< Previous70WCB Retiree Healthcare Spending Account (RHCSA) Details of the WCB RHCSA are as follows:20202019Balance at January 1$ 3,216 $2,622Benefit cost recognized in income:Current service cost 123 100Interest expense 101 104 224 204Remeasurements recognized in OCI:Loss on change in actuarial assumptions 339 427Employer contributions (47)(37)Change in net defined benefit liability 516 594Net defined benefit liability at December 31$ 3,732 $3,216Defined benefit plan risks The defined benefit plans expose the WCB to economic and demographic actuarial risk.Economic risk The retirement plans are exposed to investment risk as plan assets are invested in equity, fixed income and other assets. The defined benefit plans are exposed to interest rate risk through assumptions based on economic factors such as discounts determined with reference to bond markets. Demographic risk Demographic factors affect current and future benefits costs with respect to the amount and timing of expected payments. Demographic factors include average age, retirement rates and longevity. Sensitivity of actuarial assumptions The actuarial present value of the defined benefit obligation is sensitive to changes in actuarial assumptions, the most significant assumption being the discount rate. The following table illustrates the sensitivity of the defined benefit obligation to a one per cent change in the discount rate:20202019+1.0%-1.0%+1.0%-1.0%Retirement plans $ (77,581)$ 103,732 $ (63,361)$ 84,130Sick leave plan (1,165) 1,356 (1,089)1,263Retiree healthcare spending account (584) 760 (493)638Total cash payments for employee future benefits for 2020, consisting of cash contributed by the WCB to the funded pension plan and cash payments directly to beneficiaries for unfunded plans, were $6.2 million ($6.6 million in 2019). Based on historical experience and expected salary expense, the WCB expects to fund $6.2 million in 2021.2020 WCB ANNUAL REPORT71Related Party Transactions By definition, the WCB retirement plan is a related party to the WCB. Transactions between the related parties are detailed below: 20202019Contributions from the employees$3,528$3,546Contributions from the employer5,5625,560There were no amounts outstanding as at December 31, 2020, or December 31, 2019.13. BENEFIT LIABILITIES FOR ALL EMPLOYERSAccounting policy Under the provisions of the Act, the WCB has a legislated obligation to accept insurance risk from employers in exchange for premiums paid for WCB coverage.The WCB’s Chief Actuary prepares a valuation of the benefit liabilities of the WCB at each year end. This valuation is conducted in accordance with accepted actuarial practice in Canada, and is subject to peer review by the WCB’s external actuary. The benefit liabilities represent the actuarial present value of all future benefit payments expected to be made for claims or injuries which occurred in the current fiscal year or in any prior year. The benefit liabilities include provisions for all benefits provided by current legislation, policies and/or administrative practices in respect of existing claims, plus provisions for the future expenses of administering the existing claims. Differences arising from actual claims experience and assumptions used for the previous valuation, as well as the impacts of changes in legislation, policy, administrative practice or actuarial methods and assumptions, are recognized in the period that they occur. Benefit liabilities are determined in accordance with standards established by the Actuarial Standards Board (Canada). The actuarial present value of future benefit payments reflects management’s long term estimates of economic and actuarial assumptions and methods, which are based upon past experience and modified for current trends. As these assumptions may change over time to reflect underlying conditions, it is possible that such changes could cause a material change in the actuarial present value of the future payments. The fair value for benefit liabilities is not readily determinable.The benefit liabilities also include an estimated liability for certain long latent occupational diseases. Due to the nature of the estimated liability for long latent occupational diseases and the extent of related historical claims information currently available, this liability is more uncertain by its nature than other benefit liabilities. As information is accumulated and analyzed, adjustments may be necessary to improve precision.72The key actuarial assumptions used to value the benefit liabilities as at December 31 are as follows:20202019Discount rate5.75%5.75%Inflation for CPI-indexed benefits2.25%2.25%Inflation for wage-related benefits3.25%3.25%Inflation for healthcare benefits5.25%5.25%An analysis of the components of and changes in benefit liabilities is as follows:20202019Short-Term DisabilityLong-Term DisabilitySurvivor BenefitsHealthcare BenefitsRehabilitation