Labour Minister Monte McNaughton announced on September 24 that the Workplace Safety and Insurance Board (WSIB) will eliminate its unfunded liability charge beginning January 2020. The change is expected to reduce the overall cost of insurance premiums to Ontario businesses by $607 million.

"This is good news for employers and employees across the province," said McNaughton. "This money will lead to investments in new jobs, technology and health and safety programs."

The news comes on the cusp of the WSIB’s annual general meeting, and an expected announcement of employer premium rates under the new rate framework system.

Last September, the board announced that it had retired its unfunded liability, which ballooned to as high as $14.2 billion in 2011. Since that time, the board took aggressive measures—mandated by the provincial government—to eliminate its operating deficit. It did so nearly 10 years ahead of its mandated schedule. In so doing, the WSIB was able to reduce employer premiums by an average of 30 percent for 2019.

The unfunded liability charge—also known as the Past Claims Cost—has since 2010 been one of four pillars on which employer premiums were set, and the greatest contributor to retiring the board’s operating deficit. Other premium components included claims costs, gain or loss components, and WSIB administration expenses.

In 2019, the PCC represented approximately 13 percent of employers’ total average premium rates of $1.65. The  PCC was significantly reduced for 2019 premium rates, and will be eliminated for the 2020 premiums. Doing so will allow the WSIB to reduce employer premiums for the fourth year in a row.

"Today’s announcement marks a significant achievement,” said Ian Cunningham, president and COO of the Council of Ontario Construction Associations. “The WSIB’s unfunded liability served as a red flag to investors looking for a place to build office towers, commercial facilities, factories and warehouses and create jobs, warning them of the burden of future increased taxes."

Minister McNaughton made the announcement at a job site operated by Eastern Construction, which has pledged to give WSIB premium reductions back to employees. Eastern's 130 employees each received a cheque worth on average $600 from their employer last year.

"A good safety record saves lives and money," said Bryan Arnold, president and CEO of the construction firm. "So we want to do everything we can to encourage our employees to keep our sites safe. This was a common-sense move for us."