< Previous60 | 2015 WCB ANNUAL REPORTThe key actuarial assumptions used to value the benefit liabilities as at December 31 are as follows:20152014Discount rate5.75%6.0%Inflation for CPI-indexed benefits2.25%3.0%Inflation for wage-related benefits3.25%4.0%Inflation for healthcare benefits5.25%6.5%An analysis of the components of and changes in benefit liabilities is as follows:20152014Short Term DisabilityLong Term DisabilitySurvivor BenefitsHealthcare BenefitsRehabilitation ServicesTotalTotalBalance at beginning of year$164,438$478,351$139,401$289,888$8,604$1,080,682$1,036,965Add: Claim costs incurredCurrent year52,12551,425 3,897 51,985 1,290 160,722 183,612 Prior years(16,797)59,741 3,114 8,501 (3,731)50,828 38,488 35,328111,1667,01160,486(2,441)211,550222,100Less: Claim payments madeCurrent year27,417 706 180 20,240 1 48,544 48,408 Prior years26,052 51,919 13,034 31,969 189 123,163 129,975 53,46952,62513,21452,209190171,707178,383Balance at end of year$146,297$536,892$133,198$298,165$5,973$1,120,525$1,080,682The liability for short term disability claims is an estimate of future wage loss payments for claims that have yet to medically plateau or stabilize. The long term disability liability includes estimated future wage loss payments for those claims that have medically plateaued and stabilized, estimated future pension payments, and estimated future cost of claims relating to certain long latent occupational diseases. The liability for survivor benefits is composed of estimated future pension payments and other services provided to survivors of those who have lost their lives as a result of workplace injuries or illnesses. Healthcare liabilities are the estimated future medical costs for existing claims. The liability for rehabilitation services is composed of the estimated cost of future rehabilitation services which are externally supplied to the WCB.2015 WCB ANNUAL REPORT | 61Included in the benefit liabilities balance is $103.7 million ($55.1 million in 2014) for the estimated long latent occupational disease liability. The Workers Compensation Act of Manitoba lists specific illnesses and injuries presumed to be caused by firefighting, unless the contrary is proven. Effective January 1, 2016, the Act was amended to include a presumption for Post-Traumatic Stress Disorder, regardless of occupation.Also included in the benefit liability is $93.7 million ($90.9 million in 2014) for the future cost of administering existing claims.Sensitivity of Actuarial Assumptions The most significant assumption in the determination of the benefit liabilities is the discount rate.The following table shows the sensitivity of the benefit liabilities to an immediate one per cent increase or decrease in the key assumptions used to determine the liabilities:Change in liability in millions20152014+/- % change on assumed rates+1%-1%+1%-1%Discount rate$(87)$103$(78)$92Wage inflation rate54(47)41(36)General inflation rate10(9)14(12)Healthcare inflation rate35(28)35(28)An increase in the discount rate results in a decrease to the benefit liabilities and vice versa.An increase to any of the inflation rates results in an increase to the benefit liabilities. Each inflation rate affects only those benefits that are directly impacted by that type of inflation. For example, healthcare inflation only affects healthcare liabilities.Liability Adequacy Test IFRS 4 Insurance Contracts requires an insurer to apply a liability adequacy test that meets specified minimum requirements, as follows:a. the test considers current estimates of all contractual cash flows, and of related cash flows such as claims handling costs, as well as cash flows resulting from embedded options and guarantees; andb. if the test shows that the liability is inadequate, the entire deficiency is recognised in profit or loss.If these minimum requirements are met, there are no further requirements.The current claim benefit liability valuation meets the liability adequacy testing requirements of IFRS 4. Accordingly, a separate annual liability adequacy test is not required.62 | 2015 WCB ANNUAL REPORTClaims Development The table below compares actual claim liabilities to previous estimates back to the earliest period for which there is material uncertainty about the estimate and timing of claim payments.Injury YearEstimate of ultimate claims2006 & Prior200720082009201020112012201320142015End of injury year$ 1,458,654 182,168 203,916 184,494 181,728 196,690 202,359 211,487 219,081195,4851 year later1,516,628 191,645 187,514 165,260 171,672 182,934 204,976 