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2008 Annual ReportWorkers Compensation Board of Prince Edward Island
TAKE CARE OF ITBEFORE IT’S AN INJURY
www.wcb.pe.ca
PUT IT AwAY BEFORE IT’S AN INJURY
14 Weymouth Street, P.O. Box 757 Charlottetown, Prince Edward Island, C1A 7L7Telephone: 902-368-5680 Toll-Free in Atlantic Canada: 1-800-237-5049 Fax: 902-368-5696
www.wcb.pe.ca
30 April 2009
Hon. Carolyn BertramMinisterCommunities, Cultural Aff airs and LabourP.O. Box 2000Charlottetown, PE C1A 7N8
Dear Minister Bertram,
In accordance with Section 34 of the Workers Compensation Act, the Board is pleased to provide its Annual Report for the year ending 31 December, 2008.
Nancy GuptillChair
Letter of Transmittal
4
Table of Contents
Report to Stakeholders 5
About Us: Our Mission - Our Values - Our Organization 6
Our Board of Directors 7
A Message from the Chair and CEO 8
Strategic Plan - Our Plan, Our Results 12 Sharing Prevention Responsibilities 13 Improving Worker Outcomes 16 Meeting Service Expectations 18 Promoting Strength Within 21
Securing the Future 22
At a Glance: Key Statistical Measures 26
Financial Statements 27
Preface to the Audited Financial Statements 28
Actuarial Certificate 29
Auditors’ Report 30
Financial Statements 31
Notes to the Financial Statements 34
External Reports 49
Workers Compensation Appeal Tribunal 50
Office of the Employer Advisor 53
5
Report to Stakeholders
6
About Us
Our Values• Wetreatpeoplewithfairness,careandrespect
• Wecommunicateinanopenandhonestmanner
• Weareaccountabletothepublicandourstakeholders
• Webelieveinteamworkandarecommittedto
continually improving our services
• Wefostertrust
• Weactwithintegrityandprofessionalism
Our MissionThe Workers Compensation Board exists to
promotesafeworkplacesandtoprotect
employersandinjuredworkersthrougha
sustainable accident insurance program.
Our Organization
legal services human resources
Board of directors
ceo
corporate servicesclient services occupational health & safetycorporate development
employer servicesintake & entitlement oh&s officersinternal reconsideration
facilities & procurementcase management educationpolicy & planning
information technologyextended Benefits communications
financemedical
customer liaison
Our Board of Directors
TheWorkersCompensationBoard(WCB)BoardofDirectors:(top,fromleft)MargaretStewart,HarveyLarkin,AngusHouston,SandyMacKay,TammyChaisson,StuartAffleck(bottom)CharleneMcInnis,NancyGuptill,MikeAnnear.
7
Chair
Nancy GuptillMs. Guptill has been Chair of the Workers Compensation Board since 2007. ShehasmademanycontributionstoPrinceEdwardIslandasaformerMLAandCabinetMinister.Ms.GuptillwasresponsiblefortheWorkersCompensa-tion Act as the Minister of Labour and the Status of Women. She also served astheMinisterofTourism,wasresponsibleforhumanrightsintheprovince,andwasthespeakerofthelegislativeassembly.
Worker Representatives
Tammy ChaissonMs. Chaisson has been a Worker Representative on the Board of Directors since 2008. She currently is employed as a Medical Laboratory Technolo-gistatbothWestern&CommunityHospitalsandhasbeenPresidentoftheInternationalUnionofOperatingEngineersforthepastnineyears.ShehasservedontheOccupationalHealthandSafetyAdvisoryCouncil,wasanex-ecutivememberoftheP.E.I.FederationofLabouraswellasaboardmemberoftheP.E.I.HealthSectorCouncil.
Sandy MacKayMr. MacKay has been a Worker Representative on the Board of Directors since 2004.HeisapastPresidentofboththeP.E.I.UnionofPublicSectorEmploy-eesandtheFederationofLabour.Mr.MacKaywasamemberofthetaskforcethatdevelopedthefirstOccupationalHealthandSafetyActforP.E.I.andhasservedontwoMinisterialadvisorycommitteesthatrecommendedchanges to the Workers Compensation Act.
Charlene McInnisMs.McInnishasbeenaWorkerRepresentativeontheBoardofDirectorssince2004.Injuredonthejobin1999,shestartedworkingwithinjuredworkergroupsandbecametheInjuredWorkersOrganizationalCommitteespokespersonin2002.SheiscurrentlyemployedastheP.E.I.MilitaryFamilyServicesCoordinatorandworkswithadvocacygroupsforCanadianForcesmembers injured in the line of duty.
Margaret StewartMs.StewarthasbeenaWorkerRepresentativeontheBoardofDirectorssince2004.AhighschoolEnglishteacherforovertwentyyears,andateacher-librarianfornine,shehasservedasthePresidentoftheP.E.I.Teachers’Federa-tionaswellasaDirectoroftheCanadianTeachers’Federation.
Employer Representatives
Stuart AffleckMr. Affleck has been an Employer Representative on the Board of Directors since2008.HewasafarmownerandoperatorforthirtyeightyearsandhasheldmanypositionsthroughorganizationssuchastheP.E.I.PotatoBoard,EastPrinceRegionalHealthBoard,P.E.I.Unit2RegionalSchoolBoardandtheP.E.I.ProvincialFamilyFarmAppealsBoard.
Mike AnnearMr. Annear has been an Employer Representative and Vice-Chair of the Board ofDirectorssince2008.HewasamemberoftheLegislativeReviewCommit-tee for the Workers Compensation Act in 2007 and served on the Board of DirectorsfortheP.E.I.RoadBuildingandHeavyEquipmentAssociation.Mr.Annear also coordinated safety training and programming for Kings County Construction Ltd. for fifteen years.
Angus HoustonMr.HoustonhasbeenanEmployerRepresentativeontheBoardofDirectorssince2008.HehasoverthirtyyearsexperienceasanemployeronP.E.I.work-ing in a number of capacities in both the health and hospitality industries. Mr.Houstonhasalsoownedandco-ownedrestaurantsinbothMontagueandCharlottetown.
Harvey LarkinMr. Larkin has been an Employer Representative on the Board of Directors since2006.Heisanemployerinthehospitalityindustrywith20-25employ-eesandisafarmco-ownerandoperatorintheturkeygrowingbusiness.Mr.Larkin has also served as a board member on various community organiza-tions.
Theyear2008wasoneofachievementsandchal-lenges as the Workers Compensation Board (WCB) continued to make progress in its efforts to prevent workplaceinjuryandprovidequalityservicetoIslandworkersandemployers.Weaccomplishedthe key objectives set out in the first year of our CorporateStrategicPlanwhichiscommittedtoimprovingtheworkerscompensationsystemthroughattentiontofivestrategicthemes:sharingpreventionresponsibilities,improvingworkeroutcomes,meetingserviceexpectations,promotingstrengthwithin,andsecuringthefuture.
In2008welaunchedanewsocialmarketingcampaignaimedatencouragingbehaviourchangeintheworkplace.Oneofourtelevisionads,“Nail,”tookhomeaBronzeLionattheCannesLionsInternationalAdvertisingFestival.Betterstill,87%ofIslanderssaid“Nail”madethemmoreconcernedaboutworkplacesafety!Ournewcorporatebrand,SafetyMatters@Work,wasdevelopedin2007tobetterreflecttheBoard’songoingcommitmenttoinjuryprevention.In2008wesuccessfullylaunchedthenewbrand,whichhasevolvedintothecoremessageforallstakeholdersoftheWorkersCompensationBoard.
Wecontinuedtoworkatchangingattitudesandbehaviourintheworkplaceaswestrivedtocreateasafetyculture.Educationwasanessentialcomponentofthisstrategyin2008asweheldour9thAnnualConferenceonWorkplaceHealthandSafety.Thisconferenceequipsworkersandemployerswithpracticalinformationtheycantakebacktotheirworkplaces.AnOccupationalHealthandSafetyCDcalled“OHSforEveryone”,wasdevelopedinsupportofthisinitiativeandtohelpallstakeholdersnotonlymeetbutalsoexceedsafetyrequirements.WeorganizedtheworkplacesafetycomponentoftheprovincialSkillsCanadaeventwherebythehealthandsafetyknowledgeofsecondarystudentsintheprovinceistestedbyprovidingpracticalreallifescenarioswherestudentsarerequiredtoidentifyhazardsintheworkplace.
SofttissueinjuriescontinuetobeaseriousproblemforIslandworkers;theseinjuriesrepresentoverhalfofWCB’syearlyclaims. We identified partners to participate in the creation of a soft tissue injury prevention strategy for the health care sec-tor,reviewedbestpracticesacrossjurisdictions,anddevelopedastrategytomeetthisongoingchallenge.Akeycomponentofthisstrategywascommunicationarounddisabilitydurationguidelineswhichyieldedapostercalled“CriticalPathforSoftTissueInjury:LowBack.” TheposterwasdistributedtoIslandhealthcareproviders,aswellasasupporting“FactSheetforLowBack Strains and Sprains”.
Likemanybusinessesin2008,downturnsinthefinancialmarketsresultedinasignificantdeclineintheinvestmentreturnsoftheWorkersCompensationBoard.WearecommittedtosustainingthestrongaccidentinsuranceprogramthatwehaveinplaceforIslandworkersandemployers.Weunderstandtheimportanceofsecuringthefutureforourstakeholders.Weknowthatmarketvolatilityanddownwardtrendsin2009willbringfinancialchallengesthatwillneedtobeaddressedbythe Board.
Theabilitytoprovidequalityservicedependsontheabilitytofostergoodworkingrelationshipswithstakeholders.Webelieveeffectivecommunicationisanessentialpartofagoodworkingrelationship.Tothisend,weregularlyaskworkers
A MessageFrom the Chair and the CEO
8
andemployersfortheiropinionsabouttheservicesweprovidetothem.The2008InjuredWorkerSurveyreportedthatfairtreatmentofinjuredworkersisthemostimportantcomponentofoverallsatisfaction.Nearlyeightinten(79%)injuredwork-ersagreedtheyaretreatedfairlybyWCB.Wealsoshowedimprovementoncommunicatingwithworkersbyprovidingaclearunderstandingofcasesandclaims,movingfrom75%satisfactionin2006upto81%satisfactionin2008.Thesurveyprovides feedback from our stakeholders that is used to develop action plans to improve service delivery.
Meetingserviceexpectationsthroughtechnologytookafrontseatin2008withthedevelopmentofWCB’se-businessinfra-structure strategy. WCB also implemented key e-business goals such as the online Form 7 – Employers Report of Accident. EmployersnowhavetheoptiontofiletheirReportofAccidentonlineprovidingaconvenientandsecurewayofdoingbusiness.OurnewDirectPay–PrescriptionDrugprogramwasalsoimplementedensuringthatworkersreceivequalityandtimelyservicefordrugcoverageintheeventofaworkplaceinjuryorillness.
WCBreleasedtheReportoftheLegislativeReviewAdvisoryCommitteein2008.WCBisrequiredtoappointanAdvisoryCommitteetoreviewtheWorkersCompensationActeveryfiveyearsandtoreporttotheMinisterofCommunities,CulturalAffairsandLabour.TheopinionsofIslanderswereessentialingeneratingthereport’srecommendations.Aconsultationprocesswasestablishedtoallowcommitteememberstogatherinformationfromthepublicandworkerscompensationstakeholders. The Committee’s report included sixty-nine recommended amendments to the Workers Compensation Act and Regulations.
ThefirsteverAquacultureSafetyCodeofPracticeforPrinceEdwardIslandwasdevelopedin2008byWCBandthePrinceEdwardIslandAquacultureAlliance.TheAquacultureSafetyCodeofPracticewillhelpaquaculturistsandtheirworkersiden-tifyandcontrolsituationsorhazardsthatcouldcauseinjuryintheworkplace.ThecodeofpracticeisintendedtobeusedinconjunctionwiththeOccupationalHealthandSafetyActandRegulationsanddoesnotreplacethem.Itprovideskeywork-place health and safety information for the industry including basic responsibilities under the act, identification of common hazards,andguidelinestopracticesspecifictoPEIaquaculturesuchasdivingsafety,boatsafetyandharvestingsafety.
