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Financial Incentives of Experience Rating in Workers' Compensation: New Evidence From a Program Change in Ontario, Canada

Tompa, Emile PhD, MBA; Hogg-Johnson, Sheilah PhD; Amick, Benjamin C. III PhD; Wang, Ying MSc; Shen, Enqing MSc; Mustard, Cam ScD; Robson, Lynda PhD; Saunders, Ron PhD

Journal of Occupational and Environmental Medicine: March 2013 - Volume 55 - Issue 3 - p 292–304
doi: 10.1097/JOM.0b013e31827827fa
Original Articles

Objective: To investigate the incentive for primary and secondary prevention associated with experience rating in a retrospective workers' compensation program.

Methods: Panel data on 21,558 firms from 1998 to 2007 were used to estimate the relationship between the degree of experience rating and seven measures of workplace occupational health and safety outcomes. We focused on the impact of a policy change in 2004 in which the degree of experience rating was substantially increased for all firms.

Results: The 2004 increase in experience rating was associated with a reduction in the total, lost-time, no-lost-time, benefit days, permanent impairment, musculoskeletal disorder, and acute trauma claim rates. These observed changes follow secular trends.

Conclusion: The association of experience rating with some claim outcomes and not others in some time periods suggests that firms may focus on claims and cost management practices.

From the Institute for Work and Health, Toronto (Drs Tompa, Hogg-Johnson, Amick III, Mustard, Robson, and Saunders, and Ms Wang), Ontario, Canada; Department of Economics (Dr Tompa), McMaster University, Hamilton, Ontario, Canada; Dalla Lana School of Public Health (Drs Tompa, Hogg-Johnson, Amick III, and Mustard), University of Toronto, Toronto, Ontario, Canada; School of Public Health (Dr Amick III), University of Texas, Houston, Texas; School of Public Policy and Governance (Dr Saunders), University of Toronto, Toronto, Ontario, Canada; and Scotiabank (Mr Shen), Toronto, Canada.

Address correspondence to: Emile Tompa, PhD, MBA, Institute for Work and Health, 481 University Ave, Ste 800, Toronto, Ontario, Canada M5G 2E9 (etompa@iwh.on.ca).

This project was funded by a Workplace Safety and Insurance Board Research Advisory Council Grant (project #0805).

The authors declare no conflicts of interest.

©2013The American College of Occupational and Environmental Medicine