203,221 187,526-2 years later1,531,656 189,544 175,901 172,820 170,445 193,678 200,459 180,672--3 years later1,540,794 187,199 185,187 173,058 183,276 190,184 184,729---4 years later1,591,397 190,159 184,284 184,782 181,488 175,290----5 years later1,672,185 190,595 199,761 183,809 169,155-----6 years later1,692,401 198,086 198,546 173,308------7 years later1,786,175 197,405 188,664-------8 years later1,848,853 189,258--------9 years later1,754,856---------Injury YearCumulative claims paid2006 & Prior200720082009201020112012201320142015End of injury year$ 158,624 46,859 50,599 48,096 46,249 47,401 47,263 47,333 47,50046,8951 year later285,510 82,221 84,294 77,860 74,123 76,708 78,400 74,773 72,567-2 years later383,157 96,974 96,378 87,285 84,207 86,321 88,071 83,002--3 years later467,653 106,870 104,554 94,078 90,830 92,230 95,167---4 years later547,097 113,748 110,788 99,426 95,642 96,519----5 years later620,003 119,384 115,963 103,890 99,645-----6 years later688,743 123,961 120,129 107,590------7 years later752,415 127,565 123,619-------8 years later811,184 130,844--------9 years later866,090---------Injury Year2006 & Prior200720082009201020112012201320142015TotalCumulative estimate of ultimate claims$ 1,754,856189,258188,664173,308169,155175,290184,729180,672187,526195,485$ 3,398,943Less: Cumulative claims paid866,090130,844123,619107,59099,64596,51995,16783,00272,56746,8951,721,937Current year unpaid and unreported claims888,76658,41465,04665,71869,51078,77289,56197,670114,959148,5901,677,006Effect of discounting(753,845)Administration cost within benefit liabilities93,699Future dated long latency liability103,665Total benefit liabilities$ 1,120,5252015 WCB ANNUAL REPORT | 6314. BENEFIT LIABILITIES FOR SELF INSURED EMPLOYERSNote 13 contains a complete description of the components of the benefit liabilities for all employers. An analysis of the portion relating to self insured employers is as follows:20152014Short Term DisabilityLong Term DisabilitySurvivor BenefitsHealthcare BenefitsRehabilitation ServicesTotalTotalBalance at beginning of year$15,249$55,108$24,060$44,594$620$139,631$132,494Add: Claim costs incurredCurrent year5,620 6,312 553 6,772 49 19,306 21,578 Prior years2,591 19,780 165 9,293 (337)31,492 8,843 8,21126,09271816,065(288)50,79830,421Less: Claim payments madeCurrent year3,825 197 12 2,481 -6,515 6,388 Prior years3,672 4,276 2,502 5,309 (28)15,731 16,896 7,4974,4732,5147,790(28)22,24623,284Balance at end of year$15,963$76,727$22,264$52,869$360$168,183$139,631Included in premiums and claim costs for self insured employers are payments in the amount of $3.8 million ($3.5 million in 2014) made by self insured employers directly to injured workers on the WCB’s behalf. These amounts are reported to the WCB for inclusion in these financial statements.Included in the benefit liabilities balance is $42.2 million ($20.4 million in 2014) for self insured employers’ share of the long latent occupational disease liability and $12.7 million ($10.0 million in 2014) for the future cost of administering existing claims.64 | 2015 WCB ANNUAL REPORT15. PREMIUM REVENUE20152014Premiums - Class E employers$230,059 $253,733 Assessments - Self insured employers26,310 25,213 Increase in deferred assessments (Note 7)29,031 7,454 Total premium revenue$285,400$286,40016. OPERATING EXPENSES20152014Salaries, employee benefits and training$62,380 $54,689 Information technology service fees 1,579 1,600 Occupancy costs3,090 2,792 Office supplies, services and projects1,784 1,533 Communications1,395 1,369 Professional fees3,268 3,158 Donations108 102 Amortization of capital assets2,857 2,546 76,46167,789Appeal Commission1,347 1,307 Research and Workplace Innovation Program grants903 974 Recoveries from the Government of Canada(1,834)(1,651)SAFE Work Manitoba4,846 3,938Province of Manitoba Workplace Safetyand Health Department funding (Note 17)8,889 8,966 Total operating expenses$90,612$81,323Of the total operating expenses, $7.1 million ($6.3 million in 2014) was allocated to self insured employers based on the current year’s transaction volumes.The WCB administers the Government Employees Compensation Act program for the Government of Canada. The operation of this program is reflected only to the extent of the recoveries of operating expenses.2015 WCB ANNUAL REPORT | 6517. RELATED PARTY TRANSACTIONSThe WCB is a statutory corporation created by the Manitoba Legislature. The WCB is a government agency of the Province of Manitoba that operates at arm’s-length from government. As an agency of the Province of Manitoba, the WCB applies the exemption for government-related entities in IAS 24 Related Party Disclosures.Pursuant to The Workplace Safety and Health Act of Manitoba, the Province may pay the expenses incurred in the administration of that Act out of the consolidated fund and may, subsequently, recover such portion as it may determine from the WCB under The Workers Compensation Act of Manitoba. For 2015, the amount charged to operations under this provision was $8.4 million ($9.1 million in 2014).Also, under Section 84.