Public Personal Injury Compensation Plans

Public personal injury compensation plans (PPICPs) are also commonly known as workers’ compensation plans. PPICPs provide wage replacement, health care, and physical and vocational rehabilitation to workers who suffer job-related injuries or diseases. Benefits are also available to survivors, such as spouses and children, of workers who die as a result of job-related accidents or diseases. Each province and territory has a workers’ compensation board entity set up under its own legislation that administers this insurance arrangement and stipulates how the board is to be governed. The governing body often includes representatives from the employer, labour, and public interest communities. Employers pay an assessment to a fund, which is used to pay worker and survivor benefits and the administration costs of the program. Assessment levels are normally set annually and can vary depending on the risk of an industry, and in some cases, the employer’s own experience.  In general, participation in the PPICP insurance arrangement is mandatory for employers in most industries, according to the provincial or territorial legislation. The legislation also stipulates that workers who suffer a work-related injury or disease are prohibited from suing their employers.

The actuarial functions involved in PPICP work parallel actuarial practice in other types of insurance. Liabilities are calculated by projecting the future benefit and administration obligations for existing claims and future investment income. This permits the funded status of the plan to be determined (the ratio of the assets to the liabilities). In addition, the actuary normally calculates the required assessment rates every calendar year for each of the various industrial employer classifications. This calculation normally involves estimating the frequency of claims occurring in the upcoming calendar year, the average cost of each benefit type for such claims, and a rate adjustment (increase or decrease) to move the actual funded status of the plan closer to the target funded status. Also the actuary may recommend what additional capital, if any, should be retained over and above the liabilities to mitigate future risks.