On November 29 and 30, 2012, the Institute for Work & Health (IWH) hosted the International Symposium on the Challenges of Workplace Injury Prevention through Financial Incentives. More than 180 researchers, students, policy-makers, members of the injured worker community, employer representatives, worker representatives and other stakeholders—primarily from Ontario, but also from other parts of Canada, the United States, Europe, Australia and New Zealand—came together in Toronto to participate in the symposium. The aim was to provide a forum to discuss the social, economic and policy implications of using financial incentives as a mechanism for preventing workplace injuries.
The symposium was organized and co-hosted by IWH’s Dr. Emile Tompa and Dr. Ellen MacEachen.
To view or download presentation slidecasts, podcasts and/or slides, as available, click on the title of interest below.
Keynote presentations
About presenter
Dr. Harry Arthurs is a professor at York University’s Osgood Hall Law School, former dean of Osgoode Hall Law School (1972-77), and former president of York University (1985-92). He has extensive experience as a labour lawyer and mediator, and recently led a review of Ontario’s workplace pension system. Arthurs also chaired the Ontario Workplace Safety and Insurance Board’s funding review in 2010-2012.
Arthurs’ publications range widely, covering legal education and the legal profession, legal history and legal theory, labour and administrative law, globalization and constitutionalism. His academic contributions have been recognized by his election as an associate of the Canadian Institute for Advanced Research, a fellow of the Royal Society of Canada and a corresponding fellow of the British Academy. He was awarded the Canada Council’s Killam Prize for his lifetime contributions to the social sciences (2002), the Bora Laskin Prize for his contributions to labour law (2003) and the International Labour Organization's Decent Work Research Prize (jointly with Joseph Stiglitz, 2008).
Abstract
As chair of the Ontario Workplace Safety and Insurance Board (WSIB) funding review, Harry Arthurs was confronted with conflicting views of experience rating. Workers' advocates argued that experience rating violates the principle of collective liability and results in claims suppression and other abuses. Employer advocates contended that experience rating represents a form of "insurance equity" that ensures that each employer will pay its fair share of the costs of the system. The governing statute characterizes experience rating as a way of incenting employers to reduce injuries and to encourage workers to return to work. This presentation assesses these contending perspectives and proposes a new approach to experience rating.
Reference: Funding Fairness: A Report on Ontario's Workplace Safety and Insurance System (PDF, 3.5 MB)
About presenter
Alan Clayton, a lawyer and research and policy analyst working primarily in the field of accident compensation and injury prevention. Alan has had a long involvement in the investigation of accident compensation schemes and has undertaken work for a wide range of bodies including the International Labour Office, most Australian accident compensation regulators and the Accident Compensation Corporation in New Zealand. He has published widely in the field of accident compensation with his work appearing in books and journals in Australia, the United States and Europe. He recently co-authored the book, Work Health and Safety Law and Policy, published by Thomson Reuters. Clayton's presentation, 'Reconsidering truisms: the case of experience rating' examines the origins of experience rating and whether the belief in the efficacy of this system is supported by empirical evidence.
Abstract
In Australia, and it would appear in some other countries, faith in the efficacy of experience-rated premium systems as a means of achieving safer workplaces has almost achieved the status of religious dogma. Experience rating as a form of workers' compensation insurance pricing emerged in the second decade of the twentieth century, primarily as a tool in the battle among insurance underwriters to secure the business of large employers. The evidence base for claims that experience rating has a beneficial impact upon injury prevention and workplace safety is highly questionable. As well, there is significant evidence that such pricing can lead to “gaming” behaviour and deleterious consequences for scheme dynamics.
Reference: Clayton A. Economic incentives in the prevention and compensation of work injury and illness. Policy and Practice in Health and Safety, 2012; 10(1):27-43.
About presenters
Marion Endicott is an advocate and community legal worker at Injured Workers Consultants (IWC) in Toronto. Her work involves advancing the legal rights and entitlements of individual injured workers, as well as education, community development and law reform. In 2004, she won the Ontario Bar Association's Ron Ellis Award in Workers' Compensation for leadership and contribution to workers’ compensation law.
John Mcnamara is president of the Business Council on Occupational Health and Safety in Ontario and vice-president of Health, Safety and Environment at Hydro One.
About presenter
David Walters is a professor at Cardiff University and director of the Cardiff Work Environment Research Centre. He is also the editor of the journal Policy and Practice in Health and Safety. Dr. Walters has particular interests in employee representation and consultation on health and safety, the politics of health and safety at work, regulating health and safety management, chemical risk management at work, and health and safety in small firms. Walters has undertaken an international review of worker representation related to health and safety in collaboration with the European Trades Union Confederation, a study of the role of supply chains in regulating health and safety and, most recently, a series of studies on chemical risk management.
