CIA Annual Meeting

1. CIA Annual Meeting LOOKING BACK…focused on the future

2. Workers Compensation System - Ontario • Cover approximately 70% of the workforce • “Covered” industries are mandated by legislation

3. Schedule 1- Insurance Plan • employers pay insurance premium and WSIB pays benefits to injured workers • premiums also cover the costs of health & safety and administration of the OHSA (Ontario Health and Safety Act) • Schedule 2 - Self Insured • employers responsible for own costs • reimburse WSIB for benefits paid to injured workers

4. Income replacement benefits can begin on the day following injury • Maximum income benefit is 85% of “net earnings” under current legislation which became effective January 1, 1998

5. Income replacement benefits are indexed at different rates, depending on the degree of impairment • full CPI for 100% wage loss • for less than 100% wage loss, one half of CPI, less 1%

6. Employers pay premium in bulk based on insurable earnings - capped at $67,700 in 2005 • Exposures by number of lives are estimated from claims and insurable earnings data

7. Return to work programs are an important part of disability claims management • Claims can re-enter via “re-open or recurrence process” • Claims become “locked in” or finalized at 72 months from date of injury

8. Lost Time Injury (LTI) is any claim that receives an income replacement benefit • The following two graphs illustrate the proportion of claims at time 0 (LTIs) and at duration 2 years

11. The following graph shows the number of claims at duration 2 expressed as a proportion of the claims at time 0

13. Income replacement benefit costs are effected by wage inflation, changes in earnings ceilings, changes in tax rates and changes in legislation or policy • Following graph illustrates the average monthly benefit amount by injury year as of year end 2004

15. Recoveries are difficult to measure because of long adjudication periods and movements of claims through recurrences • Following chart shows that sometimes the number of claimants in payment status actually increases

17. Following graph illustrates the proportion of claims going off benefit, or recovering • The top line is a measure of the proportion of claims that go off benefit between time 0 and 6 months • The bottom line is a measure of the proportion of claims that go off benefit between time 6 months and 18 months

19. Impact On Liabilities • Benefit Liabilities for all disability income benefits have been steadily increasing over the last 5 years with a minimal change in claim count inventory as shown in the following table

21. Impact On Liabilities • It is easier to see the impact of recent trends if we limit our analysis to just those claims since 1998 • The following table shows that liabilities are increasing at a faster rate than inventory growth primarily due to changes in valuation assumptions

23. The End