How we set industry base premium rates
Our rate making system ensures the rates we set are based on the costs of compensation, so that rates are fair and reflect industries’ commitment to workplace health and safety. We classify similar employers into large enough groups to allow us to deliver more stable rates. Here’s our process for determining those rates.
1. Classification units and industry groups
When you register for WorkSafeBC insurance, you are assigned to a classification unit based on the products you produce, the services you provide, and the processes, technology, or materials you use.
Some classification units aren’t big enough for us to predict claim costs, so we combine them with classification units for similar types of industries to form an industry group (for example, berry farms, orchards, and vineyards are in one industry group). Some classification units are large enough to form their own industry group. There are about 200 industry groups.
We determine the historical cost rate for each industry group by looking at the ratio of their claims costs to their payroll.
2. Industry groups are combined into rate groups
Next, we combine industry groups with similar claim cost profiles into rate groups. Rate groups sometimes include industries that don’t look like they have much in common. There are about 50 rate groups.
We monitor rate group membership every year to ensure your industry group’s claim cost profile continues to match the profile of its rate group. If your industry group’s cost rate is 20 percent higher or lower than the average for its rate group for three years in a row, we’ll move it to a more appropriate rate group. This is intended to limit subsidization of other industries, maintain relatively stable base premium rates, and ensure adequate funding for future costs of current claims. To learn more, find your classification unit, industry, or rate.
3. Base rates are calculated for each rate group
Finally, we calculate the appropriate base premium rate for each rate group. First, we calculate the total cost of claims for each rate group, then we divide that by the rate group's assessable payroll to determine the cost rate. We also take into account what WorkSafeBC's investment returns are, and how much it will cost us to uphold our prevention, compensation, and service delivery mandates.
The base premium rate is applied to each classification unit in the rate group. Employers in each rate group pay the costs of injuries, diseases, and prevention activities for the group. As costs change, so do rates. Each year, some rates go up, some go down, and some stay the same.