Prevention

Big Premium for Small Risk?

It is possible to have other accessory classifications assigned to employees that perform duties significantly different than the ones encompassed by the principal classification.

For instance, a receptionist may work for a construction company but only be exposed to the risks associated with his clerical duties. Under these circumstances, this employee should be assigned to the clerical classification, which entails a premium rate significantly lower than the one applicable to the construction industry.

Given the complex nature of some operations, it is not uncommon to find employees assigned to an employer's principal classification that are not exposed to the risks associated with said classification. In such cases, the employer will end up paying a higher premium for those employees to cover for a nonexistent risk. Likewise, it is possible to find employees assigned to accessory classifications that should be included in the principal classification because of the risks they are actually exposed to.

Watch Your Merit Rating System

The basic operation to ascertain an employer's merit rating involves a comparison between "direct costs" and "incurred loss assignments".

Direct costs are the amount that the SIF actually spent to provide treatment to employees, whereas an incurred loss assignment is a previous estimate of those costs.

In sum, an employer should:

• Try to lower the incidence of work related accidents first and foremost;
• keep control of accidents reported to the SIF through programs that can be customized to their operations;
• request the necessary information from the SIF to compare the merit rating report to the data obtained from the accident monitoring program;
• and, if necessary, file a formal appeal.

Subcontractors Are Not My Employees! Aren't They?

Audits are aimed at finding deficiencies in an employer's premium history. Uninsured subcontractors are a prime target because employers are seldom aware that this type of payment is considered "payroll" by the SIF and, as such, is subject to premium. The same applies to individual employers and even freelancers that also render services for another employer.

Before the fiscal year 2009-2010, certain subcontractors and individual employers were not able to obtain a SIF policy, which left no choice to hiring employers but to provide coverage themselves to avoid exposure. However, since fiscal year 2009-2010 certain subcontractors and individual employers can obtain policy coverage from the SIF. The foregoing may represent significant savings to hiring employers provided they ensure that the subcontractor or individual employer acquires and maintains adequate SIF coverage while rendering their services.

Initiatives (or programs) to set efficient controls over the hiring of subcontractors and individual employers can be developed to suit each employer's needs. An effective program should allow an employer to keep track of all hired subcontractors and request SIF coverage before the service is provided. Such controls can limit exposure to additional premium.