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NEER & MAPNEER & MAPOverview & Financial ImpactsOverview & Financial Impacts

Prevention DivisionPhone: (416) 344-1016

Toll Free: 1-800-663-6639FAX: (416) 344-3493

Web site: www.wsib.on.ca

HCHSA Safety Group 2005

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Experience RatingExperience RatingWhat is it?

• Modifies an employer’s premium based on accident experience• Through refunds/surcharges (NEER) or rate group premium rate adjustments (MAP)

Purpose?

• Encourage employers to promote workplace health and safety

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How MAP WorksHow MAP WorksEligibility (at organization level)3 yr. avg. annual premiums $1,000 - $25,000

Fatality25% additional increase for each

Claim Counts if costs are:> $300 > $500

Claim Costs > $5,00010% additional increase

Excludes IncludesConstruction ConstructionRate Groups Rate Groups

2002 MAP2001 MAP 2001 review

2000 MAP 2000 review 20001999 MAP 1999 review 1999 1999

1998 MAP 1998 review 1998 1998 19981997 review 1997 1997 1997

1996 1996 19961995 1995

2005 MAP2004 MAP 2004 review

2003 MAP 2003 review 20032002 review 2002 2002

2001 2001 20012000 20001999

1994

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MAP Table of MAP Table of AdjustmentsAdjustmentsAverage

Premiums

1,000-1,499

1,500-1,999

2,000-2,499

2,500-4,999

5,000-9,999

10,000-14,999

15,000-19,999

20,000-25,000

0Claims

-5%

-5%

-5%

-5%

-6%

-7%

-8%

-10%

1Claim

0%

0%

0%

0%

0%

0%

0%

-5%

2Claims

+8%

+8%

+7%

+7%

+6%

+5%

+3%

0%

3Claims

+20%

+19%

+17%

+15%

+13%

+11%

+8%

+5%

4Claims

+40%

+38%

+34%

+30%

+26%

+22%

+16%

+11%

5Claims

+50%

+50%

+50%

+50%

+44%

+38%

+30%

+22%

6Claims

+50%

+50%

+50%

+50%

+50%

+50%

+46%

+35%

7 +Claims

+50%

+50%

+50%

+50%

+50%

+50%

+50%

+50%

An additional 10% increase applied for each claim with costs > $5,000 An additional 25% increase applied for fatalitiesMaximum increase is 50%

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How NEER WorksHow NEER Works

Pooling ChargeUnfunded Liability

(Retired by 2014)NEER Insurance Pooling Charge

(LLOD / Claim Limits /Firm Limits / SIEF)

Overhead(WSIB/MOL/SWA/LEG.)

Expected Cost of New Claims

Components of Gross Premium

Rate

Projected Future Cost (Reserves)

Benefit Payments to Date

NEER Insurance Pooling Charge (LLOD / Claim Limits /

Firm Limits / SIEF)

NEER Expected Claim Cost

Organizations

Actual Claim Cost

= Refund $or

Surcharge $

NEER Actual

Claim Cost

Compared

Overhead(WSIB/MOL/SWA/LEG.)

Rating Factor

Surplus (EC>AC) or

Deficit (EC<AC)

X

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2002

AccidentYear

2003

2004

2005

1st

review

2nd

review

3rd Finalreview

3rd qtr 3rd qtr 3rd qtr

NEER Three-Year NEER Three-Year ReviewReview

Projected

Costs

Actual Claims Costs

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ScenarioDuration of

ClaimClaim Type

Claim Age

Non Pension Pension

Discounted Awards

Future Costs

Overhead Costs

Limited Claim Costs

1 Health Care Only 02 16 200 0 200 0 94 2942 3 days 01 16 500 0 500 0 235 7353 3 weeks 04 16 1,700 0 1,700 1,085 1,309 4,0944 20 weeks 08 16 10,200 0 10,200 16,507 12,552 39,2595 52 weeks 09 16 26,200 0 26,200 113,029 65,438 204,6676 69 weeks 09 16 34,700 0 34,700 149,699 86,667 267,200*

*Claim Cost Limit applied

Prem.Expected Cost

Factor %Exp.

CostsLimited

CostsNEER Costs

Rating Factor % Perf. Index

Refund/ Surcharge

Max. Refund

Cost to Employer

50,000 10.08 5,040 0 0 40 0.00 -2,016 -2,016 050,000 10.08 5,040 94 94 40 0.02 -1,978 -2,016 11850,000 10.08 5,040 235 235 40 0.05 -1,922 -2,016 29450,000 10.08 5,040 1,309 1,309 40 0.26 -1,492 -2,016 1,63850,000 10.08 5,040 12,552 12,552 40 2.49 3,005 -2,016 6,04850,000 10.08 5,040 65,438 15,120 40 3.00 4,032 -2,016 6,04850,000 10.08 5,040 86,667 15,120 40 3.00 4,032 -2,016 6,048

Prem.Expected Cost

Factor %Exp.