Abstract
The restructuring of work and business relations has considerably changed the economic scenarios in which occupational health and safety is regulated. A host of challenges to conventional approaches to regulation have emerged. In particular, outsourcing has created new business dependencies and enhanced the role of supply chain management in business strategies. Previous research suggests that much of this change has potentially negative consequences for health and safety practices and performance, especially among suppliers who may struggle to meet the price and delivery demands of more powerful buyers. At the same time, policies to address some of these challenges have pointed to the use of leverage in the same supply relations to enhance health and safety management among suppliers. This presentation explores this paradox using findings from two recent studies. It also offers some reflections on these findings and their place in the wider context of strategies that create incentives for good practice in health and safety management.
About presenter
Dr. Les Boden is an economist and professor at Boston University. Much of his research has focused on describing the economic and human consequences of injuries and illnesses and identifying ways of minimizing those consequences. Over the past several years, Boden has published studies on the income lost by injured workers and the adequacy of workers’ compensation benefits. Recently, he put together a special issue of the American Journal of Industrial Medicine on workers’ compensation and human rights. Boden is currently a member of the Scientific Advisory Board of the Institute of Work and Health and an advisor to the United States National Economic and Social Rights Initiative.
Abstract
Evidence about the effectiveness of experience rating in improving workplace health and safety is mixed, at best. Moreover, there is reason to believe that experience rating leads to claim suppression, discrimination in hiring, litigation, assaults on the dignity of injured workers and other negative outcomes. Part of the appeal of experience rating is that it focuses directly on a worthy goal: reducing workplace injury, illness and consequent disability. Alternatives do not. They generally provide incentives for actions or conditions believed to affect health and safety. But we have little research about the extent to which these alternatives actually diminish injury, illness and disability. This presentation discusses concerns about experience rating and proposed alternatives. It then describes an approach that combines new initiatives with action research designed to test the extent to which they achieve their goals.
About presenter
Terrence Ison's distinguished academic career has spanned the last six decades. From 1968 to 1980, Ison served as a professor of law at Queen’s University. From 1973 to 1976, while on leave from Queen’s, he served as chair of the Workers’ Compensation Board of British Columbia. From 1980 to1995, he was a professor of law at Osgood Hall Law School, where he is now a professor emeritus. Throughout his career, he has continued to dedicate himself to teaching law.
Ison is the author of several key publications on workers' compensation in Canada, including Workers’ Compensation in Canada (1983) and Compensation Systems for Injury and Disease: The Policy Choices (1994). He has also published numerous scholarly articles, comments and reports on critical issues related to workers’ compensation law in Ontario and other jurisdictions. As recently as 2011, he participated as an expert stakeholder in the technical consultations of the Workplace Safety and Insurance Board of Ontario's funding review. In 2012, Ison received the Ontario Bar Association Ron Ellis Award for outstanding contributions and achievements in workers’ compensation law.
Abstract
This presentation explains how and why workers' compensation systems in Canada have deteriorated over the last 35 years, with an emphasis on the significance of experience rating. Other topics include the problems with workers’ compensation board doctors (including their difficulty in distinguishing questions of medicine from questions of law), the practice of actuaries, and the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO).
Concurrent Sessions
Trends and costs over time
Presenter: Cam Mustard, Institute for Work & Health, Toronto, Canada
Abstract
Objective: This study examined trends over time in workers' compensation benefit expenditures for work-related conditions among employees in the long-term care sectors in the Canadian provinces of British Columbia and Ontario. The study had a specific focus on examining the influence of insurance premium experience rating programs in the two provinces on trends in the incidence of workers' compensation claims and trends in benefits expenditures.
Methods: Compensation claim records for lost-time and no-lost-time claims were obtained for employees of long-term care facilities in British Columbia (N=129) and Ontario (N=419). Annual measures of benefit expenditures per 100 full-time equivalents were derived for each long-term care facility in the sample. Annual measures of each facility's status under the provincial experience rating program were also obtained. In both provinces, facilities were classified to one of three groups (low, medium and high claim incidence) on the basis of six consecutive observation years.
Results: The design of the experience rating program in British Columbia contained a number of elements that resulted in a general stable assessment outcome for individual facilities over time. In contrast, program design in Ontario resulted in an assessment outcome that was variable and less predictable over time. Characteristics of a facility's experience rating classification more consistently discriminated average benefit expenditure over time in British Columbia than in Ontario.
