2012 Financial Statements - Workers' Compensation Board

Changes in current assumptions
For the 2012 valuation, two of the key long-term economic assumptions were changed — the assumptions
for the real rate of return and health care escalation. The annual real rate of return for the 2011 valuation
was set at 2 per cent up to 2015 and 3 per cent thereafter, reflecting low bond market yields. The short-term
period has been extended to include 2016 as market yields have remained essentially the same. Following
an extensive study conducted in 2012, the health care escalation assumption was reduced to 5 per cent per
annum, the long-term general inflation rate plus 2.5 per cent. These assumption changes decreased the
liability by $194.8 million.
Various other actuarial assumptions were also changed based on extensive studies completed in 2012 and
those changes decreased the liabilities by $110.5 million.
Reconciliation of claim benefit liabilities
The table below is a reconciliation of the movement in claim benefit liabilities, highlighting the significant
changes for each major benefit category.
($ thousands)
Short-term
Disability
Long-term
Disability
Survivor
Benefits
Health Care
Rehabilitation
Claims
Management
2012 2011
Claim benefit liabilities, beginning of year
Claim costs recognized during the year
Provision for future costs of current year injuries
Claim benefits processed in the year
$ 406,000
97,600
72,542
$ 2,363,200
161,300
1,842
$ 510,700
26,500
1,213
$ 1,838,400
202,300
124,648
$ 147,100
37,400
2,971
$ 363,100
65,900
48,458
$ 5,628,500
591,000
251,674
$ 5,278,900
606,100
238,409
Total claim costs recognized during the year
170,142
163,142
27,713
326,948
40,371
114,358
842,674
844,509
Claim payments processed during the year
Payments for current year injuries
Payments for prior years’ injuries
(72,542)
(85,038)
(157,580)
(1,842)
(149,490)
(151,332)
(1,213)
(42,432)
(43,645)
(124,648)
(155,416)
(280,064)
(2,971)
(35,330)
(38,301)
(48,458)
(55,255)
(103,713)
(251,674)
(522,961)
(774,635)
(238,409)
(521,014)
(759,423)
Interest expense on the liability
16,400
103,000
22,100
79,900
5,900
15,200
242,500
228,800
Remeasurement of the liability
Changes relating to policy, legislation and
administrative practices
3,200
12,700
1,500
-
-
-
17,400
7,400
Changes relating to latent occupational diseases
35,800
132,400
82,700
375,600
5,200
54,700
686,400
-
Changes in valuation methods and assumptions
Change to health care escalation rate
Change to exposure index
Assumptions for Economic Loss Payments
Lower discount rate related to real rate of return
Other changes in methods and assumptions
-
-
-
1,800
-
-
-
(96,500)
17,700
24,400
-
-
-
3,600
-
(232,000)
-
-
11,400
(34,200)
-
-
-
600
-
-
-
-
2,100
(4,200)
(232,000)
-
(96,500)
37,200
(14,000)
-
38,100
(47,200)
35,600
400
Changes in claims experience
Inflation and wage growth different than expected
Actual costs different than expected
Other experience (gains) losses
Claim benefit liabilities, end of year
(2,500)
(7,900)
(6,562)
23,838
$ 458,800
(27,000)
(41,800)
(34,010)
(12,110)
$ 2,465,900
(6,700)
(7,900)
(8,968)
64,232
$ 581,100
(22,900)
(11,800)
(3,084)
83,016
$ 2,048,200
(200)
1,600
730
7,930
$ 163,000
(500)
(700)
18,155
69,555
$ 458,500
(59,800)
(68,500)
(33,739)
236,461
$ 6,175,500
21,000
12,200
(31,786)
35,714
$ 5,628,500
See Note 14 Claims and Claims Management Expenses for details of the amounts recognized in income for the
reporting period.
2012 FINANCIAL STATEMENTS and notes 67