Sufficiency policy

A: The sufficiency policy was first introduced to WCB customers at the 2023 preliminary rate information meeting (2024 rates).

The sufficiency policy (POL 16/2023) was effective Dec. 31, 2023.
 

A: “International Financial Reporting Standards, also referred to as IFRS or IFRS Accounting Standards, are a set of international rules, standards and procedures accountants use to prepare financial statements. 

“The purpose of IFRS Accounting Standards is to provide a globally consistent basis for accounting worldwide so that we have efficient capital markets across borders. 

“The International Accounting Standards Board (IASB) created IFRS to standardize how financial statements are prepared. The goal was to make accounting standards consistent and transparent across borders, allowing investors to compare companies easily.

“Since 2011, all publicly accountable enterprises in Canada, including companies listed on the Toronto Stock Exchange, Canadian Securities Exchange, and other Canadian exchanges, have been required to use IFRS to prepare their financial statements.

“IFRS is a rigorous system detailing how companies must maintain their financial records and report expenses and income.” (Source: What is IFRS?)

All WCBs across Canada have adopted IFRS to report their financial statements and follow every IFRS update. With IFRS 17, all Canadian WCBs are coming into alignment for how WCB financial statements are displayed.

Learn more about the key principles of IFRS.

A: “IFRS 17 is the first truly international IFRS Standard for insurance contracts. IFRS 17 replaces IFRS 4 Insurance Contracts. When introduced in 2004, IFRS 4—an interim Standard—was meant to limit changes to existing insurance accounting practices. Hence, IFRS 4 has allowed insurers to use different accounting policies to measure similar insurance contracts they write in different countries …

“IFRS 17 provides consistent principles for all aspects of accounting for insurance contracts. It removes existing inconsistencies and enables investors, analysts and others to meaningfully compare companies, contracts and industries …

“IFRS 17 requires (organizations) to measure insurance contracts using updated estimates and assumptions that reflect the timing of cash flows and any uncertainty relating to insurance contracts. This requirement will provide transparent reporting about a company’s financial position and risk. 

“IFRS 17 requires a company to recognise profits as it delivers insurance services (rather than when it receives premiums) and to provide information about insurance contract profits the company expects to recognise in the future. This information will provide metrics that can be used to evaluate the performance of insurers and how that performance changes over time” and IFRS 17 will provide “more transparent and useful information.” (Source: IFRS 17 Fact Sheet)

A: Any financial statements published after Jan. 1, 2023 must comply with IFRS 17.

A: IFRS 17 has changed the way the WCB reports some of its financial statements and calculations, including updates to its funding policy. This change will be most apparent when comparing previous year financial statements.

A: The WCB is required to follow all IFRS updates.

The introduction of IFRS 17 caused the WCB’s discount rate to be subject to short-term market volatility. Therefore, the sufficiency policy was designed to preserve rate stability for employers. 

A: IFRS 17 had the potential to create volatility in employers’ premium rates. Therefore, the WCB conducted a comprehensive review of its funding policy. This resulted in the new sufficiency policy, which works to mitigate the additional volatility.

The implementation of IFRS 17 will not change the workers’ compensation system or the WCB’s commitment to serving our customers.
 

A: No, your rate code will not change as a result of IFRS 17. 

A: The basis of the calculation has changed to limit the impact of market volatility. The new sufficiency policy has a new target range of between 100 and 140 per cent. The policy ensures the WCB’s assets are sufficient to meet its short- and long-term obligations to workers and employers. 

Employers will not notice much of a change under the new sufficiency policy, since the new target funded position range has been calibrated to produce a similar range of outcomes as the previous policy. 

A: The WCB aims to uphold a balance between stable premium rates and a fully funded compensation system. 

The Saskatchewan WCB is legislated under The Workers’ Compensation Act, 2013 (the Act) to maintain an injury fund sufficient to finance worker claims and support, including earnings loss, physical and vocational rehabilitation, prevention initiatives and other obligations under the Act. The WCB’s target range is in place to ensure the organization has the capacity to cover the future costs of all claims in the system.

The sufficiency policy establishes a target time frame of three years to return the sufficiency ratio to the target range. The specific timing and approach used will be at the discretion of the WCB’s board of directors and will balance the interests of employers and workers. Information on any actions taken to regulate surpluses or deficits will be available on the WCB’s website.

A: The WCB continues to ensure that the premiums collected from employers will be sufficient to cover expected costs and expenses. In creating the sufficiency policy, the WCB reviewed a number of scenarios for employers to determine what would result in the greatest stability for employer premium rates. This resulted in a target range of 100 to 140 per cent. The target ensures that all current and future claim costs of the compensation system are covered.

Though the calculation and target range of the sufficiency policy are different from the former funding policy, the impact on employer premium rates is intended to be minimal.

A: While implementing the IFRS change, the WCB also completed a comprehensive review of all accounting and funding policies. Additional factors leading to the creation of the sufficiency policy included consulting with other workers’ compensation boards across Canada and analyzing the impact to employers. 

A: The sufficiency policy does not have a direct impact on workers.

A: Changes from the implementation of IFRS 17 and the WCB’s new sufficiency policy will not impact worker benefits or injury claims.

A: Changes to the WCB’s accounting policy as a result of IFRS 17 will not impact WCB coverage.

A: Contact the WCB’s employer services department for information on your employer account, if you are:

• ready to register your business
• requesting a clearance or a letter of good standing
• revising or updating your payroll
• discussing your statement of account and/or making a payment

Employer services department
employerservices@wcbsask.com
Phone: 306.787.4370
Toll free: 1.800.667.7590

For general inquiries, contact the Employer Resource Centre:
ERC@wcbsask.com
Phone: 1.833.961.0042