Conclusion: In this sector, experience rating appears to accomplish the objective of equity, particularly in British Columbia. There is only limited evidence that experience rating influences the incidence of work-related conditions or the duration of work disability episodes.
Authors: Cam Mustard, Peter Smith, Emile Tompa, Jeremy Petch, Chris McLeod and Mieke Koehoorn
Presenter: Jessica Wong, Canadian Memorial Chiropractic College, Toronto, Canada
Abstract
Objective: The objective was to develop a model to evaluate the impact of policy changes in compensation levels and experience rating programs on the number of workers’ compensation lost-time back claims in Ontario, Canada over a 30-year timeframe. This model tested the hypothesis that a theory- and-policy-driven model would be sufficient in reproducing historical claims data in a robust manner, and that policy changes related to potential financial incentives would have a major impact on modeled data.
Methods: The model was developed using system dynamics methods in the Vensim® simulation program. Sensitivity analysis was used to evaluate the modeled data at extreme endpoints of variable input and timeframes. The degree of predictive value of the modeled data was measured by the coefficient of determination, root mean square error and Theil’s inequality coefficients.
Results: Correlation between modeled data and actual data was found to be meaningful (R2=0.934), and the modeled data was stable at extreme endpoints. Among the relationships explored, policy changes in compensation levels and experience rating programs were found to be relatively minor drivers of back claims data, accounting for a 13% improvement of error. Simulation results suggested unemployment, number of no-lost-time claims, number of injuries per worker and recovery rate from back injuries outside of claims management to be significant drivers of back claims data.
Conclusion: The study findings suggest that certain areas within and outside of the workers’ compensation system need to be considered when evaluating and changing policies around potential financial incentives and back claims.
Presenter: Mike Wright, United Steelworkers International Union, Pittsburgh, U.S.A.
Abstract
Overview: The current “experience rating” system in workers’ compensation does not produce an accurate reflection of true injury/illness experience in workplaces. Perverse incentives come into play, and actual experience gets hidden and altered. Employers use various policies, practices and programs to discourage injury-reporting and claims-filing, as well as practices that mask lost-time experience. This presentation shares experiences from workplaces in the U.S. and Canada.
Conclusion: The system as presently constructed hides true injury, illness and lost-time experience in workplaces across all industry sectors. Systemic changes will be needed to address current problems with the workers’ compensation system and “experience rating.”
Incentives, behaviours and outcomes
Presenter: Marianne Levitsky, ECOH Management Inc., Mississauga, Canada
Abstract
Overview: This presentation explores research findings that reflect on incentives and motivation, emerging from the domains of behavioural economics and related fields such as social marketing and decision-making. Examples of findings such as framing effects, the endowment effect, the IKEA effect, and present-bias preferences are discussed, along with examples of research studies that relate these phenomena to health and safety. Suggestions are made as to the relevance of this research in opening up avenues of inquiry on incentives and motivators for workplace health and safety. The presentation is based on secondary research that the authors conducted and integrated into seminars on health and safety culture, which they have delivered at industrial hygiene professional conferences and courses.
Conclusion: Health and safety practitioners may identify useful change strategies by looking beyond health and safety research, and researchers may find provocative new research questions by examining findings from studies of behavioural economics, social marketing and decision-making.
Authors: Marianne Levitsky and Dr. Om Malik
Presenter: Xuguang (Steve) Guo, University of Wisconsin–Whitewater, Whitewater, U.S.A.
Abstract
Objective: The study examined how levels of statutory cash benefits affect the number of workplace injuries and the amount of actual benefit payments.
Methods: Workers’ compensation insurance provides financial incentives to all employers through industry-level experience rating and to many employers through firm-level experience rating and/or large deductible policies. The levels of cash benefits prescribed by workers’ compensation statutes were calculated for 46 U.S. jurisdictions from 1975 to 1999. The study examined the elasticities between statutory benefits and (1) actual benefits payments and (2) workplace injury rates. Higher benefits encourage workers to take more risks (the “true injury effect”), to report more injuries and to extend the duration of benefits. Higher benefits also motivate employers to improve safety, to monitor claims and to increase rehabilitation.
Results: Benefit elasticities were significantly less than 1.0. Frequency elasticities were not statistically different than 0.
Conclusion: The benefit elasticities suggest the monitoring and rehabilitation effects are stronger than the reporting and duration effects. The frequency elasticities suggest the true injury effect is offset by the safety effect and that, in the absence of the financial incentives, employers’ safety efforts may be tempered.