Deliveringqualityservicetoourstakeholdersrequiresdedicatedstaffwhoarefullyequippedwiththepropertools,knowl-edgeandsupporttomeet,andexceed,stakeholderexpectations.In2008,throughstaffparticipation,aperformanceman-agementmodelwasdeveloped.Thisnewapproachtoperformancemanagementisintendedtoimprovecommunicationand promote greater understanding of strategic objectives among all staff at WCB.
Wemadegreatprogressin2008towardourstrategicobjectivesandlookforwardtothechallengesandopportunitiesahead.Ourmotivatedstaff,BoardofDirectorsandstakeholdersarecommittedtoourcommongoalofeliminatingworkplaceinjuryandcreatingacultureofsafetyonPrinceEdwardIsland.
____________________________ ____________________________Nancy Guptill Carol Anne DuffyChair Chief Executive OfficerWorkers Compensation Board Workers Compensation Board
9
L’année 2008 en a été une de réalisations et de défis, alors
quelaCommissiondesaccidentsdutravailacontinuéde
progresser dans ses efforts visant à prévenir les blessures
autravailetàfournirdesservicesdequalitéauxtravail-
leurs et aux employeurs insulaires. Nous avons réalisé les
objectifs principaux définis dans la première année de
notreplandirecteurstratégique,danslequelons’engageàaméliorerlesystèmedecompensationdestravailleursenportantattentionà
cinqthèmesstratégiques:lepartagedesresponsabilitésenmatièredeprévention,l’améliorationdesrésultatsdutravailleur,lasatisfaction
des attentes en matière de service, la promotion de la force intérieure et l’assurance de l’avenir.
En 2008, nous avons lancé une nouvelle campagne de marketing social visant à encourager le changement des comportements en milieu
de travail. Une de nos annonces télévisées, « Nail », a remporté un Lion de bronze au festival de publicité international des Lions de Cannes.
Mieuxencore,87%desInsulairesontaffirméque«Nail»lesavaitrendusplusconscientsdelasécuritéautravail!Notrenouvellemarque
commerciale, Safety Matters @ Work, a été créée en 2007 afin de mieux mettre en évidence l’engagement permanent de la Commission à
prévenirlesblessures.En2008,nousavonsréussiàlancerlanouvellemarquequiestdevenuelemessagedebasedetouslespartenaires
de la Commission des accidents du travail.
Nous nous sommes sans cesse efforcés de changer les attitudes et le comportement dans le milieu de travail afin de créer une culture
delasécurité.L’éducationaétéunecomposanteessentielledecettestratégieen2008,alorsquenousavonstenunotre9eConférence
annuellesurlasantéetlasécuritéautravail.Cetteconférencemunitlestravailleursetlesemployeursderenseignementspratiquesqu’ils
peuvent rapporter à leur lieu de travail. Un CD sur l’hygiène et la sécurité au travail intitulé OHS for everyone (Santé et sécurité au travail
pour tous) a été gravé afin d’appuyer cette initiative et d’aider toutes les parties intéressées non seulement à satisfaire, mais à dépasser les
règles de sécurité. Nous avons organisé la composante sécurité au travail de l’événement provincial de Compétences Canada. On mesure
ainsi les connaissances des élèves du secondaire en matière de santé et de sécurité au travail en les plaçant devant des scénarios réels dans
lesquelsilsdoiventreconnaîtrelesdangerssetrouvantdanslemilieudetravail.
Lesblessuresdestissusmoussonttoujoursunproblèmepourlestravailleursdel’Île;ellesreprésententplusdelamoitiédesréclamations
annuelles de la CAT. Nous avons identifié des partenaires en vue de créer une stratégie de prévention des blessures des tissus mous pour le
secteurdessoinsdesanté.Nousavonségalementrévisélespratiquesexemplairesdanslesprovincesetterritoiresetélaboréunestratégie
afin de relever ce défi permanent. Une des grandes composantes de cette stratégie a été la communication entourant les lignes directrices
concernantladuréedesincapacités,cequiamenéàuneafficheintitulée:«CriticalPathforSoftTissueInjury:LowBack»(chemincri-
tiqueaucasdeblessuredestissusmous:lésionsaubasdudos).L’afficheaétédistribuéeauxfournisseursdesoinsdesantédel’Île,accom-
pagnée d’une fiche de renseignements sur les douleurs et entorses lombaires.
Comme ce fut le cas pour de nombreuses entreprises en 2008, le ralentissement des marchés financiers a engendré un déclin impor-
tant dans les rendements de l’investissement de la Commission des accidents du travail. Nous sommes soucieux de maintenir le pro-
grammed’assurancedesaccidentsambitieuxquenousavonsenplacepourlestravailleursetlesemployeursdel’Île.Nouscomprenons
l’importanced’assurerl’avenirdenospartenaires.Deplus,noussavonsquelavolatilitéetlestendancesàlabaissedumarchéen2009
apporterontleurlotdedéfisquelaCommissiondevrarelever.
Messagedu président et de la directrice générale
10
Lacapacitédefournirunservicedequalitédépenddelacapacitéd’entretenirdebonsrapportsdetravailavecnospartenaires.Nous
croyonsquelacommunicationefficaceestunélémentessentieldesbonnesrelationsdetravail.Àcettefin,nousdemandonsrégulièrement
auxtravailleursetauxemployeursleuropinionsurlesservicesquenousleuroffrons.Lesondageauprèsdestravailleursblessésen2008
aindiquéqueletraitementéquitabledestravailleursblessésestlacomposantelaplusimportantedelasatisfactionglobale.Prèsdehuit
surdix(79%)destravailleursblessésreconnaissentqu’ilssonttraitéséquitablementparlaCAT.Nousavonségalementréussiàaméliorer
les communications avec les travailleurs en leur fournissant des explications claires des cas et des réclamations, en faisant passer le taux de
satisfactionde75%en2006à81%en2008.Lesondagenousapportelescommentairesdenospartenaires,lesquelsserventàpréparerles
plans d’action visant à améliorer la prestation des services.
La satisfaction des attentes de service au moyen de la technologie a reçu une priorité en 2008 avec l’élaboration de la stratégie
d’infrastructuredesaffairesélectroniquesdelaCAT.LaCATaégalementréalisédesobjectifsd’affairesélectroniquesimportantstelsquele
formulaire 7, Rapport d’accident des employeurs, en ligne. Les employeurs ont maintenant l’option de déposer leurs rapports d’accident
enligne,cequileurdonneunmoyenfacileetsécuritairedefairedesaffaires.Notrenouveauprogrammedepaiementdirectdesmédica-
mentsd’ordonnanceaégalementétémisenplacedanslebutdes’assurerquelestravailleursreçoiventunservicedequalitéentemps
opportun en cas de blessure ou de maladie au travail.
En 2008, la CAT a rendu public le rapport du Comité consultatif de révision législative. De plus, la CAT doit constituer un comité consultatif
afin de réviser la Workers Compensation Act(loisurlesaccidentsdutravail)touslescinqans,etfairerapportàlaministredesCommunautés,
desAffairesculturellesetduTravail.LacontributiondesInsulairesaétéessentielleauxrecommandationsdurapport.Unprocessusdecon-
sultation a été mis en place afin de permettre aux membres du comité d’aller chercher des renseignements auprès de la population et des
partenaires de l’indemnisation des accidents du travail. Le rapport du comité contenait soixante-neuf recommandations de modifications à
la loi sur les accidents du travail et à son règlement.
LetoutpremierCodedepratiquesurlasécuritéaquacoledel’Île-du-Prince-Édouardaétérédigéen2008parlaCATetl’Allianceaquacole
del’Île-du-Prince-Édouard.LeCodedepratiqueaquacoledel’Île-du-Prince-Édouardaideralesaquaculteursetleurstravailleursàrecon-
naîtreetàmaîtriserlessituationsoulesrisquesquipourraientcauserdesblessuresautravail.LeCodeestcenséêtreutiliséenmêmetemps
quelaOccupational Health and Safety Act (loisurlasantéetlasécuritéautravail)etsonrèglement,etilnelesremplacepas.Ilfournitdes
renseignements essentiels sur la santé et la sécurité au travail à l’industrie, notamment les responsabilités de base en vertu de la loi, la
reconnaissancedesrisquescommuns,etleslignesdirectricesapplicablesauxpratiquesparticulièresàl’aquacultureàl’Î.-P.-É.tellesquela
sécuritéenplongée,lasécuritédel’embarcationetlasécuritédelapêche.
Laprestationdeservicesdequalitéànospartenairesexigeunpersonneldévouéquiestpleinementmunidesbonsoutils,desconnais-
sances et de l’appui afin de répondre et de dépasser les attentes des partenaires. En 2008, grâce à la participation du personnel, on a mis au
point un modèle de gestion de la performance. Cette nouvelle méthode de gestion de la performance vise à améliorer les communications
etàpromouvoirunemeilleurecompréhensiondesobjectifsstratégiquesparmitoutlepersonneldelaCAT.
Nousavonsgrandementprogresséen2008danslaréalisationdenosobjectifsstratégiques,etnousavonshâtedefairefaceauxdéfiset
auxpossibilitésquinousattendent.Notrepersonnelmotivé,notreconseild’administrationetnospartenairessouscriventànotreobjectif
commund’éliminerlesblessuresautravailetdecréeruneculturedelasécuritéàl’Île-du-Prince-Édouard.
____________________________ ____________________________Nancy Guptill Carol Anne DuffyPrésident Directrice généraleCommission des accidents du travail Commission des accidents du travail
11
The Strategic Plan (2007-2012) reflects the mission and values of the Workers Compensation Board and focuses on five strategic themes.
Within each theme, key result areas guide specific goals, actions and measures of success. Our results are highlight-ed for stakeholders by key result area.
Strategic Plan Our Plan, Our Results
12
strategic theme: Sharing Prevention Responsibilities
strategic theme: Improving Worker Outcomes
strategic theme: Meeting Service Expectations
strategic theme: Promoting Strength Within
strategic theme: Securing the Future
13
strategic theme: Sharing Prevention Responsibilities
Course of Action: Yearone(October2007–December2008)effortswillfocusonthegoal“The Workers Compensation Board, workers and employers understand their role in injury prevention” by:• Reassessingeffortstoeducateworkersandemployersoninjuryprevention.• Facilitatingthedeliveryofinjurypreventioneducationwhichmeetstheneedsofworkersandemployers.• Identifyingandpromotinginjurypreventionbestpractices.• Developingastrategytoreducerecurringworkplaceinjuries.• ReinventingthecorporateidentityoftheWorkersCompensationBoardtoincorporate“safety”.
Results Summary:Completed as of December 2008:√Developedandfacilitatedaworkplantomeetfocusedemployerinitiativeobjectives.√ Developed and held education sessions for the health care sector.√DevelopedanddistributedageneralinformationCDwithOccupationalHealthandSafetyInformation.√ Coordinated and delivered the safety component of Skills Canada event.√Reassessedcurriculumprioritiesforyoungworkereducation.√IdentifiedbestpracticesininjurypreventioneducationmodelsforrecurringinjuriesinCanada.√Identifiedpartnerstoparticipateinthedevelopmentofasofttissueinjurypreventionstrategyforhealthcaresector.√Reviewedinjuryinformationandbestpracticesmodelsfromothercompensationsystemjurisdictions.√ Developed options and cost/benefit information.√Identifiedastrategyanddevelopedaworkplanforimplementingthesofttissueinjurypreventionstrategyforthehealth care sector.√Identifiedothersectorsthatareexperiencinghighnumbersofinjuriesandtheinjurytype.√Metwithindustryrepresentativestoidentifypossiblestrategiesforinjuryreduction.√ Facilitated the release of the 2007/2008 social marketing campaign.√Developedandimplementedaworkplanforroll-outofnewcorporateidentity.