(1) of The Workers Compensation Act of Manitoba, the Province may pay the costs incurred in respect of worker advisors and may recover them from the WCB. For 2015, the amount charged to operations under this provision was $0.7 million ($0.8 million in 2014).In addition to the legislated obligations referred to above, included in these financial statements are amounts resulting from routine operating transactions conducted at prevailing market prices with various provincial government controlled ministries, agencies and Crown corporations with which the WCB may be considered related. This includes the provision of assistance, in the form of medical opinions and appeal services, for the Province of Manitoba relating to criminal injury claims. The provincial government is also a self insured employer under The Workers Compensation Act of Manitoba. Accordingly, the Province of Manitoba was allocated $2.5 million ($2.4 million in 2014) of the total operating expenses (Note 16) based on their transaction volume. Balances resulting from transactions with the Province of Manitoba are included in these financial statements and are settled on normal trade terms.Included in the WCB’s investment portfolio as at December 31, 2015 are guaranteed debentures issued by the Province of Manitoba in the amount of $4.0 million ($3.5 million in 2014).Other Related Party Disclosures In addition to the related government entities above, the key management personnel of the WCB (comprised of the WCB executive personnel and the Board of Directors) are deemed related parties. By definition, close family members of the key management personnel are also related parties of the WCB. Any transactions or business relationships are incidental, and carried out at normal trade terms.The WCB has a pension plan for the benefit of WCB employees, which is a related party by definition of IAS 24 Related Party Disclosure. Detailed information on transactions with the pension plan can be found in Note 12.66 | 2015 WCB ANNUAL REPORTKey Management Compensation The following table shows total compensation for the executive personnel of the WCB:20152014Short term employee benefits$1,625 $1,498 Post-employment benefits383 322 $2,008$1,820Short term employee benefits include salary, vacation, car allowances, group health and dental benefits, group life insurance, and the employer’s share of contributions to the Canada Pension Plan and employment insurance. Post-employment benefits include the estimated current service cost accrued for pension and other post-employment benefits.The following table shows the total compensation for the Board of Directors of the WCB:20152014Fees$165 $160 Benefits2 2 $167$162The Board of Directors is comprised of 10 members appointed by the Government of Manitoba. Members’ remuneration is set out in Order in Council passed by Lieutenant Governor in Council.18. COMMITMENTSThe WCB has signed operating leases for office premises and office equipment expiring at various times until October 30, 2025. The minimum lease obligations over the next five years are:20162017201820192020ThereafterTotal$1,695$1,672$1,624$1,291$1,147$4,896$12,3252015 WCB ANNUAL REPORT | 6719. CONTINGENCIESThe WCB is party to various claims and lawsuits related to the normal course of business that are currently being contested. In the opinion of management, the outcome of such claims and lawsuits are not determinable. However, based on the total amount of all such actions, the WCB has concluded that their outcomes, either individually or in aggregate, will not have a material effect on the results of operations or financial position.20. AUDITOR INDEPENDENCEGrant Thornton LLP did not provide non-audit services to the WCB in 2015 or 2014.21. COMPARATIVE FIGURESCertain comparative figures and disclosures have been reclassified to conform to the financial statement presentation adopted in the current year.Workers Compensation Board of Manitoba333 Broadway, Winnipeg, MB R3C 4W3WCB@wcb.mb.ca | 204-954-4321 | 1-855-954-4321WCB.MB.CANext >