By Dan Ogale, AVP, workers’ compensation, Canada
Sedgwick is best known in Canada for property loss adjusting and related services, but did you know that we’re also one of the leading Canadian third party administrators (TPAs) in the workers’ compensation (WC) arena?
Many of the inquiries we get about workers’ compensation in Canada come from U.S.-based employers who have employees north of the border and are largely unfamiliar with the workings of the Canadian system. This blog aims to educate readers on the workers’ compensation landscape in Canada and outline the benefits of having a Canadian TPA partner.
Comparing the American and Canadian workers’ compensation systems
Just as WC is legislated at the state (vs. federal) level in the United States, it’s mandated at the equivalent province/territory level in Canada. However, unlike the privatization found in most U.S. states, the Canadian workers’ compensation system operates similarly to those with monopolistic, government-owned state funds, such as Ohio and Washington.
Canadian employers obtain workers’ compensation coverage by paying premiums to the Workers’ Compensation Boards (WCBs) in the provinces/territories where they have employees. These boards are jurisdictionally regulated throughout the country, and each has its own set of rules about the workers’ compensation claims process. The boards determine the workers’ compensation rates charged to employers based on their payroll records. Canadian employers cannot purchase WC coverage from an insurer or self-insure their WC programs.
One key difference in workers’ compensation between Canada and the U.S. is the primary driver of cost. Whereas the medical costs associated with treating injured and ill workers are the leading source of workers’ compensation expense in the U.S., lost time benefits paid to workers drive most of the costs in Canada. Although there is a universal healthcare system in Canada, the costs associated with medical care for workplace injuries and illnesses are included in employers’ cost statements.
Another distinction is that Canada does not have the same kind of jurisdiction-specific licensing requirements as the U.S. for those handling workers’ compensation claims. In Canada, these professionals are often referred to as “consultants,” as opposed to “examiners” or “adjusters,” and play more of an advisory role than their U.S. counterparts.
What a Canadian TPA can do for you
In many organizations, payment of workers’ compensation premiums is a function of the human resources or accounting department. This often results in poor internal oversight of claims. An experienced TPA can help employers navigate their workers’ compensation claims that are being administered by the provincial WCBs. In Canada, TPAs act as liaisons between employers and the provincial WCBs. They work to ensure that employers’ interests are being addressed. Effective TPAs help their clients proactively reduce workers’ compensation claims costs, using tactics such as identifying barriers to early claim resolution; exploring opportunities for loss transfer; reviewing medical information; managing hearings, arbitrations and appeals; and promoting timely return to work — especially on claims most likely to impact premiums. They also work to ensure that clients’ employees are well cared for following a work-related illness or injury and receive the support needed to achieve maximum recovery and return to productivity.
For organizations with employees in multiple provinces/territories, it’s can be helpful to have a national TPA partner that’s knowledgeable in the various legislative structures and has good working relationships with each of the WCBs. Multinational organizations with a presence in Canada can further benefit from partnering with a TPA that has global claims and reporting systems for ease of use and the ability to produce apples-to-apples analyses of key performance indictors (KPIs) across various geographies; this enables risk management professionals to more effectively implement health and safety measures that can drive down WC costs.
Here are a few examples that demonstrate the value Sedgwick delivers for our Canadian clients:
- As part of a takeover of open claims, we began managing one that began two years ago, when a client’s employee was struck by a vehicle owned by another employer. The employee sustained significant injuries, and the claim was quickly approaching our client’s maximum cap of approximately $425,000. Our client was not previously aware of the opportunity for cost relief on this claim. We were able to get all of the claim costs transferred to the vehicle owner, and $425,000 was credited back to our client! Our team’s experience and knowledge of the provincial legislation yielded significant savings for our client in this case.
- A client’s employee complained of chest and shoulder pain at work. After a careful review of the claim, we determined that the incident was non-occupational in nature and therefore requested a denial; however, the WCB allowed the claim to proceed. We objected on behalf of our client and received little response from the WCB. Our team persisted in following up and months later got the WCB to acknowledge that the claim should never have gone through the workers’ compensation system. The client was able to remove this incident from their annual experience rating, which lowered their premium costs for the following year.
- A client’s employee suffered a back injury at work and was off the job for nearly four months. Our WC specialists discovered that the employee had a pre-existing condition and requested cost relief for the final two months due to the waiting period. It took nearly 10 months of working with the WCB, but we secured a significant recovery of wages. When compared to the client’s annual service fees paid, their return on investment (ROI) from partnering with us on this claim was more than 200%!
Given the complexities of the Canadian landscape, an experienced TPA is a critical partner to have in navigating the workers’ compensation system, controlling costs, and taking good care of employees. If you’d like to learn more about what Sedgwick can do for your Canadian workers’ compensation program, please don’t hesitate to contact me at [email protected].