Measure of Success: • Workersandemployersperceivetheirinjuryprevention education needs are being met. • ThemandateoftheWorkersCompensationBoardfor injurypreventioneducationisendorsedbyworkers and employers. • Astrategyforreducingrecurringworkplaceinjurieshas been implemented. • Incidentsofrecurringworkplaceinjuriesarebeing monitored. • Workersandemployersinhighinjurysectorsrecognize the value of the internal responsibility model for improving outcomes.
Key Result Area: Injury PreventionThe Workers Compensation Board recognizes that preven-tionisthemosteffectivewaytominimizetheoverallemo-tional,physical,andfinancialburdenofworkplaceinjuries.Aneffectiveinjurypreventionprogramdependsonwork-ers, employers and the Workers Compensation Board each understandingtheirroleinmakingPrinceEdwardIslandasafeplacetowork.
0
500
1000
1500
2000
2006 2007 2008
14813414133
9559041043
866862809
197119021993
14
Key Statistics: Injury Prevention
Number of Adjudicated Claims
total adjudicated claims: Total number of claims adjudicated for entitlement to benefits.temporary Wage loss: Claims received where, as a result of a workplace injury, compensation for wage loss is paid to a worker.medical aid only: Claims received where, as a result of a workplace injury, a worker does not lose wages but does receive medical aid which is paid on behalf of the workers by the Workers Compensation Board.fatalities: Claims received as a result of a workplace fatality. denied: Claims received and determined not eligible for workers compensation system benefits under the Workers Compensation Act.
Injury Frequency (per 100 FTE’s)
injury frequency: The injury frequency rate is calculated by dividing the number of claims by the number of full-time employees in a given year. A full-time employee or full-time equivalent (FTE) is defined as an employee who works the equivalent of 35 hours per week.
Workplace Health and Safety Inspections
Total Adjudicated Claims
Temporary Wage Loss
Medical Aid Only
Fatalities
Denied
0
0.45
0.90
1.35
1.80
2004 2005 2006 2007
1.371.351.42
1.79
0
500
1000
1500
2000
2006 2007 2008
18711970
1746
00
0.45
0.90
1.35
1.80
2004 2005 2006 2007
1.371.351.42
1.79
0
0.45
0.90
1.35
1.80
2004 2005 2006 2007
1.371.351.42
1.79
15
in jur y prevent ion .. .
depends on workers, employers and the Workers Compensation Board
each understanding their role in making Prince Edward Island a safe place to work.
Workplace Health and Safety Workshops and Presentations
Top Five Industries having Workplace Injuries
Top Five Anatomical Areas of Injury
Back
Multiple Body Parts
Shoulders
Legs
Fingers
Health and Social Service Industries
Food Processing Industries
Transportation Industries
Food and Beverage Service Industries
Educational Service Industries
0
100
200
300
400
2006 2007 2008
165
238
317
0% 7% 14% 21% 28%
8%
9%
9%
14%
27%
0% 7% 14% 21% 28%
4%
4%
6%
12%
24%
strategic theme: Improving Worker Outcomes
Course of Action: Yearone(October2007–December2008)effortswillfocusonthegoal “Criteria for identifying workers with soft tissue injuries have been defined and a process for managing soft tissue injury claims has been developed” by:• Definingclaimtypestobecategorizedassofttissueinjuries.• Consultingwithemployersonreturntoworkprocessesforsofttissueinjuries.• Consultingwithhealthcareprovidersontreatmentstandardsforsofttissueinjuries.• Researchingsofttissueinjuryprogramsusedinothercompensationsystemjurisdictions.• Identifyingcriticalsuccessfactorsandindicatorsforimprovingsofttissueinjuryoutcomes.• Developingaprocessformanagingsofttissueinjuryclaims.• Identifyingrolesandresponsibilitiesformanagingsofttissueinjuryclaims.• Educatingstaff,workers,employers,andhealthcareprovidersontheprocessformanagingsofttissueinjuryclaims.
Results Summary:Completed as of December 2008:√ Finalized treatment standards for soft tissue injuries.√ Developed a procedure for management of soft tissue injury claims that includes action items to address critical points, success factors, and recognizes treatment standards for health care providers.√Identifiedrolesandresponsibilitiesinprocedureformanagementofsofttissueinjuries.√ Amended the audit procedure to include responsibilities and action areas for management of soft tissue injuries.
16
Measure of Success: • Aprocessformanagingsofttissueinjuryclaimshas been developed. • Staff,employers,andhealthcareprovidersunderstand the process and respective roles and responsibilities for managing soft tissue injury claims. • Softtissueinjuryclaimsarebeingidentifiedanda process for managing soft tissue injury claims is being used. • Workerswithsofttissueinjurieshavemoresuccessful outcomes.
Key Result Area: Improving Outcomes for Workers with Soft Tissue InjuriesOverfiftypercentofallclaimsfiledwiththeWorkersCom-pensation Board are the result of soft tissue injuries. The Workers Compensation Board is committed to effective casemanagementforallinjurytypes,however,afocusedapproachwhichwillenhancethesafeandtimelyreturntoworkforworkerswithsofttissueinjuriesisessential.
Key Statistics: Improving Worker Outcomes
Benefit payments: Benefit payments in any given year are associated with either injuries which occur in that year or injuries that have occurred in previous years.
$ Benefit Payments (in thousands)
Benefits Paid - Temporary Wage Loss
Benefits Paid - Health Care
Benefits Paid - Rehabilitation
Benefits Paid - Extended Wage Loss0
1,300
2,600
3,900
5,200
2006 2007 2008
5,0234,905
4,403
451485570
4,341
3,7123,518
4,207
3,7063,269
o v e r 5 0 %
of all claims filed with the Workers Compensation Board are the result of soft tissue injuries ... a focused approach
which will enhance the safe and timely return to work for workers with soft tissue injuries is essential.
17
2007
Extended benefits include pensions, extended wage loss benefits and pension replacement benefits.
Number of Workers Receiving Extended Benefits
Average Claim Duration
Nature of Injury
Sprains, strains
Bruises, contusions
Cuts, lacerations
Other
Multiple
Repetitive Motion
Fractures
Burns
2006
2008
0
10
20
30
40
2006 2007 2008
30.7328.1129.42
0
390
780
1170
2004 2005 2006 2007 2008
11201137116911491169
3%7%
4%2%
11%
8%
9%
56%
3%9%
3%1%
10%
8%
8%
58%
1%8%
6%2%
14%
8%
9%
52%
strategic theme: Meeting Service Expectations
Course of Action: Yearone(October2007–December2008)effortswillfocusonthegoal “Standards for claim processing effectiveness are identi-fied for Workers Compensation Board staff, employers, workers, and service providers” by:• Researchingclaimprocessingstandardsandmeasurementprocessesusedinothercompensationsystemjurisdictions.• Consultingwithstakeholdergroupsonclaimprocessingexpectations.• Establishingandcommunicatingclaimprocessingstandards.
Results Summary:Completed as of December 2008:√Coordinatedtheworkerstakeholdersurvey(2008).√Identifiedclaimprocessingstandardsbasedoninput.
18
Measure of Success: • WCBstaff,employers,workersandserviceproviders have participated in the identification of standards for claim processing effectiveness.• Priorityclaimprocessingstandardshavebeenidentified and communicated.• Claimprocessingeffectivenesshasimproved.
Key Result Area: Service DeliveryMeetingservicedeliveryexpectationswillalwaysbecriti-cal to the success of the Workers Compensation Board. Past stakeholder survey results indicate that improving claimprocessingeffectivenesswillhavethegreatestimpactintermsofstakeholdersatisfactionwithservicesdelivered by the Workers Compensation Board.
Key Statistics: Service Delivery
Average Calendar Days from Report of Accident to First Payment
0
5
10
15
20
25
2006 2007 2008
23.67
21.0220.43
improving claim processing .. .
will have the greatest impact in terms of stakeholder satisfaction with services delivered by the Workers Compensation Board.
19
Employers Survey - Service Satisfaction Index - Employers
Injured Workers Survey - Service Satisfaction Index - Workers
Internal Reconsideration
Customer Liaison Complaint Calls
Appeals Received
Accepted
Denied
Dismissed
Withdrawn
Decisions Pending
0%
20%
40%
60%
80%
2003 2005 2007
74.9%75.7%73.4%
0%
20%
40%
60%
80%
2004 2006 2008
70.2%69.7%72.5%
0
24
48
72
96
120
2006 2007 2008
37
1710
133
222111
545248
11127
108
95
68
0
2
4
6
8
10
2006 2007 2008
9
6
10
0
24
48
72
96
120
2006 2007 2008
37
1710
133
222111
545248
11127
108
95
68
strategic theme: Meeting Service Expectations
Course of Action: Yearone(October2007–December2008)effortswillfocusonthegoal“The Workers Compensation Board understands and has illustrated to stakeholders the potential for E-business to improve service delivery effectiveness” by:• AdoptingstandardsforasecureE-businessinfrastructure.• EstablishinganE-businessinfrastructure.• Identifyingandimplementingshort-termE-businessgoals.
Results Summary:Completed as of December 2008:√ Coordinated and implemented an electronic authorization and payment system for pharmacies (Pharmacy e-pay).√ Completed an intranet implementation and established maintenance standards.√ Completed general ledger, budget management and account payable system upgrades.
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Measure of Success: • AsecureE-businessinfrastructureisinplace.• E-businessserviceshavebeenintroduced.• AnInformationTechnologyBusinessPlanhasprioritized E-businessrequirements.• E-businessisavailabletostakeholdersinasecure,well supported environment.• E-businessservicesarebeingusedbystakeholders.
Key Result Area: Information Technology (IT)Technology continues to evolve at a rapid pace. The Work-ers Compensation Board recognizes the potential of the Internetfordeliveringcoreservicestoclients.Overthenextfiveyears,theWorkersCompensationBoardwillrolloutanE-businessstrategyprovidingsecureandeasytouseweb-basedservicesforclientswhoprefertheconvenienceofonline access.
Key Statistics: Information Technology (IT)
Injured Workers Survey - “Have You Ever Visited the WCB’s Website?”
... will roll out an E-business strategy providing secure and easy to use
web-basedservices.
Employers Survey - “Have You Ever Used the WCB’s Website?”
Yes
No
Don’t Know/No Answer
0%
20%
40%
60%
80%
2006 2008
1%1%
63%
73%
36%
26%
0%
20%
40%
60%
80%
2003 2005 2007
1%1%
67%
77%80%
33%
22%19%
0%
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Measure of Success: • Employeeshaveparticipatedinareviewof performance development and evaluation methods.• Performancedevelopmentandevaluationprocedures have been documented.• Supervisorshavebeentrainedonperformance development,evaluationprocedures,andtechniques for giving and receiving feedback.• Employeesatisfactioninareasspecifictoreceiving support and recognition has improved.
Key Result Area: Human ResourcesAqualified,committed,andmotivatedstaffisclearlythemostvaluableresourcewithinanyorganization.TheWorkers Compensation Board must create an environment wherestaffbelieveintheworktheydo,havethetools,knowledgeandsupporttheyneed,andarechallengedtocontribute to ongoing improvement and positive change withintheorganization.
Key Statistics: Human Resources
Investment in Employee Development
strategic theme: Promoting Strength Within
Course of Action: Yearone(October2007–December2008)effortswillfocusonthegoal “Supervisors understand their role and have the neces-sary skills to implement an effective employee performance development and evaluation program” by:• Reviewingtheexistingapproachandexploringalternateapproachesforperformancedevelopmentandevaluation.• Identifyinganddocumentingperformancedevelopmentandevaluationprocedures.• Providingperformancedevelopmentandevaluationtrainingforsupervisors.• Providingsupportforstaffwellnessandprofessionalgrowth.