Authors: Xuguang (Steve) Guo and John F. Burton, Jr.
Reference: Workers’ compensation: Recent developments in moral hazard and benefit payments. Industrial and Labor Relation Review, 2010; 63(2): 340-55.
Presenter: Seth Seabury, RAND Corporation, Santa Monica, U.S.A.
Abstract
Objective: In workers’ compensation schemes, experience rating is used to provide employers with incentives to invest in the safety of workers. However, the impact of experience rating on return-to-work outcomes for injured workers is largely unknown. Self-insurance, which by definition implies perfect experience rating, is sometimes used as a proxy for experience rating in empirical work. This study assessed the association between self-insurance and return to work after a permanently disabling workplace injury.
Methods: This study used data on permanent partial disability claimants in the California workers’ compensation system.
Results: The study found that workers injured at self-insured firms had significantly improved return-to-work outcomes up to five years after their injury.
Conclusion: Future research should investigate which mechanisms lead to improved return-to-work outcomes by self-insured firms and whether experience rating could be used to help extend these to a broader sample of firms.
Authors: Seth Seabury, Christopher McLaren, Robert Reville, Frank Neuhauser and John Mendeloff
Reference: Workers' compensation experience rating and return to work. Policy and Practice in Health and Safety, 2012; 10(1):97-115
Types and extent of incentives
Presenter: Hazel Armstrong, Hazel Armstrong Law, Wellington, New Zealand
Abstract
Overview/Conclusion: Occupational disease claims raise distinct challenges for the experience rating model, demonstrating that it is not wholly effective in preventing occupational diseases or accurately attributing the claims costs of compensation or rehabilitation to employers. Experience rating is also incapable of effectively providing incentives to employers to manage most occupational disease claims, as there is likely to be a mismatch between the employer where exposure occurred and the employer where the disease manifests itself. In fact, there may be a perverse incentive on employers, where employers may not be concerned about exposing workers to potential diseases as the employer is unlikely to be accountable for them.
Authors: Hazel Armstrong and Kristen Bunn
Reference: Experience rating and occupational disease: a New Zealand case study. Policy and Practice in Health and Safety, 2012; 10(1):63-75
Presenter: Katherine Lippel, University of Ottawa Faculty of Law, Ottawa, Canada
Abstract
Objective: Highly sensitive experience rating mechanisms were integrated into the Quebec workers' compensation system in the early nineties. In most cases, costs of employment injuries are, in principle, attributed to the account of the injured worker's employer. Yet, in 2007, over 25% of compensation costs were transferred from specific employers' accounts to the general fund. Tens of thousands of appeals are filed each year with Quebec's workers' compensation final appeals tribunal, the Commission des lésions professionnelles (CLP), and the number of appeals regarding experience rating has increased considerably in the last decade. This paper aimed to describe legal rules that permit cost transfers to the general fund and to explore the effects of these provisions on the underpinnings of the workers' compensation system.
Methods: Based on classic legal methods, the researchers examined the legislation (An Act Respecting Industrial Accidents and Occupational Disease) and the CLP decisions that implement the experience rating provisions to describe the parameters of the rules applied, and to illustrate issues being litigated and outcomes of decisions regarding cost transfers from accounts of employers of injured workers to the general workers' compensation fund.
Results: Issues frequently raised in these cases were requests for cost transfers based on a worker's pre-existing handicap, on liability of third parties for the injury, or because the employer was "unduly burdened" by the claim costs.
Conclusion: In Quebec, experience rating mechanisms encourage debates on liability in a no-fault system, provide incentives to employers to screen out disabled candidates seeking employment and encourage litigation related to workers' compensation.
Presenter: Martin Lebeau, Institut de recherche Robert Sauvé en santé et en sécurité au travail, Montreal, Canada
Abstract
Objective: Occupational injuries and diseases are costly for companies and for society as a whole. This study estimated the overall costs of occupational injuries and diseases in Quebec, both human and financial, during the period 2005 to 2007.
Methods: An incidence approach was used to measure the costs of new cases of occupational injuries and diseases (including deaths) from 2005 to 2007. The estimates were based almost entirely on data from the Commission de la santé et de la sécurité du travail (CSST), Quebec’s workers’ compensation board. The human capital method was used to estimate lost productivity. A health indicator (DALY or disability adjusted life years) was used in combination with the willingness-to-pay method to estimate, in monetary terms, the human costs resulting from occupational injuries and diseases.
