Bill 27 Proposes to Further Reduce WSIB Expense

Last week, the WSIB sent all registered employers its 2022 Premium Rate. For most general contractors registered in Class Rate G6, the news was one of a significant reduction. As we explained earlier, the WSIB has recognized Non-residential general contractors for a steady reduction in claims and claims costs, dropping the class rate to $1.79.

Two weeks ago, Labour, Training and Skills Development Minister Monte McNaughton took a further step for recognizing employers’ long-term commitment to fully fund the WSIB system.

In 2010, the WSIB was running an unfunded liability of more than $14 billion. The Provincial auditor delivered a report to the Ontario government recommending that the WSIB must focus on targeted reductions or the government would need to assume the debt. As a result, employers paid increased premiums, the highest in Canada. This expense was particularly high for construction, as for many years, over 50% of the premium went to pay down the unfunded liability. The industry contributed billions to the required funding of the WSIB.

Fortunately in 2018, years ahead of schedule, the system reached full funding. As a result, the WSIB reduced premium rates in 2019 and 2020, but the funding of the accident fund continued to grow. The WSIB’s 2021, second quarter report showed the system is now 119.5% funded, an amazing turnaround.
This of course, raised the question: what is the proper funding level? The WSIB premium levels are much higher than required to the point where the accident fund is $6 billion over full funding. Now there is a need to put restrictions on overfunding the system.

OGCA and the Constructure Employers Council made a submission to the Minister this past August and, the Minister has now introduced legislation that “gives the WSIB discretion to distribute the excess insurance funds to employers when the fund is equal to or more than 115% and is less than 125% funding sufficiency.” If the funding meets or exceeds 125%, then the WSIB is obliged to distribute excess funds.

The details of how this legislation will be implemented has been left for regulations and policy.

Construction employers now have an opportunity to further reduce their WSIB costs at a time when all expenses are increasing. OGCA, through the CEC, is actively supporting the proposal and will work with government and the WSIB to implement policy that supports full funding of the WSIB while distributing excess funds to construction employers.