CostsLimited

CostsNEER Costs

Rating Factor % Perf. Index

Refund/ Surcharge

Max. Refund

Cost to Employer

500,000 34.82 174,100 0 0 76 0.00 -132,316 -132,316 0500,000 34.82 174,100 294 294 76 0.00 -132,093 -132,316 223500,000 34.82 174,100 735 735 76 0.00 -131,757 -132,316 559500,000 34.82 174,100 4,094 4,094 76 0.02 -129,205 -132,316 3,111500,000 34.82 174,100 39,259 39,259 76 0.23 -102,479 -132,316 29,837500,000 34.82 174,100 204,667 204,667 76 1.18 23,231 -132,316 155,547500,000 34.82 174,100 267,200 267,200 76 1.53 70,756 -132,316 203,072

Injury Date: May 1, 2004 Weekly Benefits: $500 Overhead Factor 47% Past Awards to: 30Sep05

NEER Return-to-Work Examples

A Financial Business CaseA Financial Business Casefor Health & Safetyfor Health & Safety

in Ontario Workplacesin Ontario Workplaces

A Simple Costing Tool using your NEER Statement

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Part 1: Part 1: Calculating the Calculating the

Financial Business Case Financial Business Case for Health & Safety for Health & Safety

Using NEER InformationUsing NEER Information

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300,000300,000

Cost Sheet 1: Maximum Cost Sheet 1: Maximum RebateRebate

Acc.Year

Premiums

($)Exp. Cost Factor (%)

Expected Costs ($)

NEERCosts ($)

RatingFactor (%)

Perf.Index

2001 550,000 43.13 237,215 300,300 64.48 1.27

1. Expected Costs:

2. Rating Factor:

3. Max. Potential Rebate:

$237,215.00

64.48 %

$152,956.23

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300,000300,000

Cost Sheet 2: Actual Cost Sheet 2: Actual Rebate/SurchargeRebate/Surcharge

4. NEER Costs:5. Expected Costs:6. Difference: X Rating Factor:7. Rebate/Surcharge:

$237,215.00

64.48 %$40,677.21 DR

$300,300.00

$63,085.00

300,000

Acc.Year

Premiums

($)Exp. Cost Factor (%)

Expected Costs ($)

NEERCosts ($)

RatingFactor (%)

Perf.Index

2001 550,000 43.13 237,215 64.48 1.07300,300

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Cost Sheet 3: Unrecovered Cost Sheet 3: Unrecovered RebateRebateand Surcharge Per Claimand Surcharge Per Claim8. Unrecovered Rebate and Surcharge (Line 3 + Line 7):

9. Average Unrecovered Rebate and Surcharge Per Claim:

$152,956.23 CR$40,677.21 DR

Line 3:Line 7:Line 8: $193,633.44 DR

Unrecovered Rebate (Line 8) ÷ No. of Claims

= _______________= _______________

$193,633.44$12,908.90

÷ 15

Max RebateMax Rebate

ActualActual

UnrecoveredUnrecovered

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Cost Sheet 4: Determining Cost Sheet 4: Determining Gross Sales Required to Gross Sales Required to Recover NEER CostsRecover NEER Costs

10. Unrecovered Rebate (Line 8):

11. Company Profit Margin:12. Gross Sales Required: (Line 10 ÷ Line 11):

$193,633.446 %

$3,227,224.00

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Part 2: Part 2: Calculating the Financial Calculating the Financial

Business Case for Health & Business Case for Health & Safety Using Total Costs of Safety Using Total Costs of Injuries (NEER Information Injuries (NEER Information & Company Information on & Company Information on

Direct/Indirect Costs of Direct/Indirect Costs of Injuries)Injuries)

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Cost Sheet 5: Determining Cost Sheet 5: Determining Approx. Total Cost Per Approx. Total Cost Per Injury/IllnessInjury/Illness

13. Unrecovered Rebate (Line 8): $193,633.4414. Determine Direct/Indirect Costs:

15. Add Line 13 and Line 14:

16. Determine No. of Claims: 17. Divide Line 15 by # of Claims:= Approx. Total Cost per claim

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$882,825.00

$1,076,458.44

$71,763.90

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Cost Sheet 6: Determining Cost Sheet 6: Determining Gross Sales Required To Gross Sales Required To Recover From Overall Costs of Recover From Overall Costs of ClaimsClaims18. Overall Costs (Line 15):

20. Gross Sales Required (Line 18 ÷ Line 19)

19. Company Profit Margin: 6%$1,076,458.44

$17,940,974.00

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Web site: Web site: www.wsib.on.cawww.wsib.on.ca

NEER Cost ToolWhere?Prevention - Incentives and Training - New Experimental Experience Rating (NEER) Program - NEER Cost Tool

Map Cost ToolWhere?Prevention - Incentives and Training - Merit Adjusted Premium (MAP) plan for small business - MAP Cost Tool

How much do workplace injuries cost? (NEER)Where?Prevention - Incentives and Training - New Experimental Experience Rating (NEER) Program - NEER Cost Fact Sheets

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RemindersRemindersQuestions? Call 1-800-663-6639

or (416) 344-1016

Drive Safe,Work Safe,

Play SafeBe Safe!