Results Summary:Completed as of December 2008:√Completedreviewofperformancedevelopmentmethods.√Identifiedperformancemanagementmodelthroughtheparticipationofstaff.√Identifiedperformancedevelopmentproceduresin“UserGuideforPerformanceManagement”.√Developedworkplanforimplementationofnewperformancedevelopmentmodel.√Identifiedworkplacewellnessstrategy.
A qualified, committed, and motivated staff is clearly the most
va luable resource.
$0
$20,000
$40,000
$60,000
$80,000
2006 2007 2008
$62,744$69,305
$46,281
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strategic theme: Securing the Future
Course of Action: Yearone(October2007–December2008)effortswillfocusonthegoal “The funding strategy protects the financial position of the Workers Compensation Board” by:• Completinganassetmixstudy.• Finalizingandimplementingassetmixdecisions.• Identifyingrisktoleranceandfundingtargetlimits.• Revisingfinancialpositionandobjectives.• Identifyingandrecommendingfundingstrategyamendments.• Developingafundingpolicytoreflectassetmixdecisions,fundingtargetsandfundingstrategydirection.• Implementingoperationalstrategiesforfundingpositionmaintenance.
Results Summary:Completed as of December 2008:√ Met portfolio asset mix 2008 benchmarks.√ Reviewedfinancialpositionandobjectivesasofyearend2007.√ Implementedfundingstrategyamendmentstoreflectassetmixdecisions,fundingtargetandfundingstrategydirection.√ Capital Assets Maintenance plan approved and 2008 priorities completed.
Measure of Success: • Thefundingstrategyhasbeenamended.• Afundingpolicyhasbeendeveloped.• Fundingtargetsarebeingmaintained.• Changingaccountingstandardsarebeingmonitored and potential impacts identified.
Key Result Area: FinancialLongtermsustainabilityoftheworkerscompensationsystemonPrinceEdwardIslanddependsonsoundfis-cal management, stringent audit standards, full funding policies, and transparent financial reporting. The Work-ers Compensation Board is committed to protecting the futureoftheworkerscompensationsystemonbehalfofIslandworkersandemployers.
Key Statistics: Financial
Average Assessment Rate
$0
$0.48
$0.96
$1.44
$1.92
$2.40
2001 2002 2003 2004 2005 2006 2007 2008
$2.15$2.22$2.23$2.33$2.39$2.39
$2.29$2.24
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Long term sustainability of the workers compensation system on Prince Edward Island depends on sound
fiscal management,stringent audit standards, full funding policies, and transparent financial reporting.
Investment Return (Percentage)
Funded Position (Percentage)
Target Asset Mix
Equities - Canadian
Equities - US
Equities - International
Fixed Income - Universe Bonds
Liability-Hedged Investments - Real Estate
Fixed Income - Long Bonds
Liability-Hedged Investments - Real Return Bonds
Equities - Emerging Markets
Investment returns - Smoothed:Recognizing gains and losses of investments over five years rather than recording them entirely in the year they occur.
Investment returns - Fair Market Value:Recognizing gains and losses of investments in the year they occur.
Smoothed
Fair Market Value
Investment returns - Smoothed:Recognizing gains and losses of investments over five years rather than recording them entirely in the year they occur.
Investment returns - Fair Market Value:Recognizing gains and losses of investments in the year they occur.
Smoothed
Fair Market Value
0%
25%
50%
75%
100%
125%
2001 2002 2003 2004 2005 2006 2007 2008
89%
110%110%100%
88%80%
70%70%
102%103%96%
91%83%
78%74%69%
-24%
-16%
-8%
0%
8%
16%
2001 2002 2003 2004 2005 2006 2007 2008
-20.38%
-0.84%
12.26%
8.57%8.33%11.33%
-6.12%
-1.21%
0.57%
6.24%7.24%4.44%3.89%4.04%
2.26%4.51%
20%
18%
18%
17%
10%
8%5%4%
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strategic theme: Securing the Future
Course of Action: Yearone(October2007–December2008)effortswillfocusonthegoal“There is a comprehensive and consultative review of the Workers Compensation Act and there is a consultative review process to identify priority Occupational Health and Safety Act regulations” by:• EstablishingaLegislativeAdvisoryCommitteeforthereviewoftheWorkers Compensation Act.• FacilitatingacomprehensivereviewanddocumentingLegislativeAdvisoryCommitteerecommendationsonproposed Workers Compensation Act amendments.• IdentifyingprioritiesforregulatorychangewithintheOccupational Health and Safety Act regulations.• Developinganaquaculturesafetycodeofpractice.
Results Summary:Completed as of December 2008:√ ProvidedthereportoftheLegislativeReviewAdvisoryCommitteeandtherecommendationoftheWorkersCompensation Board to Government. √Workedwiththeaquaculturealliancemembershipandestablishedtheaquaculturesafetycodeofpractice.
Measure of Success: • LegislativeAdvisoryCommitteerecommendationson proposed Workers Compensation Act amendments have been documented and presented to the Board of Directors.• OccupationalHealthandSafetyActregulatorypriorities have been identified.• WorkersCompensationActamendmentshavebeen presented to Government.• PriorityOccupationalHealthandSafetyActregulations have been presented to Government.• Legislativeandregulatorychangeshavebeen implemented.
Key Result Area: LegislationThe Workers Compensation Board is responsible for administration of the Workers Compensation Act and the OccupationalHealthandSafetyAct.
Provisions in the Workers Compensation Act mandate acomprehensiverevieweveryfiveyears.TheWorkersCompensation Board must facilitate a fair and consultative processresultinginrecommendationsforchangewhichbalancetheneedsofworkers,theneedsofemployers,andthe fiscal responsibilities of the Workers Compensation Board.
Meetingdemandsforregulatoryamendmentswithintheoccupationalhealthandsafetylegislationwillremainapriority for the Workers Compensation Board over the next number of years.
Legislative and regulatory review ... a
fair and consultativeprocess resulting in balance.
25
strategic theme: Securing the Future
Course of Action: Yearone(October2007–December2008)effortswillfocusonthegoal “Business continuity risk areas have been identified” by:• IdentifyingandassigningresourcesrequiredtoidentifybusinesscontinuityriskareasineachDivisionofthe Workers Compensation Board.• DevelopingareportdocumentingmissioncriticalservicesprovidedbytheWorkersCompensationBoard.
Results Summary:Completed as of December 2008:√Developedaworkplantoidentifythebusinesscontinuityriskareas.√FacilitatedtheprocesswithineachDivisiontoidentifyriskareas.√Documentedtheresultsofthereview.
The Workers Compensation Board believes that
mission critical servicesmust be available to clients should an unforeseen event cause a disruption in normal business operations.
Measure of Success: • Abusinesscontinuityriskworkinggroupisinplace.• Missioncriticalserviceshavebeendocumented.• ABusinessContinuityPlanhasbeenformalizedand communicatedtostaffwithintheWorkers Compensation Board.• ProceduresforBusinessContinuityPlanmaintenance are in place.
Key Result Area: Business Continuity PlanningBusiness continuity planning is a proactive planning ap-proachwhichensuresthatessentialservicesareprovidedduring a disruption of business. The Workers Compensa-tion Board believes that mission critical services must be available to clients should an unforeseen event cause a disruption in normal business operations.
26
At a GlanceKey Statistical Measures
26
KEY STATISTICAL MEASURE 2007 2008
Workers Claims adjudicated
Claims accepted
Claims denied
Temporarywagelossclaims
Medical aid only claims
Fatalities
Maximum annual earnings level
Average calendar days from report of accident to first payment
Average claim duration
Employers Assessable payroll (in millions)
Assessment revenue (in millions)
Average assessment rate (per $100 assessed payroll)
Maximum assessable earnings
Number of assessed employers
Prevention Workplace health and safety inspections
Complaint investigations
OccupationalHealthandSafetyviolationorders
Serious accident investigations
Workplacehealthandsafetyworkshopsandpresentations
Prosecutions
Finance Benefits liability (in millions)
Fund balance (in millions)
Administration costs (in millions)
Market rate of return on portfolio
Workers Compensation Appeal Tribunal (WCAT) Appeals Appealsinitiatedbyworkers
Appeals initiated by employers
Appeals resolved
1,902 1,971
1,768 1,823
134 148
862 866
904 955
3 3
44,700 45,400
21.02 23.67
28.11 30.73
1,132.80 1,257.67
26.56 25.93
2.22 2.15
44,700 45,400
4996 4922
1970 1871
101 87
1298 1853
154 106
238 165
0 2
117.64 122.10
12.24 -13.39
5.74 6.19
-0.84% -20.38%
21 19
1 3
36 13
2727
Financial Statements
preface to the audited financial statements2008 Financial Reporting
Duringthe2004year,allWorkersCompensationBoardsinCanadawererequiredtochangetheirinvestmentaccountingpolicyintheirfinancialstatementsasaresultofnewstandardsintroducedbytheCanadianInstituteofCharteredAccountants.Investmentsmustnowberecordedattheirfairvaluewhichisessentiallytheirmarketvalue.
Under the old policy, Workers Compensation Boards in Canada had smoothed gains and losses on the sales of investments overfiveyearsratherthanrecordingthementirelyintheyeartheyweresold.Theresultofdoingthiswastoreducethevolatil-ityexperiencedintheBoard’sfinancialresultsastheannualinvestmentincomewasmorecomparabletothelongtermrateofreturn than rates experienced over the short term. This gave stability to assessment rates and ensured that annual assessment rateswerenotsetbasedonvolatileannualinvestmentreturns.
Underthenewpolicy,gainsandlossesarerecognizedintheyeartheyoccur.Thisintroducesasignificantamountofvolatil-ity to the Board’s financial results. As is outlined in the 2008 financial statements, the Board’s financial position is $15.3 million worsein2008thanitwouldhavebeenundertheoldinvestmentpolicy.
TheBoard’sfundedpercentage,asdeterminedonitstraditionalmethodofrecordinginvestmentswas101.5%attheendof2008comparedwith103.2%attheendof2007.Theadoptionofthenewaccountingstandardsforinvestmentsreducedthefundingratioattheendof2008to89.2%.
The Board cannot use an accounting policy alone to drive its key business decisions. Assessment rates for employers and benefitlevelsforinjuredworkerscannotbebasedonshort-term,annualinvestmentgainsorlosses,whichbytheirnature,areunpredictableandnotguaranteedtobesustainedoverthelongterm.TheBoard’sfinancialcapacitytolowerratesorincreasebenefits has to continue to be based on the long-term expectation for investment returns. As a result, the Board intends to continue setting assessment rates based on the long-term expected rate of return rather than short-term results.
In2002,theBoardimplementedafundingstrategytoaddressretirementoftheunfundedliabilityasatDecember31,2001.In2007,theBoardreplacedthisfundingstrategywithafundingpolicywhichrecognizescurrentfundinglevelsandisaimedatmaintaining a financial position of fully funded.
The primary goals of the funding policy are to minimize the risk of becoming unfunded, thereby ensuring there is sufficient moneyavailableforpaymentofcurrentandfutureworkerbenefits;minimizecostvolatilityforemployerssothatoverallaverageassessmentrateforthecurrentyearwillnotvarysignificantlyoverthepreviousyear’soverallaverageassessmentrate;minimizethetotalcostchargedtoemployersbyensuringthefundedstatusisappropriateinrelationtofinancialneeds;ensure today’s employers pay for the current and future cost of today’s accidents.
Thefundingpolicywilltargetafundingstatusintherangeof100%-110%andincludesspecificadjustmentstobeappliedtothe assessment rate setting process should the funding status fall outside this range.
We expect the Board to maintain strong financial results despite fluctuations and erratic movements of the investment market. Wewillalsocontinuetobeprudentwhenrecognizinginvestmentgainsandlossesoverareasonabletimeperiodwhenset-ting rates and evaluating the funding strategy.
