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Compensation Boards



January 01, 2009 – Comments (3)

Worker Compensation Boards have huge funds to manage as they put aside the money for long term claims that must be paid.  I saw this article about Ontario increasing its benefits

This is a truly amazing irresponsible thing to do when you consider current claims are estimated to be covered only to the tune of about 58%.

I don't know the details, but apparently BC WCB did pretty good considering the year and the amount of funds they have to manage.  My understanding is that they went from being funded on claims to the tune of 118% to 110%.  They did lose money, but they didn't do what the market did, which would have brought them to the 70% funded range.  I haven't looked closely to see if there is creative accounting.

But, overall, I would think that the percent that you can collect on a claim should be declining, not increasing.  

3 Comments – Post Your Own

#1) On January 02, 2009 at 2:50 AM, DaretothREdux (52.64) wrote:

Even if you are right, you have to assume that the government cares about the bottom line. I don't know about Canada but the US will just print more money.

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#2) On January 02, 2009 at 11:47 AM, bammerone (29.28) wrote:

The article is a bit incomplete. Can't tell if increases are for permanently disabled (and able to continue working at some point) or permanently and totally (can't go back to work). It may not be totally irresponsible if the increases are to keep pace with COLA, or wage inflation.

DWOT, you bring up a great point about huge "pots" of money. I ran one of these funds in the States and the restrictions on where we could invest are pretty restrictive - usually govenrment bonds and money market funds.

Now, if we want to get a little more return, we could start the private social security debate. Do we want looser regulations so that our fund managers can be more aggressive? State of Ohio allowed one of their investment managers to take money and put it into collectible coins!!!!

Sounds like lots of opportunities to chase returns ala Madoff investment company strategy.

In the long run, if we aren't careful with protecting public trust funds, we will end up paying even more in underfunded benefits.

The other side of the coin is rates taken in and used to fund the pot. Since this is an insurance scheme, need to understand if rates to emploers are going up, staying flat or being artificaially depressed to lessen the buden on emplyers.

Instead pf printing money to increase the funding level, they will raise rates to employers. In the end, we all pay.

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#3) On January 06, 2009 at 10:03 AM, bammerone (29.28) wrote:

Here is a link to an interesting blog posting this morning. Granted, this is the editor of an insurance underwriting organization....interesting responses.


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