC retains a reasonable level of assets over liabilities. WorkSafeBC’s Board of Directors set a smoothed funded target level of no less than 130 per cent.

The COVID-19 situation has resulted in a lot of economic uncertainty. Prior to the pandemic, WorkSafeBC was in a very strong financial position, and we remain financially sound. Currently, WorkSafeBC continues to exceed its target funding level, despite the volatility.

However, at this point, we do not have a reliable estimate of expected investment income, premium revenues or claims costs for the year. As such, we will not know the full impact of COVID-19 on our financial position for some time.

Background

WorkSafeBC’s financial position, for funding and rate-setting purposes, is determined annually and includes actuarial calculations of expected future claim costs, premium revenues, and investment returns. This includes the appraisal of illiquid investment assets, the valuation of which occur only on an annual basis, at the time that financial statements are finalized each year.

Currently, for purposes of contingency planning, WorkSafeBC’s actuaries are considering multiple possible scenarios, based on widely varying economic forecasts. Some of these scenarios would result in a year-end fair value funding position at, or even slightly below, the 130 per cent funding target/threshold. Other scenarios would suggest lesser impacts in the current year. While current year-to-date investment losses are estimated to be approximately 5 per cent (or $1 billion, on an asset base of approximately $20 billion), it is impossible at this point to know what the actual final results will be.

A loss in the range of $1 billion would result in a current funding level of approximately 145 per cent.

It should also be noted, however, that WorkSafeBC’s long term planning, including the setting of assessment rates, is based on a smoothed approach to financial valuation and projection, meaning that significant investment gains or losses are generally taken into account over a period of years, rather than having the immediate impact that the fair value financial statements might suggest. This is demonstrated in the publication of WorkSafeBC’s smoothed funded level in the organization’s annual report.

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For more information, contact:

Media Relations, WorkSafeBC
Tel: 604.276.5157
Email: media@worksafebc.com