28
3529
Grant Thornton LLP Suite 501 199 Grafton Street PO Box 187 Charlottetown, PE C1A 7K4
T (902) 892-6547 F (902) 566-5358 www.GrantThornton.ca
Audit • Tax • Advisory Grant Thornton LLP. A Canadian Member of Grant Thornton International Ltd
Auditors’ report
To the members of the Board of the Workers Compensation Board of Prince Edward Island We have audited the balance sheet of the Workers Compensation Board of Prince Edward Island (the Board) as at December 31, 2008 and the statements of operations, unfunded liability and cash flows for the year then ended. These financial statements are the responsibility of the Board's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material respects, the financial position of the Board as at December 31, 2008 and the results of its operations and cash flows for the year then ended in accordance with Canadian generally accepted accounting principles.
Charlottetown, Prince Edward Island
March 6, 2009 Chartered Accountants
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31
2
Workers Compensation Board of Prince Edward Island Statements of operations and unfunded liability Year ended December 31 2008 2007 Revenues Current assessments $ 25,928,920 $ 26,561,373 Self-insured employers (Note 11) 2,033,619 2,123,046 Investments (Note 4) (23,038,137) (1,023,990) Recoverable administration fees and interest charges to self-insured employers (Note 11) 809,837 673,657 5,734,239 28,334,086 Expenditures Expected increase (Note 10) 8,119,000 8,496,000 Changes in actuarial assumptions and methodology (Note 10) - 632,000 Experience (gains) losses (Note 10) (361,000) (2,976,000) Claims and administrative costs incurred (Note 10) 14,933,000 13,641,000 Claims costs incurred for self-insured employers (Note 11) 2,033,619 2,123,046 24,724,619 21,916,046 (18,990,380) 6,418,040 Administration (Page 18) 6,187,090 5,736,552 Workers’ Advisor Program (Note 8) 158,001 160,685 Employers’ Advisor Program (Note 8) 82,611 97,186 Appeals Tribunal (Note 8) 210,136 132,510 6,637,838 6,126,933 Excess of (expenditures over revenues) revenues over expenditures $ (25,628,218) $ 291,107 Fund balance, beginning of year $ 12,237,850 $ 11,946,743 Excess of (expenditures over revenues) revenues over expenditures (25,628,218) 291,107 (Unfunded liability) fund balance, end of year $ (13,390,368) $ 12,237,850
See accompanying notes to the financial statements
.
(Page 47)
3
Workers Compensation Board of Prince Edward Island Balance sheet December 31 2008 2007 Assets Cash and cash equivalents $ 2,770,927 $ 3,501,579 Receivables (Note 3) 672,141 1,068,112 Investments (Notes 2, 4 and 5) 102,784,495 123,324,754 Capital assets (Note 6) 4,218,789 3,629,797 $ 110,446,352 $ 131,524,242 Liabilities and unfunded liability Payables and accruals $ 1,051,020 $ 816,292 Employee future benefits (Note 9) 696,700 835,100 Benefits liabilities (Note 10) 122,089,000 117,635,000 123,836,720 119,286,392 (Unfunded liability) fund balance (Note 13) (13,390,368) 12,237,850 $ 110,446,352 $ 131,524,242 Contingent liabilities (Note 12) On behalf of the Board Chair Chief Executive Officer
See accompanying notes to the financial statements.
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33
4
Workers Compensation Board of Prince Edward Island Statement of cash flows Year ended December 31 2008 2007 Cash flow from operating activities Cash received from: Assessed employers $ 26,247,574 $ 26,953,576 Self insured employers for assessments 2,048,746 1,885,610 Investments and other 3,659,101 3,272,196 31,955,421 32,111,382 Cash paid: To claimants or third parties on their behalf (19,157,619) (18,304,046) For administration requirements and other goods (1,323,473) (1,288,483) For salaries to employees (5,011,326) (4,499,422) (25,492,418) (24,091,951) Net cash provided by operating activities 6,463,003 8,019,431 Cash flow from investing activities Cash received from: Sale of investments 47,118,023 31,426,412 Cash paid for: Purchase of investments (53,212,812) (39,121,694) Purchase of capital assets (1,098,866) (520,065) (54,311,678) (39,641,759) Net cash used in investing activities (7,193,655) (8,215,347) Net decrease in cash and short term investments (730,652) (195,916) Cash and cash equivalents Beginning of year 3,501,579 3,697,495 End of year $ 2,770,927 $ 3,501,579
See accompanying notes to the financial statements.
5
Workers Compensation Board of Prince Edward Island Notes to the financial statements December 31, 2008 1. Nature of operations The Workers Compensation Board of Prince Edward Island (the “Board”) was established by the Prince Edward Island Legislature in 1949 under the Workers Compensation Act. The Board has a mandate for the administration of a workers compensation system as defined by the Workers Compensation Act and for the administration of health and safety programs as defined by the Occupational Health and Safety Act. The nature of operations includes administering payments of benefits to or on behalf of workers, levying and collecting assessment revenues from employers, investing Board funds, inspecting Prince Edward Island workplaces, enforcing health and safety standards defined by legislation and delivering health and safety education and prevention programs. The current Workers Compensation Act became effective on January 1, 1995. The current Occupational Health & Safety Act became effective on May 20, 2006. The Board does not receive government funding. 2. Summary of significant accounting policies Basis of presentation The financial statements of the Board have been prepared in accordance with Canadian Generally Accepted Accounting Principles (GAAP). Cash and cash equivalents Cash and cash equivalents include cash on hand and balances with banks. Cash and short term investments held by custodians for investment purposes are not available for general use, and accordingly are included in investments. Assessment revenues Assessments are billed when employers file their insurable payroll for the current assessment year. Assessment revenues for the year are recognized on an estimated basis as insurable payroll is incurred. For employers who have not filed, assessments are estimated. Self-insured employers are subject to individual responsibility for costs attributable to claims arising from their employees, as well as administration expenses incurred on behalf of the self-insured employers. As such, assessment revenues from self-insured employers are recognized as these costs are incurred. Accrued assessments receivable At the beginning of each year, an assessment is levied on non-monthly employers by applying industry assessment rates to their estimated payrolls. During the year, employers’ actual payrolls may vary from their estimate; therefore, at year end, accrued assessments receivable are adjusted based on payroll adjustments from the prior year. The accrued assessments are determined excluding those employers whose assessments are levied on a monthly basis.
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35
6
Workers Compensation Board of Prince Edward Island Notes to the financial statements December 31, 2008 2. Summary of significant accounting policies (continued) Investments The Board has classified its investments as held for trading. As such, investments are recorded at their fair value. The Board recognizes interest revenue as earned, dividends when declared and investment gains and losses when realized. Realized gains and losses represent the difference between the amounts received through the sale of the investments and their respective cost base. Unrealized gains and losses on held for trading investments are recognized at year end based on the fair value of the investments. Transaction costs are included in the acquisition cost of individual investments and recognized as part of the realized gains and losses when they are sold or written down. Direct investment expenses such as external custodial and management fees are netted against investment income. Fair values of investments are determined as follows:
• Equities are valued at their year-end quoted market prices as reported on recognized public securities exchange.
• Fixed-term investments are valued at their year end closing or bid price based on available public quotations from recognized dealers in such securities.
• Commercial paper, short term notes and treasury bills and term deposits maturing within a year are valued at either their year end closing or bid price based on available quotations from recognized dealers in such securities, or cost plus accrued interest, which approximates fair value.
• Pooled fund units are valued at their year end net asset value, as determined by the fund manager or administrator. These values represent the Board’s proportionate share of underlying net assets at fair values determined using either quoted market prices or year end closing market prices or the average of the latest bid/ask prices based on available public quotations from recognized dealers in such securities.
• Forward foreign exchange contracts are valued at their net unrealized gain or loss, based on quoted market exchange rates at the balance sheet date.
Foreign currencies Assets denominated in foreign currencies are translated into Canadian dollars at exchange rates prevailing at the balance sheet date. Income from these assets is translated at the rate in effect at the time the income is received. Realized exchange gains or losses are included in investment income and recognized in the period earned. Unrealized exchange gains or losses resulting from the translation of foreign currency denominated asset balances are recorded in investment income in the period in which they arise. Capital assets Property and equipment are reported at cost and are depreciated over their estimated lives on the straight line basis for building and on the declining balance basis for furniture and fixtures and computer programs and equipment. Assets are depreciated at 50% of the applicable rate in the year of acquisition. The rates used are as follows: Building 40 years, straight line Furniture and fixtures 10%, declining balance Computer programs and equipment 20%, declining balance
7
Workers Compensation Board of Prince Edward Island Notes to the financial statements December 31, 2008 2. Summary of significant accounting policies (continued) Employee future benefits Permanent employees of the Board participate in a defined benefit pension plan sponsored by the Province of Prince Edward Island. As these multi-employer plans meet the accounting requirements for treatment as defined contribution plans, the current year employer contributions are accounted for as current pension expense. The cost of retirement pay benefits earned by employees is actuarially determined using the projected unit credit method pro rated on service. Benefits are projected with management’s best estimate of salary escalations to retirement and then pro-rated based on service. Benefits liabilities An independent consulting actuary completes a valuation of the components of the benefits liabilities of the Board on an annual basis.
The benefits liabilities represent the actuarial present value of all future benefits payments expected to be made for claims which occurred in the current fiscal year or in any prior year. The benefits liabilities include provision for all benefits provided by current legislation policies and administrative practices in respect of existing claims. The Board believes that the amount provided for benefit liabilities as at December 31, 2008 is adequate, recognizing that actuarial assumptions as disclosed in Note 10 may change over time to reflect underlying economic trends. When they do, it is possible to cause a material change in the actuarial present value of the future payments. Accounting estimates and measurement uncertainty The preparation of financial statements in conformity with GAAP requires the use of estimates as at the date of the financial statements that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities and the reported amounts of revenues and expenses during the reporting periods presented. Measurement uncertainty exists when there is a variance between the recognized amount and another reasonable amount. Some accounting measurements require management’s best estimate, based on assumptions as at the financial statement date that reflect the most probable set of economic conditions and planned courses of action. Benefit liabilities, employee future benefits, accrued assessments, allowance for doubtful accounts and depreciation are the most significant items that are based on accounting estimates. Actual results could differ from the estimates made by management in these financial statements, and these differences, which may be material, could require adjustment in subsequent reporting periods. Changes in accounting policies Effective January 1, 2008, the Board adopted the new provisions of CICA Handbook Section 3862 Financial Instruments – Disclosure, released in July 2006 and effective for fiscal periods beginning on or after October 1, 2007. These revised standards will enhance the standards on financial instruments issued in January 2005 and will expand on their disclosure requirements, placing an increased emphasis on disclosure about the risks and exposures relating to recognized and unrecognized financial instruments and how those risks are managed. The adoption of Section 3862 is not expected to have a material effect on the Board’s operating results or financial position.