Results: The costs of occupational injuries and diseases occurring in a single year in Quebec were estimated at $4.6 billion, on average, for the 2005 to 2007 period. Of this amount, approximately $1.78 billion was allocated to financial costs and $2.86 billion to human costs. The average cost of an occupational injury or disease was $38,507.
Conclusion: This study makes it possible to better understand the size of the costs related to occupational injuries and diseases in Quebec. The results of these estimates are relevant to helping to determine research directions in occupational health and safety and prevention. The methodology used can be replicated for the purposes of estimating the costs of injuries and diseases in other populations.
Authors: Martin Lebeau, Patrice Duguay and Alexandre Boucher
Evidence synthesis: Opening up avenues of inquiry
Presenter: Marion Endicott, Injured Workers Consultants, Toronto, Canada
Abstract
This presentation introduces injured workers who, through their lived experiences, describe three aspects of the harmful effects of experience rating:
1. Discourse of abuse: The story of Halima Tato involves an employer calling her home over and over again within hours of her return from the hospital, urging her to come back to work. This was despite the fact that she had been treated for a substantial blow to the head.
2. Construction of the image of fraud: The story of Basil Boolis describes the harm resulting from an employer’s use of video surveillance. In this case, the workers’ compensation board cancelled Boolis’s claim and charged him with fraud. Eventually, the whole thing was dropped, but the harm was already done.
3. “Hurricane jobs”: The story of Patmanathan Veeragathipillai shows the effects of employers providing jobs described as “sitting on a roof and watching for a hurricane” in order to avoid experience rating surcharges or to earn experience rating rebates by bringing injured workers back immediately or as soon as possible after injury. In this case, the employer provided Veeragathipillai a job counting hogs as they came off a truck, even though a permanent employee already had the job of counting the hogs and Veeragathipillai’s records were not kept. When Veeragathipillai did not continue with this work, he was considered uncooperative by the workers’ compensation board.
These lived experiences bring a human face to the phenomena described in various studies on the effects of experience rating.
Presenter: Emile Tompa, Institute for Work & Health, Toronto, Canada
Abstract
Objective: This study investigated the incentive for health and safety and cost management at the firm level associated with the degree of experience rating in a retrospective workers’ compensation program in Ontario, Canada.
Methods: Panel data on all firms in the principal Ontario experience rating program between 1998 and 2007 was used to estimate regression models of the relationship between the degree of experience rating and various claim rates. The researchers controlled for firm characteristics and contextual factors that may have been associated with the outcomes under investigation.
Results: A higher degree of experience rating was found to be associated with a lower lost-time claim rate and a higher no-lost-time claim rate. The relationship with the total claim rate was insignificant. The degree of experience rating was also associated with outcomes that proxied for cost-management practices.
Conclusion: A higher degree of experience rating appears to be associated primarily with increased secondary prevention efforts (i.e. work disability prevention), rather than primary prevention. There is also some indication of an incentive for cost management. Workers’ compensation authorities need to consider how best to ensure there are appropriate checks and balances in financial incentives programs.
Authors: Emile Tompa, Sheilah Hogg-Johnson, Benjamin Amick, Ying Wang, Enqing Shen, Cam Mustard and Lynda Robson
Reference: Financial incentives in workers' compensation: an analysis of the experience-rating programme in Ontario, Canada. Policy and Practice in Health and Safety, 2012; 10(1):117-137.
Presenter: Liz Mansfield, Institute for Work & Health, Toronto, Canada
Abstract
Objective: This study reviewed the English-language, peer-reviewed literature on experience rating and critically examined the framing of research questions, methodology selection, study findings, the interpretation of results and underlying logic. Two main questions were addressed: What is known about how experience rating motivates employer and worker behaviour? What is known about how experience rating affects workplace health and safety?
Methods: Researchers conducted a comprehensive search of quantitative and qualitative literature on experience rating and claims management. Studies were appraised on several key characteristics (e.g. central objective, relevance), study quality (e.g. study design, interpretation of results) and experience rating findings (e.g. how it motivates stakeholders, other health and safety incentives, and cost-shifting).
Results: While some qualitative studies considered claims management, few focused directly on the topic of experience rating. Several of the qualitative studies did not adequately theorize the power relations, socioeconomic context and politics of experience rating. Many of the quantitative studies were based on simplified understandings of human behaviours and made substantial conclusions from proxy measures used in statistical models. Several studies aggregated data across multiple jurisdictions and paid little attention to the variety of contextual details.
