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Rate setting
How
we calculate base rates
WorkSafeBC uses a classification
and rate making system to ensure the costs of compensation are fairly
distributed. Employers in industries with similar claim costs pay similar
base rates. The same base rate applies to all employers in a classification
unit. The rate is expressed as an amount per $100 of assessable payroll.
Experience rating adjustments may result in a discount or surcharge on
your base rate.
Learn more
- For more information, view An Introduction to Rate Setting
- For a more detailed explanation, view An Introduction to Classification, Rate Setting, and Experience Rating
- In addition, see the classification and rate making discussion paper (PDF 89kb)
- For policy related to the rate setting, see Section 1-39-1 of the Assessment Manual
Three-step guide to rate setting
Step 1: We roll classification units into industry groups
We take classification units for similar types of industries and roll
them into industry groups. Berry farms, orchards, and vineyards are
in one industry group, for example. Then, we calculate the historical
cost rate for each industry group, looking at how much employers in
each group have collectively cost WorkSafeBC (in terms of the ratio
of their claim costs to their payroll). This helps us determine which
rate group each industry group should reside in. Occasionally, a classification
unit is large enough to form its own industry group. Supermarkets, for
instance, form both a classification unit and an industry group.
Step 2: We roll industry groups into rate groups
To ensure rates remain stable, we combine industry groups into rate groups.
Rate groups are made up of industry groups with similar historical cost
rates. They may however, include employers from dissimilar industries.
Hotels are in the same rate group as parking lots, for example,
since they share similar historical cost rates. Some industry groups are
large enough to form rate groups of their own. School districts, for
example, form their own industry group and rate group.
Step 3: We calculate a base rate for each rate group
Base rates are calculated at the rate group level. First, we calculate
the total claim costs for each rate group, then divide that by the group's
estimated total assessable payroll to produce a cost rate. Employers in
all rate groups also contribute to reserves for enhancement, disaster,
and administration. This ensures one group is not unfairly burdened with
costs. Each rate group is self-sufficient when it comes to cost. That
is, all employers in the rate group pay for the cost of workers' injuries
and diseases within the rate group.
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