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Workers Compensation Board of Prince Edward Island Notes to the financial statements December 31, 2008 2. Summary of significant accounting policies (continued) Effective January 1, 2008, the Board adopted CICA Handbook Section 1400, General Standards of Financial Statement Presentation. This section provides revised guidance on management’s responsibility to assess and disclose the Board’s ability to continue as a going concern. The adoption of this section had no significant impact on the Board’s financial statements for the year ended December 31, 2008. Effective January 1, 2008, the Board adopted CICA Handbook Section 1535, Capital Disclosures. This section requires the Board to disclose additional information about capital and the manner in which it is managed. This additional disclosure includes quantitative and qualitative information regarding the Board’s objectives, policies and processes for managing capital. The required disclosures are included in Note 13. Recent accounting pronouncements CICA has issued Section 3064, Goodwill and Intangible Assets, which will replace Section 3062, Goodwill and Intangible Assets. The new standard establishes standards for the recognition, measurement, presentation and disclosure of goodwill and intangible assets. The new standard also provides guidance for the treatment of preproduction and start-up costs and requires that these costs be expensed as incurred. The new standard applies to fiscal years beginning on or after October 1, 2008. Management does not anticipate that this section will have a material impact on its financial statements. In January 2009, CICA Handbook Section 1582, Business Combinations, was issued replacing the former Section 1581, Business Combinations. This section establishes standards for the accounting for a business combination under the acquisition method. This new section applies prospectively to business combination for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2011. Management does not anticipate that this section will have a material impact on its financial statements. In February 2008, the Accounting Standards Board (“AcSB”) confirmed that the use of International Financial Reporting Standards (“IFRS”) will be required in 2011 for publicly accountable enterprises in Canada. In April 2008, the AcSB issued an IFRS Omnibus Exposure Draft proposing that publicly accountable enterprises be required to apply IFRS, in full and without modification, on January 1, 2011. The adoption date of January 1, 2011 will require the restatement, for comparative purposes, of amounts reported. The Board is continuing to assess the financial reporting impacts of the adoption of IFRS and, at this time, the impact on future financial position and results of operations is not reasonably determinable or estimable. The Board does anticipate a significant increase in disclosure required, as well as system changes that may be necessary to gather and process the required information. 3. Receivables 2008 2007 Assessments $ 659,513 $ 1,047,799 Accrued assessments (258,714) (328,346) Other 73,331 135,521 Self-insured employers 198,011 213,138 $ 672,141 $ 1,068,112
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Workers Compensation Board of Prince Edward Island Notes to the financial statements December 31, 2008 4. Investments 2008 2007 Cash and short term investments $ 2,068,176 $ 2,245,953 Forward foreign exchange contracts (462,574) 424,873 Fixed term investments 37,648,237 43,955,423 Equities 63,530,656 76,698,505 $ 102,784,495 $ 123,324,754 Investment income (loss) Earned during the year, net of portfolio management expenses $ 3,596,911 $ 3,257,300 Realized investment (losses) gains (9,904,579) 6,477,269 Unrealized investment losses (16,730,469) (10,758,559) $ (23,038,137) $ (1,023,990) Investment agreement The Board has entered into an Investment Agreement (January 1995) for the management of its investment assets with those of the Workplace Health, Safety and Compensation Commission of New Brunswick. These financial statements report the Board’s proportionate share of the investment assets held in the pooled fund which was 12.21% at December 31, 2008 (2007 – 12.10%). The Board pays a fee to the Workplace Health, Safety and Compensation Commission of New Brunswick for the administration of the combined investments. 5. Financial risk management The Board has established policies for management of its investments. All of the Board’s pooled investments are managed by independent, external investment managers. The compliance of these managers with the established policies is monitored on a regular basis. The pooled investments are managed to reduce investment risk by diversifying its portfolio among asset classes, industry sectors, geographic locations and individual securities. Further diversification is achieved by selecting investment managers with varying investment philosophies and styles. From time to time, in conjunction with the Workplace Health, Safety and Compensation Commission of New Brunswick, independent consultants are retained to advise on the appropriateness and effectiveness of its investment policies and practices. The following sections describe the Board’s financial risk exposure and related mitigation strategies.
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Workers Compensation Board of Prince Edward Island Notes to the financial statements December 31, 2008 5. Financial risk management (continued) Market risk The Board invests in publicly traded equities listed on domestic and foreign exchanges, and bonds traded over the counter through broker dealers. These securities are affected by fluctuations in market prices. Such market changes are subject to economic factors and other fluctuations in domestic and global capital markets, as well as risks to issuers, which may affect the market value of individual securities. Policy guidelines have been established to ensure that the Board’s investments are diversified by issuer, industry and geographic location. The table below indicates the total exposure in each of the equity mandates within the Board’s portfolio: 2008 2007 Canada $ 19,378,828 $ 25,327,875 Unites States 22,056,985 25,079,621 International (EAFE) Equities 18,350,898 20,408,477 Emerging markets 3,743,945 5,882,532 $ 63,530,656 $ 76,698,505 The table below presents the effect of a material adverse change in the key risk variable – the sector benchmark – for each of the equity mandates in the Board’s portfolio. Reasonably possible changes are estimated using the historical (10-year) variability of each of the market benchmarks about their respective means. The standard deviation measures the normal variance in a probability distribution. 2008 2007 Equities 1 std dev 2 std dev 1 std dev 2 std dev Canadian %age change in market benchmark (14.7%) (29.4%) (14.5%) (29.1%) Impact on fund balance $ (2,286,000) $ (4,533,000) $ (3,334,000) $ (6,544,000) United States %age change in market benchmark (13.1%) (26.3%) (13.5%) (27.1%) Impact on fund balance $ (2,720,000) $ (5,426,000) $ (3,343,000) $ (6,663,000) International (EAFE) Equities %age change in market benchmark (13.4%) (26.8%) (13.0%) (26.1%) Impact on fund balance $ (2,493,000) $ (5,426,000) $ (2,486,000) $ (4,900,000) Emerging markets %age change in market benchmark (20.6%) (41.2%) (21.3%) (42.6%) Impact on fund balance $ (772,000) $ (1,544,000) $ (1,222,000) $ (2,438,000) The benchmarks used for each of the above equity mandates is as follows: Canadian – S&P TSX (Standard & Poor’s Toronto Stock Exchange) Capped Composite Index Unites States – S&P (Standard & Poor’s) 500 Index
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Workers Compensation Board of Prince Edward Island Notes to the financial statements December 31, 2008 5. Financial risk management (continued) International (EAFE) Equities – MSCI (Morgan Stanley Capital International) EAFE (Europe, Australia and Far East) Total Return Index. Emerging markets – MSCI EM (Emerging Markets) Total Return Index Foreign currency risk The Board has certain investments denominated in foreign currencies. Currency risk is the risk that the value of these investments will fluctuate due to changes in foreign exchange rates. For its U.S. and non North American equities, the Board has adopted a policy to hedge 50% of its developed market foreign currency exposure using forward exchange contracts. Forward foreign exchange contracts are agreements to exchange an amount of one currency for another at a future date and at a set price, agreed upon at the contract’s inception. The fair value of these financial instruments would change in responses to changes in the foreign exchange rates of the currencies involved in the contracts. The notional amounts in forward foreign exchange contracts are the contractual amounts on which payments are made. These notional amounts have been converted into Canadian dollars at the contractual exchange rates in effect at the inception of the contracts. Outstanding contracts from 2008 mature in the first three months of 2009. The Board has significant current exposure in the US dollar, the Euro, the Japanese Yen and the British Pound. Exposure to changes in these 4 currencies represents 91% of the Board’s total exposure to developed market foreign currencies and 80% of the total foreign currency exposure including emerging markets. The Board has holdings of $26,498,000 (2007 - $25,000,000) in US dollar or 26% of the portfolio, $5,507,000 (2007 - $6,609,000) or 5% in the Euro, $4,820,000 (2007- $5,507,000) or 5% in the Japanese Yen, and $3,981,000 (2007 - $3,482,000) or 4% in the British Pound. The table below presents the effects of a 15% appreciation in the Canadian dollar as compared to the US dollar, Euro, Japanese Yen and British Pound on the fund balance: 2008 2007 CAD/USD $ (3,456,000) $ (3,260,000) CAD/EURO $ (718,000) $ (862,000) CAD/YEN $ (628,000) $ (718,000) CAD/POUND $ (519,000) $ (454,000) At December 31, 2008, the notional value of outstanding forward foreign exchange contracts was $57,982,000 (2007: $22,662,000). The fair value of these contracts was $(462,574) (2007: $424,873). Unrealized losses on forward foreign exchange contracts of $462,574 (2007: gains - $424,873) were included in investment income.
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Workers Compensation Board of Prince Edward Island Notes to the financial statements December 31, 2008 5. Financial risk management (continued) Interest risk management Interest rate risk is the risk that the value of a financial security will fluctuate due to changes in market interest rates. The Board’s investment portfolio is exposed to interest rate risk from its holdings of fixed income securities. Fluctuations in interest rates are managed by varying the duration of the fixed income portfolio. The table below presents the remaining term to maturity of the Board’s outstanding fixed term investments. Remaining term to maturity From 1 year Total Total Within 1 year to 5 years Over 5 years 2008 2007 Fixed term investments (market value) $ 349,049 $ 10,836,755 $ 26,462,433 $ 37,648,237 $ 43,955,423 The average effective yield of these fixed term investments is 3.7% (2007 – 4.3%) per annum based on market value. As of December 31, 2008, had the prevailing interest rate changed by 1%, assuming a parallel shift in the yield curve, with all other variables held constant, the value of the fixed term investments would have increased or decreased by $3,185,000 (2007 - $3,550,000) approximately 8.5% (2007 – 8.1%) of their value. Credit risk management Credit risk on fixed term or money market investments or forward foreign exchange contracts arises from the possibility that the counterparty to an instrument fails to meet its obligation to the Board. Policy guidelines have been established to ensure the Board holds corporate fixed term investments with a credit rating of A or higher, and Canadian federal or provincial government fixed term investments with a credit rating of BBB or higher. The Board may only invest in money market instruments that are provincially or federally guaranteed by one of the five largest Canadian chartered banks. Counterparties to forward foreign exchange contracts must have a credit rating of at least AA-. As at December 31, 2008, the aggregate amount of fixed income securities with counterparty ratings of BBB was $354,972 (2007 - $503,680). The Board is also exposed to credit risk through its trade receivables. The Board mitigates this risk through a regular monitoring process. Credit risk is mitigated due to the large number of customers and their dispersion across geographic areas and various industries. Allowance for doubtful accounts is reviewed at each balance sheet date. The Board updates its estimates of allowances for doubtful accounts based on customer history.
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Workers Compensation Board of Prince Edward Island Notes to the financial statements December 31, 2008 6. Capital assets 2008 2007 Accumulated Net Net Cost depreciation book value book value Land $ 368,460 $ - $ 368,460 $ 368,460 Building 1,611,946 400,002 1,211,944 1,185,907 Furniture and fixtures 1,832,456 1,470,373 362,083 391,225 Computer programs and equipment 5,893,140 3,616,838 2,276,302 1,684,205 $ 9,706,002 $ 5,487,213 $ 4,218,789 $ 3,629,797 7. Bank indebtedness The Board has a $500,000 unsecured operating line of credit of which nil was used at December 31, 2008. 8. Legislative obligations and other related party transactions Included in these financial statements are transactions with various Prince Edward Island crown corporations, departments, agencies, and boards related to the Board by virtue of common influence by the Government of Prince Edward Island. Routine operating transactions in the ordinary course of business with related parties are settled at prevailing market prices under normal trade terms. The Board is required by the Workers Compensation Act (the Act) to provide an annual grant to the Workers’ Advisor Program. The Workers’ Advisor Program operates autonomously from the Board and assists workers or dependants of workers in respect of claims for compensation. During the year, the Board paid $158,001 (2007 - $160,685) of the Program’s expenses. The Board is required by the Act to provide an annual grant to the Employers’ Advisor Program. The Employers’ Advisor Program operates autonomously from the Board and assists employers in respect of classifications, assessments and claims for compensation. During the year, the Board paid $82,611 (2007 -$97,186) of the Program’s expenses. The Board is required by the Act to pay the operating costs of the Appeals Tribunal. During the year, the Board paid $210,136 (2007 - $132,510) to cover the operating costs of the Tribunal.