Conclusion: This review found that the social and economic logic of experience rating, as well as the effects of its implementation, is an important and neglected subject in occupational safety and health research. There is still much to be learned about the topic.
Authors: Liz Mansfield, Ellen MacEachen, Emile Tompa, Christina Kalcevich, Marion Endicott and Natalie Yeung
Reference: A critical review of literature on experience rating in workers' compensation systems. Policy and Practice in Health and Safety, 2012; 10(1):3-25
Experience rating and workplace behaviour
Presenter: Women of Inspiration, Ontario, Canada
Abstract
Overview: The Women of Inspiration is a group of injured workers belonging to the broader Ontario Network of Injured Workers Groups (ONIWG). The group gathers on a monthly basis to offer support and knowledge transfer through education and outreach. In this presentation, members of Women of Inspiration share their experiences after workplace injuries and the impact of financial incentives on their treatment by employers. These experiences included being pressured not to report accidents, being pressured not to take time to heal, being humiliated, and experiencing worsening of conditions.
Conclusion: Experience rating has introduced an increasingly adversarial environment in the workplace and at the workers’ compensation board, which is in direct contradiction to the intention of the workers’ compensation system.
Presenter: Agnieszka Kosny, Monash Centre for Occupational and Environmental Health at Monash University, Melbourne, Australia
Abstract
Objective: The electrical sector, a part of the construction industry, employs approximately 29,000 workers in Ontario. While the number of workers’ compensation claims has decreased in the construction sector and the electrical rate group, the construction total claim rate is still the fourth highest among all sectors. The focus of this presentation is to examine some of the ways that financial incentives affect injury prevention in the sector and the return-to-work (RTW) experiences of injured workers and their co-workers.
Methods: Based on Gary Majesky’s experience as a workers’ compensation specialist at the International Brotherhood of Electrical Workers (IBEW) and a study involving focus groups and interviews with electrical workers about the role of co-workers in the RTW process, this presentation highlights some of the ways that financial incentives may be affecting primary injury prevention and RTW in the sector.
Results: A fear of fines has led to documentation of “due diligence” and provision of training and safety information, but not necessarily to the operationalization of safe work practices when these conflict with production demands. When an injury occurs, lost-time claims are avoided, and even those with severe injuries are pressured to RTW. This can be problematic for injured workers and co-workers since meaningful modified work is scarce. Injured workers can be viewed as a liability if their injury results in higher premiums and interferes with the production process. This view can undermine the support and recovery of injured electricians.
Conclusion: Financial incentives can lead to superficial changes in safety and have some unintended consequences for injured workers and their colleagues in the electrical sector.
Authors: Agnieszka Kosny and Gary Majesky
Presenter: Ellen MacEachen, Institute for Work & Health, Toronto, Canada
Abstract
Objective: This study explored how temporary work agencies in Ontario, Canada carry out workplace injury prevention and return to work. It aimed to understand why these agencies would shoulder experience rating costs when they cannot control the work environment.
Methods: Focus groups and in-depth interviews were held with 64 participants between 2009 and 2011. Participants included low-wage agency workers, temporary work agencies, client employers and key informants. Legal and documentary data were also analyzed.
Results: Findings showed how experience rating rules create a market for outsourcing risky jobs to temporary work agencies, which cannot properly manage injury prevention and return to work. The researchers detailed how agencies are positioned to absorb experience rating costs for their clients and avoid financial risk through cost transfer, premium rate groups, legal positioning, influencing accident reporting practices, and shutting down and reopening the business. The findings also showed how experience rating arrangements can distort the responsibility these agencies have for work and health. In Ontario, these facilitate employer “gaming,” largely within the rules.
Conclusion: By putting a price on workplace health and linking this to costs incurred in individual businesses, experience rating rules encourage employer “gaming”—cost-reduction attempts that do not necessarily increase workplace safety. Experience rating rules, together with the rise of non-standard employment arrangements, have fostered the growth of the temporary work agency sector to which employers can outsource workplace injury risk. The researchers propose that workplace health would be less of a tradable commodity, and workers’ safety and return to work a more significant priority for employers, if experience rating were applied to the client employer who controls the conditions of work.
Authors: Ellen MacEachen, Katherine Lippel, Ron Saunders, Agnieszka Kosny, Liz Mansfield, Christine Carrasco and Diana Pugliese
Reference: Workers' compensation experience-rating rules and the danger to workers' safety in the temporary work agency sector. Policy and Practice in Health and Safety, 2012; 10(1):77-95.
