Ontario Electrical Contractor 29 The second step looks at how an employer’s individual claim history compares to the rest of the businesses in their class. This means that the overall rate under the new model will reflect individual claims experience and risk. This two-step approach will ensure busi- nesses are paying a fair rate that is reflective of their industry and experience. When setting premium rates, the WSIB will be using insurable earnings, claims costs and the number of allowed claims over a six-year period. For new businesses with less than one year of experience, the premium rate will be the class average rate. Annual premiums & the premium rate Each class will first be assigned a Base Premium Rate. An employer’s individual experience over six years will then determine whether they receive a discount or surcharge on the Base Premium Rate. This new calcu- lated amount will be their Premium Rate. The employer’s Annual Premium is then calculated by multiplying the Premium Rate by every $100 of payroll. In 2020 when the New Rate Framework is introduced, WSIB will consider the accident years from 2013-2018 to create an employer’s Personalized Premium Rate. 2016, 2017 & 2018’s accident experience is worth 2/3 of the 2020 Personalized Premium Rate, while 2013, 2014 & 2015’s accident experience is worth 1/3 towards the 2020 Personalized Premium Rate. Risk banding Under the new system, classes are further divided into a number of Risk Bands. A business will be assigned to a Risk Band that best represents their risk in relation to other businesses in their class. Businesses that fall under the same Risk Band will all be assigned the same Premium Rate that reflects their individual risk profile. The Risk Bands are a specific percentage, higher or lower than the Class Rate Average. For example, let’s apply this to two medium- sized businesses, Terry’s Transport and Wanda’s Warehouse. Both of the businesses are in the same Class; however, Terry’s Transport has had more claims over the past six years than Wanda’s Warehouse. After considering their predictability, claims and insurable earnings history, Terry’s Transport receives a risk profile of 110 per cent and Wanda’s Warehouse’s is 90 per cent. (The Class Rate is considered to be 100 per cent.) If the class rate is $0.47 and Wanda’s Ware- house is placed in the 90 per cent Risk Band, their rate would be $0.42. Terry’s Transport is placed in the 110 per cent Risk Band, resulting in a rate of $0.52. Wanda’s Warehouse Rate = 90 per cent of $0.47 = $0.42 Terry’s Transport Rate = 110 per cent of $0.47 = $0.52 Phase-In Plan The following is how/when the WSIB is going to phase-in the New Rate Framework’s classification and risk banding system: • 2019: The 2020 Premium Rates will be released in September • 2020: The Premium Rate will be based on previous rates, claims experience, business size and NAICS classification • 2021: The Premium Rate will be calculated using only the new system; however, an employer can only move up ONE Risk Band but can move down up to THREE in a single year • 2022: The Premium Rate will be calculated using only the new system; however, an employer can only move up TWO Risk Bands but can move down up to THREE in a single year • 2023: New Rate Framework in full effect, an employer can now move up or down THREE Risk Bands in a single year