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Workers Compensation Board of Prince Edward Island Notes to the financial statements December 31, 2008 9. Employee future benefits Pension plan The Board and its employees participate in a multi-employer contributory defined benefit pension plan, administered by the Province of Prince Edward Island under the Civil Service Superannuation Act. The Civil Service Superannuation Fund provides pensions to employees of the Provincial Government and certain Crown Corporation and agencies based on the length of service and average of best three year’s salary. Since sufficient information is not readily available to account for the Board’s participation in the plan using defined benefit pension plan accounting, these financial statements have been prepared using accounting rules for defined contribution pension plans. The current year expense for this pension plan is $282,608 (2007 - $254,385). Retirement pay benefits The Board provides a retirement pay benefit equal to one weeks pay for each year of service, subject to a maximum benefit equal to 26 weeks pay. The retirement pay benefit is payable upon retirement. Unionized employees qualify at retirement if they have accrued 10 years of service and attained age 55. Non-unionized employees qualify at retirement if they have accrued 5 years of service and attained age 55, accrued 30 years of service, or accrued 5 years of service and die or become disabled. The significant actuarial assumptions adopted in measuring the Board’s accrued retirement pay benefits obligations are a discount rate of 7% (2007 – 5%) and a rate of compensation increase of 3.5% (2007 – 3.5%). The retirement pay benefits liability has been estimated to equal $696,700 (2007: $835,100) based on the last actuarial estimate update as of December 31, 2008. Other information about the Board’s retirement pay benefits is as follows: 2008 2007 Opening retirement pay benefits $ 835,100 $ 763,000 Changes during the year (138,400) 72,100 Ending retirement pay benefits $ 696,700 $ 835,100
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Workers Compensation Board of Prince Edward Island Notes to the financial statements December 31, 2008 10. Benefits liabilities Benefits liabilities as at December 31, 2008 have been independently valued by the Board’s external actuary. Benefits liabilities include a provision for all benefits provided by current legislation, Board policies, and administrative practices. These liabilities also include a provision for future expenses of administering those benefits. Benefits liabilities do not include a provision for benefits costs of self-insured employers. Since the benefits liabilities of the Board are of a long term nature, the actuarial assumptions and methods used to calculate the reported benefits liabilities are based on considerations of future expenditures over the long term. As the determination of these liabilities requires assumptions about economic and other events that may occur many years in the future, but which are based on best information as at the valuation date, a significant degree of professional judgement must be exercised in developing these assumptions. Accordingly, changes in future conditions within one year of the financial statement date could require a material change in the recognized amounts. An analysis of the components of and changes in benefits liabilities is as follows: 2008 2007 Temporary Pension wage and extended Health loss wage loss care Rehabilitation Administration Total Total Balance, beginning of year $7,150,000 $ 78,696,000 $ 22,196,000 $ 2,413,000 $ 7,180,000 $ 117,635,000 $ 115,075,000 Expected increase 481,000 5,449,000 1,527,000 166,000 496,000 8,119,000 8,496,000 Changes in actuarial assumptions and methodology - - - - - - 632,000 Experience (gains) losses 412,000 (2,275,000) 1,695,000 (170,000) (23,000) (361,000) (2,976,000) 8,043,000 81,870,000 25,418,000 2,409,000 7,653,000 125,393,000 121,227,000 Costs incurred 4,207,000 5,023,000 4,341,000 451,000 911,000 14,933,000 13,641,000 12,250,000 86,893,000 29,759,000 2,860,000 8,564,000 140,326,000 134,868,000 Less: Payments made (4,757,000) (6,735,000) (5,109,000) (523,000) (1,113,000) (18,237,000) (17,233,000) Balance, end of year $ 7,493,000 $ 80,158,000 $ 24,650,000 $ 2,337,000 $ 7,451,000 $ 122,089,000 $ 117,635,000 Key actuarial assumptions The table below presents key assumptions used to determine the benefits liabilities.
2008 2007
Gross rate of return 7.0% 7.0% Real rate of return 3.5% 3.5% Increase in inflation 3.5% 3.5% The December 31, 2008 valuation of benefits liabilities did not include any changes to actuarial assumptions and methods compared to those used for the previous valuation.
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Workers Compensation Board of Prince Edward Island Notes to the financial statements December 31, 2008 10. Benefits liabilities (continued) The benefits liabilities are determined by using many actuarial assumptions. The two most significant assumptions are the real rate of return and increase in inflation. The liability estimates are highly sensitive to small changes in these assumptions. The following table presents the sensitivity of the liabilities to an immediate 0.50% increase and decrease in the assumed rates: 2008 2007 %age change in assumed rates +0.50% -0.50% +0.50% -0.50% Real rate of return $(4,200,000) $ 4,500,000 $(4,100,000) $ 4,400,000 Increase in inflation $ 600,000 $ (600,000) $ 600,000 $ (700,000) 11. Self-insured employers These financial statements include the effects of significant transactions carried out for self-insured employers, principally the Government of Canada and the Government of Prince Edward Island, who directly bear the costs of their own incurred claims and an appropriate share of administration expenditures. Administrative fees and interest charges are included within the schedule of administrative expenses (Page 18). Total amounts of assessment revenue and offsetting expenses included in the statements of operations and operating surplus are as follows: 2008 2007 Current assessment revenue $ 2,033,619 $ 2,123,046 Administration fees and interest charges recoverable 809,837 673,657 $ 2,843,456 $ 2,796,703 Claims costs incurred Short term disability $ 287,495 $ 241,842 Long term disability 1,286,480 1,356,826 Health care 447,990 511,434 Rehabilitation 11,654 12,944 2,033,619 2,123,046 Administration fees and interest charges 809,837 673,657 $ 2,843,456 $ 2,796,703 12. Contingent liabilities Latent occupational diseases The Board is liable for the future costs of claims relating to certain latent occupational diseases which may have occurred in the current year or previously, but which may not be recognized and reported for a number of years due to the extended latency period of such diseases. Because of the absence of reliable evidence and data pertaining to these matters, the liabilities cannot be reasonably estimated and have not been recorded in the financial statements.
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Workers Compensation Board of Prince Edward Island Notes to the financial statements December 31, 2008 13. Funding strategy and capital management In 2002, the Board implemented a funding strategy to address retirement of the unfunded liability as at December 31, 2001. In recognition of the significant improvement in the Board’s financial position under this strategy (2002 – 2006), the Board replaced this funding strategy with a funding policy (POL01-13) which recognizes current funding levels and is aimed at maintaining a financial position of fully funded. Fully funded means the total assets of the Board are equal to or greater than the total liabilities. The funding policy will target a funding status in the range of 100% - 110% and includes specific adjustments to be applied to the assessment rate setting process should the funding status fall outside this range. Although, per CICA accounting changes, investments have been recorded in the financial statements using the fair value method, investment revenue for funding policy purposes continues to be recorded using the smoothing method. Under the smoothing method, gains or losses realized on disposal of fixed term investments are deferred and amortized on a straight line basis over a nine year period. Realized and unrealized gains and losses on equity investments are deferred and amortized on a straight line basis over a four year period. The use of the smoothing method for funding policy purposes continues to be in effect to reduce the volatility of investment returns on assessment rates as per the goals of the funding policy. Investment reconciliation to the smoothing method January 1, 2008 balance $ 8,461,882 2008 adjustment to record revenue using the smoothing method (23,712,796) $ (15,250,914) Fund balance based on investment smoothing Unfunded liability as currently reported $ (13,390,368) Adjustment to record revenue using the smoothing method 15,250,914 Fund balance based on investment smoothing $ 1,860,546 Asset total based on investment smoothing Total assets as currently reported $ 110,446,352 Adjustment to record revenue using the smoothing method 15,250,914 Asset total based on investment smoothing $ 125,697,266 Total liabilities as currently reported $ 123,836,720 Funding status as per funding policy (percentage based on investment smoothing): 101.50% 14. Comparative figures The 2007 comparative figures have been reclassified to conform to the 2008 financial statement presentation.
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Workers Compensation Board of Prince Edward Island Schedule of administration expenditures Year ended December 31 2008 2007 Building operating costs $ 205,369 $ 201,254 Communications, printing and office supplies 235,828 239,377 Computer maintenance 264,486 254,296 Depreciation 509,874 451,500 Dues and fees 45,943 33,000 Miscellaneous 39,510 26,274 Postage 71,802 69,187 Professional development 62,744 69,305 Professional fees 680,495 630,123 Salaries Board members 105,152 81,707 Staff members 4,171,165 3,809,935 Benefits 596,609 679,880 Telephone 92,777 82,476 Travel 218,336 160,238 7,300,090 6,788,552 Less allocation to benefits liabilities (Note 10) (1,113,000) (1,052,000) $ 6,187,090 $ 5,736,552
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External Reports
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Onbehalfofthemembersandstaff,IampleasedtoprovidetheannualreportontheactivitiesoftheWorkersCompensationAppeal Tribunal (WCAT) for the year ending December 31, 2008.
Earlyin2008,changeswereannouncedtotheWCATmembershipwhichrescindedtheappointmentsofthethenchair,twovice-chairs,oneemployerrepresentative,andoneworkerrepresentative,replacingthemwithsixnewappointees.Withacombined service of over 36 years, these members demonstrated a commitment to providing fair and timely decisions to theworkersandemployersofPrinceEdwardIsland.Accordingly,IwouldliketobeginthisreportbyacknowledgingthehardworkanddedicationofAllenMacPhee(Chair),PamelaWilliamsandSherraProfit(Vice-Chairs),KevinHughes(EmployerRepresentative), and Michael DesRoches (Worker Representative).
About the TribunalTheWorkersCompensationAppealTribunalwasestablishedwiththeproclamationofanewWorkers Compensation Act on January 1, 1995.
TheTribunalisanindependentquasi-judicialbodyexternaltotheWorkersCompensationBoardofPrinceEdwardIsland,althoughitisboundbytheAct,RegulationsandBoardpolicies.Itisthesecond(andfinal)appeallevelforbothworkersandemployerswhoaredissatisfiedwiththeinternalreconsiderationdecision.
AfullyaccessibleofficeislocatedintheSherwoodBusinessCentreat161St.PetersRoad,Charlottetown.Theofficeisstaffedbyafull-timeCoordinatorwhoisresponsibleforalladministrativefunctions.
CompositionThereare18part-timemembersontheTribunal:achair,twovice-chairs,sevenemployerrepresentatives,andeightworkerrepresentatives. All appointments are made by, and at the pleasure of, the Lieutenant Governor in Council, as authorized in Section 56(7) of the Act.SittingmembersontheAppealTribunalareasfollows: Chairperson Vice-Chairperson Vice-Chairperson WendyE.Reid,Q.C. JordanK.M.Brown JohnL.Ramsay,Q.C.
Employer Representatives Worker RepresentativesDon Cudmore Leo CheverieScottDawson NancyFitzGeraldRayHann GordonHuestisStu Lavers Neil MacFadyenHarveyMacKinnon RalphMacLeanJeanTingley JamieMatthewsDonald Turner Elizabeth (Libba) Mobbs Gary Paynter
Workers compensation appeal tribunal 2008 Report from the Chair
Appealsareheardbyapanelofthreemembersconsistingofachairandonemembereachfromtheemployerandworkerrepresentatives.Thehearingsareconductedinaccordancewiththerulesofnaturaljusticeandproceduralfairnessandallpartiestoanappeal(worker,employer,theirrepresentative,andtheBoard’ssolicitor)aregivenanequalopportunitytopres-ent their case.
Tribunal Activity During this past year, the Workers Compensation Appeal Tribunal experienced a significant reduction in the list of appeals waitingtobeheard.Atyear-end,therewere22pendinghearingstobescheduled,and50%ofthesewerefiledin2008.
The current caseload inventory is 27, including 5 decisions pending and 22 appeals to be scheduled. The Appeal Tribunal remainscommittedtoreducingwaitingtimesforpendingappealhearingsandstrivestoscheduleoralhearingsasquicklyaspossibleafterfilingofdocumentsbythevariousparties.Ofthependingappeals,11werefiledpriorto2008andareonholdforvariousreasonsattherequestoftheappellant.Theremainingcaseswereallfiledduring2008andthemajorityofthemarescheduledforhearingsearlyinthenewyear.
Thenumberofappealsfiledin2008wasunchangedfromthepreviousyearandsimilartopreviousyears,themajoritywerefiledbyinjuredworkers(86.36%).Employersfiledonly3appeals,aminimalincrease(+2)fromthepreviousyear.