Experience rating design: The source of some problems
Presenter: Brenda Greenslade, Workplace Health, Safety and Compensation Commission, St. John’s, Canada
Abstract
Overview: In the early 2000s, the Workplace Health, Safety and Compensation Commission (the Commission) in Newfoundland and Labrador tried to find a more direct and responsive way to motivate employers to establish safer and healthier workplaces and better return-to-work practices. Similar to other Canadian workers’ compensation boards, the Commission had an existing experience rating program. Yet, it was felt that the system was too complex, was based on industry averages instead of individual employer performance, and had a lag between a change in cost experience and the adjustment to the employer’s rate. The system at that time also lacked employer incentives for good prevention and return-to-work practices. This presentation provides the “real world experience” of the Commission’s development of an employer financial incentive program to respond to these needs, called PRIME. The presentation explains how the PRIME program was developed and implemented, some of the challenges faced along the way, and how PRIME operates today.
Conclusion: When it was determined that improvements were needed to the Commission’s experience rating program, the Commission sought new and creative ways of using financial incentives to improve workplace injury prevention.
Presenter: Kevin Purse, Central Queensland University, Rockhampton, Australia
Abstract
Overview: Experience rating programs have become an increasingly prominent feature of workers’ compensation policy in Australia during recent decades. This presentation focuses on the rise and fall of one such program—the South Australian Bonus and Penalty Scheme (BPS), which was the state’s flagship experience rating program from 1990 to 2010. The main arguments for and against experience rating are reviewed, and the basic design features of the BPS and its subsequent operation over the 20 years—from its introduction to its demise—are outlined. The principal finding from the BPS experiment was its failure to deliver on promised improvements in workplace health and safety outcomes.
Conclusion: A number of lessons learned from the South Australian experience may be of interest to an international audience. One crucial consideration is how this experience rating program was able to survive for so long, given its inability to achieve systemic reductions in work-related injury. Another concerns the value of research findings in this complex but contested policy area. A third, and more fundamental, consideration is whether experience rating can be reformed or, alternatively, scrapped altogether.
Reference: Purse A. Experience rating: an Australian post mortem. Policy and Practice in Health and Safety, 2012; 10(1):45-61.
Presenter: Dorothy Wigmore, Winnipeg, Manitoba, Canada
Abstract
Overview: “Our health is not for sale” was a slogan motivating health and safety activists and students in the 1970s. An honourable goal, it is a dream for most workers, especially in an economy increasingly based on contingent/precarious/temporary jobs and deregulation. There are many ways to change this. An important one is making the issue a problem: What does the problem of unsafe and unhealthy jobs cost? For whom? Recent American and Australian research confirms what many of us know: workers’ compensation systems—and the employers using them—pay very little compared to workers, their families, communities and private/public health and social programs. Researchers observed this during a workplace-based Manitoba project to develop tools to help joint health and safety committees be more effective. Asking the question wasn’t enough. They took some baby steps using publicly available documents to integrate cost estimates into several tools and discussed their creative use with the current law to persuade decision-makers of the need for preventive measures.
Conclusion: Asking “what does the problem cost?” should be part of every health and safety program, along with the answers and preventive responses to them. Workers, their unions and employers need tools, systems and appropriate incentives to “see with new eyes,” document the costs for all involved, and do something about them to reduce the toll of unsafe and unhealthy jobs. And they need health and safety enforcement and regulatory systems that take this approach, to increase the odds that workers’ health is not for sale.
Alternative financial incentive programs
Presenter: Frank Neuhauser, Center for the Study of Social Insurance, Berkeley, U.S.A.
Abstract
Objective: In the United States, 80% of employers are excluded from experience rating for workers' compensation insurance because they are considered too small to have credible experience. This study evaluated whether expanding experience modification to cover smaller employers would substantially reduce occupational injury claims.
Methods: Using data on the experience of all insured employers in California from 1993 to 2006, researchers used regression discontinuity (RD) to evaluate whether smaller employers that become experience-rated for the first time (because their premium just exceeds the threshold) have different claim rates and cost per claim then otherwise similar employers who remain just below the premium threshold.
Results: Newly experience-rated small employers report 8% to 12% lower claims incidence rates than matched employers that are not experience-rated. The safety effect remains for at least three years after initial application of experience rating. There is no evidence that the effect is driven by suppression of claim reporting.
Conclusion: Expanding experience rating to cover smaller employers would reduce occupational injuries substantially at those workplaces. However, policy-makers need to consider the costs imposed on employers related to higher variation in premium rates. Many smaller employers pay additional premiums that are greater than their actual losses simply because they are experience-rated.
