Employers get 'sticker shock' as workers' compensation premiums rise

Employers across New Brunswick will start paying higher premiums for workers' compensation, starting Jan 1.

The average premium is expected to rise from $1.11 per $100 of assessed payroll to $1.48.

Some will pay even more.

"Employers around the province had a bit of sticker shock the last couple of weeks when they ... were opening their rate assessment letters from WorkSafe NB showing upwards of a 33 per cent increase at a minimum," Joel Richardson said Friday, speaking for the Coalition of New Brunswick Employers.

"So this could have a significant impact on companies' ability to be able to pay that rate."

Singles outtribunal

WorkSafe blamed rising costs and a new tribunal, which it says has been driving up the value of payouts to workers.

It's up to WorkSafeNB's board of directors to set the rate every year. It is expected to raise enough revenue to cover the costs of all claims processed in the year.

For the past decade, the cost of premiums has been going down.

Even with the pending increase, employers will still be paying less than they did in the 1990s.

Rates were higher in 1990s

"In 1991, the employer assessment rates were at $2.40 and the proposed rates are going up to $1.48, so they're 56 cents less on assessment than they were in 1991, almost 26 years later," said national CUPE representative Michael Davidson.

"I think that it's been artificially low ... here in New Brunswick and as far as I'm concerned, it's been on the backs of the injured workers."

In its annual report, Worksafe NB reported a $126 million deficit in 2015 and has five years to make it up.

In a presentation to shareholders, Worksafe said it's also seen rising costs from an uptick in the number of claims and the duration of claims.

Tribunal decisions cost more

Health-care costs have also risen.

Moreover, Worksafe said, the independent appeals tribunal created in 2015 has been making decisions that have driven up benefit payouts.

"What's fundamentally changed here is that the previous government actually implemented a new tribunal to hear appeals for claims and accidents," said Richardson.

"That tribunal is overshadowing the WorkSafe board of directors and causing significant new costs in the system."

"It has added an additional $87 million into the costs in New Brunswick."

Investments earn less

CBC News requested an interview with Tim Petersen, the interim WorkSafe NB acting president and CEO. He is expected to be availableMonday.

One of the tools that WorkSafe uses to keep down premiums is its $1.3-billion investment portfolio.

However, it earned a rate of return of just over four per cent last year.

Its average rate of return over the past 20 years has been closer to seven per cent.