Thefollowing“ActivityataGlance”tableprovidessomecomparisonsforthepastfouryears.
ACTIVITY AT A GLANCE
Year FilesCarriedOver AppealsFiledBy Hearings Decisions Appeals WorkerEmployer Heard Rendered Abandoned, Conceded or Resolved before Hearing
2008 27 19 3 16 13 92007 58 21 1 33 36 162006 52 20 3 12 13 42005 20 42 4 16 6 5
HearingsTheTribunalexperiencedadecrease(106%)intheactualnumberoforalhearings,withonly16heldin2008.Acontributingfactorwasthechangeoverinmembershipandresultingneedforanorientationsession.Thedecisionbynumerousappel-lants to place their cases on hold also contributed to the decrease.
Whilethemajorityofappellants(50%)appearingatahearingcontinuetobeself-representedorrelyonafriendorfamilymemberforassistance,WCATdidnoticeanincreaseinpresentationbytheWorkerAdvisor(37.5%). Representation 2008 2007 2006Self-represented 7 14 4Personal Representative 1 6 3Worker Advisor 6 2 3Employer Advisor 1 3 1Legal Counsel 1 3 1Union Representative 0 2 0Appellantdidnotappear:paperreviewconducted 0 1 0
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Decisions The number of decisions rendered in any given year may differ from the number of appeals heard due to the length of time it takestogeneratethewrittendecision.TheratioofdecisionsdismissedversustheIROdecisionsoverturned,isapproximately70%infavouroftheBoard.Thefollowingtableshowsacomparisonforthepastthreeyears.
2008 2007 2006 2005Decisions Rendered 13 36 13 6IRODecisionReversedinWholeorInPart 4 19 5 0Dismissed or Denied 9 17 8 6
WhileWCATdoesendeavourtorenderdecisionswithin90daysofthecompletionofthehearing,overthepastyeartherehasbeenanincreaseinthenumberofposthearingsubmissionsnecessitatingadditionaltimefordecisionwriterstoreleasetheirdecisions.However,evenwiththeadditionaltimerequiredinthoseinstances,theTribunalmanagedtoreleasetheirdeci-sionsinlessthan90daysfor47%ofthecasesheard.Itshouldalsobenotedthatinthosecaseswhereposthearingsubmis-sionswererequired,theTribunalrendereditsdecisionswithin90daysofthelastsetofsubmissionsfiled.
Leave to AppealWhile there is no right of appeal on a final decision of the Appeal Tribunal, persons directly affected by a final decision may makeapplicationforLeavetoAppealtotheAppealsDivisionoftheP.E.I.SupremeCourtonaquestionoflaworjurisdiction.UponreleaseofawrittendecisionbyWCAT,allpartiesareadvisedofthissectionoftheWorkers Compensation Act, as the leaveapplicationmustbefiledwithin30daysofthedateoftheWCATdecision.WCATisawareofonlyonesuchapplicationfiled in 2008.
OnDecember20,2007,WCATreleaseditswrittendecision(#89)denyingtheappealofanappellantworkerrelativetocol-lateral benefit reduction, overpayment due to CPP benefits, and discrimination under Charter of Rights and Freedoms. UnhappywithWCAT’sdecision,theappellantmadeapplicationforleaveandahearingwasscheduled.Atthehearing,theCourtindicateditwouldproceedwithtwoprimaryissues:requirementforleavetoappealandthestatutorynoticeprovision,and,requestforanextensiontofiletherequisiteleaveapplication.
On July 30, 2008, the Supreme Court Appeal Division rendered their decision in Doyle v. W. Comp. Brd & Ano, 2008 PESCAD11. InaunanimousdecisiontheCourtruledtheapplicationforleavewasnotmadewithinthestatutorytimeperiodandtheCourt had no authority to extend time, and therefore denied the leave application.
Training and DevelopmentWCAT recognizes that continuing education, training and development is essential to achieving and maintaining the expect-edstandardsofqualityinprogramdeliveryanddecisionmaking.Accordingly,whereresourcespermit,WCATiscommittedto enhancing development and training opportunities for members and staff.
Followingtheappointmentofthenewmembers,anorientationsessionwasheldforbothnewandexistingmembers.Agenda topics included WCB’s Reconsideration Process, role of the Worker Advisor, role of the Employer Advisor, WCAT’s appeal process and essential administrative matters.
The three chairs and coordinator maintained membership in the Canadian Council of Administrative Tribunals (CCAT), a national,non-profitorganizationconsistingofmembers,lawyersandstaffoffederal,provincialandterritorialtribunals.CCATactsasanationalforumwhichaddressesissuesofimportancetotheadministrativejusticecommunityandprovidesitsmem-berswithavenuetoworkinpartnershipwithothertribunals.
InadditiontoattendingtheWorkplaceHealthandSafetyConference,hostedbytheP.E.I.WorkersCompensationBoard,theCoordinator attended CCAT’s 24th Annual Conference and Workshop in Gatineau, Quebec from June 25 to June 27, 2008.
AsanewChair,Iparticipatedinprofessionaldevelopmentopportunitiesfocussedon Decision Writing and The Rules of Evidence.
Internal ChallengesFor the past couple of years, WCAT has focussed on three particular issues: alleviating the backlog, decision release times, and improving public access to WCAT decisions.
Aspreviouslymentioned,withtheexceptionofthosecasesonholdattherequestoftheappellants,thebacklogforpendingappealshasvirtuallybeeneliminated,withmanyhearingsscheduledforthenewyear.
Aswell,theWorkersCompensationAppealTribunalisnowadministeringthepublicationofdecisionsthroughitsownwebsite.
Inclosing,IwanttoagainassurethepublicWCATwillcontinuetoexpediteoralhearingsanddecisionrelease.
Respectfully submitted,
Wendy E. Reid, Q.C. WCAT Chair
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The legislative authority for the Office of the Employer Advisor is contained in Section 85.(1)(b) of the Workers Compensation Act. ThemandatefortheOfficeistoprovidePEIemployersandemployerassociationswithindependentadviceandassis-tanceintheareasofclaimsmanagement,assessmentsandclassifications,workplacehealthandsafetyandappeals.Earlyin2008,theOfficeoftheEmployerAdvisorcompleteditsfourthyearofoperationsandIampleasedtopresentthisAnnualReportwhichhighlightsouraccomplishmentsduringthepast12months,inaccordancewithourstatedmandate.
TheOfficeassistedseveralemployersinthepreparationandpresentationoftheircasestotheInternalReconsiderationOfficerandtotheWorkersCompensationAppealTribunal.Ofthefour(4)casesheardbytheIRO,three(3)weredecidedinfavouroftheemployerwhiletwo(2)morecaseshavehearingspendingin2009.WCATruledinfavouroftheemployerintheone(1)hearingheldthisyearandone(1)hearingispendinginearly2009.Duringtheyear,twentyseven(27)newfileswereopenedanddealtwithissuesonassessments,classifications,rates,registrations,audits,entitlement,OH&Sandappeals.Inaddition,numerousinquirieswerehandledfromindividualemployersandemployerassociationsonmultipleaspectsofboththeWorkers Compensation Act and the Occupational Health and Safety Act.
IwasinvitedtopresentateventshostedbytheCharlottetownExecutivesAssociation,theWorkersCompensationAppealTribunalforitsnewmembersandtheHollandCollegeSmallBusinessManagerPrograminTignish.Iparticipatedinactivities
office of the employer advisor 2008 Report
commemoratingtheNationalDayofMourning,NorthAmericanOccupationalSafetyandHealthWeek,PublicServiceWeek,theUnitedWayKick-0ffandtheopeningoftheLegislativeAssembly.IwaselectedtotheExecutiveofthePEIChapteroftheCanadianSocietyofSafetyEngineeringasTreasurerandnowserveontheirNAOSHWeekandMembershipCommittees.Aswell,IattendedourDepartment’sProfessionalDevelopmentDayalongwithanumberofotherprofessionaldevelopmentactivitieswhichenhancemyabilitytobetterunderstandanddeliverrelevantprogrammingtoIslandemployers.
TheOfficeoftheEmployerAdvisorcontinuedtofocusonbuildingawarenessofitsservicesamongIslandemployersandinsodoingIattendedmeetings,mixers,annualmeetingsandspecialeventssponsoredbytheChambersofCommerceinCharlottetown,EasternPrinceEdwardIsland,Kensington,SummersideandWestPrince,TourismIndustryAssociationofPEI,FinancialManagementInstituteofCanada,PEIAutomobileDealersAssociation,theVocationalRehabilitationAssociationofCanada,ExcellenceinManufacturingConsortium,PEIChapteroftheCanadianSocietyofSafetyEngineering,ConstructionAssociationofPEIandthePEIRoadbuildersandHeavyConstructionAssociation.IattendedregularmeetingsoftheEmployersCouncilInc.andprovidedthemwithupdatesonWCB,OH&SandWCATtopicsofinterestaswellasactivitiesbeingundertaken by our office. Regular monthly issues of The Employer Advisorelectronicnewsletterwereproducedandcirculatedviatheinternettoemployersandtheirmanagementstaff,employerassociationsandtopublicsectormanagersonourgrow-ingmailinglist.WiththeintroductionofNoiseRegulationslateintheyear,anarticleonhowtocomplywiththesenewregu-lationswaspreparedfortradeassociationstoreprintandcirculatetotheirmembership.
Throughout2008therewerenumerousopportunitiesforinteractionwiththeWorkersCompensationBoard,includingpartici-pationintheir9thAnnualOccupationalHealthandSafetyConference.ImetwiththenewChairandseveralseniorBoardstaffand provided feedback on proposed changes to a number of Board policies, in particular the policies on Apportionment, Hernias,Impairment,MedicalInformation,OccupationalDiseases,Pre-ExistingConditions,RepetitiveStrainInjuries,SelfEmploymentProgram,ThirdPartyActionsandVocationalRehabilitation.DiscussionshavebeenheldwiththeOccupationalHealthandSafetyDivisiononthenewNoiseRegulationsandontheestablishmentofaChiefExecutiveOfficerCharterforPEI.IrespondedtoinquiriesfromWorkersCompensationBoardsinotherCanadianjurisdictionsonavarietyofsubjectsandparticipatedinteleconferencecallswiththeotherfive(5)membersoftheCanadianAssociationofEmployerAdvisors/Advocates.IattendedtheAssociationofWorkersCompensationBoardsofCanadaLearningSymposiuminVancouveratwhichtimeface-to-facemeetingswiththeotherEmployerAdvisors/Advocateswereheld.Ialsoprovidedinforma-tiontoassistintheestablishmentofanOfficeoftheEmployerAdvisorinNovaScotiaandmetwithmycounterpartsinNewfoundlandandLabradorduringtheyear.
ThefourthyearofoperationhasseentheprofileoftheOfficeoftheEmployerAdvisorraisedtothepointwherethecurrentandplannedprogrammingrequireapermanentandexpandedstaffcomplement.Asaresult,screeningandinterviewingforanewProgramAssistantwereconductedandthesuccessfulcandidatewillstartworkearlyinthenewyear.Asthedemandfromtheemployercommunityforourservicesonmattersdealingwithworkerscompensationandworkplacehealthandsafetymatterscontinuestoincrease,ourabilitytorespondmustincreaseaccordingly,andwelookforwardtoprovidingitonce again in 2009.
Respectfully submitted,
Keith D. Mullins, B. Comm., RRPEmployer Advisor
REPlACE IT BEFORE IT’S AN INJURY
www.wcb.pe.ca
14 Weymouth Street, P.O. Box 757
Charlottetown,PrinceEdwardIsland,C1A7L7
Telephone: 902-368-5680
Toll-Free in Atlantic Canada: 1-800-237-5049
Fax:902-368-5705•Web:www.wcb.pe.ca
2008 Annual Report Workers Compensation Board of Prince Edward Island