Presenter: Jean Dussault, Quebec Federation of Labour, Montreal, Canada
Abstract
Overview: In 2009, when the province was revising its health and safety regime, the Quebec Federation of Labour (QFL) looked thoroughly, among other things, at the manner in which the Quebec system is financed. It rapidly came to the conclusion that experience rating was not fulfilling its purpose. As a result, the QFL elaborated a different financial system based on real prevention in the workplace.
Conclusion: Although the QFL’s proposal was not accepted in its entirety, most of its concepts were included in a project to modify Quebec’s health and safety legislation. However, the legislation was not adopted before the September 2012 election was called.
Presenter: Sandro Perruzza, Workplace Safety & Prevention Services, Toronto, Canada
Abstract
Overview: Workplace Safety & Prevention Services (WSPS) is a sponsor of the Safety Group program, a financial incentive program currently administered by the Workplace Safety and Insurance Board in Ontario. From its experience as a sponsor, and its evaluation of the program over time, WSPS has gained valuable insight into what initially draws people into the program and what keeps them coming back year after year. This session introduces Safety Groups as a financial incentive program, shares the WSPS’s real-world experiences with respect to which organizations have been drawn into this program, what they value about the experience that keeps them engaged, and how this can translate into health and safety prevention outcomes.
Conclusion: While financial incentives may be an initial draw to engage workplaces to invest in health and safety, multi-component programs that integrate opportunities to collaborate, share experiences and demonstrate value are the key to sustainable health and safety prevention.
Presenter: Pierre Koning, Ministry of Social Affairs and Employment, The Hague, The Netherlands
Abstract
Objective: Since 1998, The Netherlands has stood out as a country with substantial experience rating incentives in disability insurance. Currently, more than one third of the disability insurance costs of workers are paid by employers, together with two years of wage-continuation costs during sickness prior to the disability insurance claims assessment. Although the Dutch system has undergone further changes since 2006, experience rating schemes have persisted, and the inflow into the disability insurance scheme has dropped substantially. This paper examined the effects of experience rating on the inflow into disability insurance in The Netherlands.
Methods: The study used a unique longitudinal administrative data set from the Dutch social benefit administration. The data set covered employers for the years 2000, 2001 and 2002. A special focus was given to the distinction between (and importance of) ex-ante and ex-post effects of experience rating.
Findings: While there was weak evidence for effects of ex-ante incentives, the study found the ex-post impact of experience rating to be significant and substantial, amounting to a 15% reduction in the inflow into disability insurance.
Conclusion: It appears that the decision of employers to increase preventive activities is mainly an issue of being aware of the experience rating incentive. When taking a broader perspective, however, the evidence suggests that the enhanced incentives (also) have led to an increased inflow into unemployment insurance and other benefit schemes.
Presenter: Peter Brouwer, TNO Dutch Center for Health Assets, Hoofddorp, The Netherlands
Abstract
Objective: This article examined remunerative incentives aimed at supporting job retention among workers who fall ill and how they are balanced among employees, employers and the public authorities in The Netherlands, Denmark and Great Britain.
Methods: An analytical framework that focused on the financial flows among all of the relevant stakeholders in cases of sickness absence was used to systematically investigate the incentives. Such flows are the key to the possible incentives involved.
Results: In all three countries, most employees initially received employer-provided sick pay at a rate of 100% of their previous wages. However, the benefit amount decreased over time and, after a certain period, the payment of benefits became the responsibility of the public authorities rather than the employer. The rate of decrease in, and the duration for which the employer was responsible for, the payment of benefits differed among countries. Thus, the actual incentives for job retention offered to employees, employers and the public authorities also differed significantly.
Conclusion: The main incentive to have an employee return to work lies with the employer in the Netherlands, with the public authorities (municipalities) in Denmark, and with the employee him/herself in Great Britain. Legal arrangements for sickness management can effectively strengthen remunerative incentives.
Authors: Joost van Genabeek, Peter Brouwer and Jan Høgelund
Presenter: Peter Sturm, Canadian Society of Safety Engineering (CSSE), Toronto, Canada
Abstract
Overview: In recent years, international companies have begun to report their health and safety performance as part of their "corporate sustainability reports." This session addresses the evolution of health and safety reporting from using traditional lagging internal indicators to becoming an integral part of a company's external overall corporate reporting. It reviews present metrics and provides company examples.
Conclusion: Safety practitioners across North America are, or should be, preparing to proactively include health and safety in external corporate reporting.