ServicesTotalTotalBalance at beginning of year$ 176,314 $ 500,869 $ 112,315 $ 342,290 $ 4,279 $ 1,136,067 $1,119,963Add: Claim costs incurredCurrent year 51,343 44,962 3,116 55,582 834 155,837 154,318Prior years 6,236 8,204 3,852 12,441 (852) 29,881 38,298 57,579 53,166 6,968 68,023 (18) 185,718 192,616Less: Claim payments madeCurrent year 26,596 801 371 17,605 1 45,374 48,698Prior years 31,519 49,149 11,015 30,991 328 123,002 127,814 58,115 49,950 11,386 48,596 329 168,376 176,512Balance at end of year$ 175,778 $ 504,085 $ 107,897 $ 361,717 $ 3,932 $ 1,153,409 $1,136,067The 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.Included in the benefit liabilities balance is $114.9 million ($113.0 million in 2019) for the estimated long latent occupational disease liability including Post-Traumatic Stress Disorder. Also included in the benefit liability is $100.4 million ($96.1 million in 2019) for the future cost of administering existing claims.2020 WCB ANNUAL REPORT73Sensitivity of Actuarial Assumptions The most significant assumption in the determination of the benefit liabilities is the discount rate. The following table shows the sensitivity of the benefit liabilities to an immediate one per cent increase or decrease in the key assumptions used to determine the liabilities:Change in liability in millions:20202019+/- % change on assumed rates+1.0%-1.0%+1.0%-1.0%Discount rate$(89)$106$ (90)$106Wage inflation rate55(48)55 (48)General inflation rate7 (6)7 (6)Healthcare inflation rate43(36)42(35)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.Claims risk Because there is no statutory limit on the benefit amount payable or the duration of the risk exposure related to work related injuries, the WCB bears risk with respect to its future claims costs, which could have material implications for liability estimation. In determining the WCB’s claim benefit liabilities, a primary risk is that the actual benefits payments may exceed the estimation of the amount of the liabilities. This may occur due to changes in claim reporting patterns, frequency and/or size of claim payments or duration of claims. Compensable injuries and benefits payable may also change due to legislation or policy changes. With potentially long claim runoff periods, inflation is also a factor because future costs could escalate at a faster rate than expected. 74Liability 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.Claims Development The table below compares actual claims 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 cumulative claims2011 & Prior201220132014201520162017201820192020TotalEnd of accident year$ 2,588,713 202,359211,487219,081195,543192,331199,311194,341196,585 191,616 1 year later 2,593,717 204,976 203,221187,526188,020189,192204,883194,005190,185 - 2 years later 2,745,758 200,459180,672180,810184,957190,487204,370187,014- - 3 years later 2,800,283 184,729177,911178,809184,791190,640185,142-- - 4 years later 2,650,531 183,041176,628178,845185,050182,127 --- - 5 years later 2,627,484 181,176176,612178,751174,553---- - 6 years later 2,624,615 180,433176,427166,175----- - 7 years later 2,619,137 181,598179,872------ - 8 years later 2,608,157 182,220------- - 9 years later 2,632,743 -------- - Estimate of cumulative claims$ 2,632,743 182,220 179,872 166,175 174,553 182,127 185,142 187,014190,185191,616$ 4,271,646 Cumulative claim payments(1,693,456)(118,641)(105,269)(103,181)(102,486)(103,495)(104,500)(89,961)(80,200)(46,599) (2,547,789)Currrent year unpaid and unreported claims 939,287 63,580 74,603 62,994 72,066 78,633 80,642 97,053109,984145,016 1,723,857 Effect of discounting (785,692)Administration cost within benefit liabilities 100,394 Future dated long latency liability 114,850 Total benefit liabilities$ 1,153,409 2020 WCB ANNUAL REPORT7514. BENEFIT LIABILITIES FOR CLASS A THROUGH CLASS D EMPLOYERSNote 13 contains a complete description of the components of the benefit liabilities for all employers. An analysis of the portion relating to Class A through Class D employers is as follows:20202019Short-Term DisabilityLong-Term DisabilitySurvivor BenefitsHealthcare BenefitsRehabilitation ServicesTotalTotal Balance at beginning of year$ 22,330 $ 75,466 $ 15,916 $ 61,198 $ 40 $ 174,950 $ 169,764 Add: Claim costs incurredCurrent year 11,489 6,012 487 9,265 3 27,256 19,830Prior years 6,398 (998) 980 2,730 (89) 9,021 6,554 17,887 5,014 1,467 11,995 (86) 36,277 26,384Less: Claim payments madeCurrent year 4,713 393 13 2,038 1 7,158 6,687Prior years 6,048 3,571 1,890 5,005 (56) 16,458 14,511 10,761 3,964 1,903 7,043 (55) 23,616 21,198Balance at end of year$ 29,456 $ 76,516 $ 15,480 $ 66,150 $9$ 187,611 $174,950Included in premiums and claim costs for Class A through Class D employers are payments in the amount of $7.2 million ($5.5 million in 2019) made by Class A through Class D 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 $51.4 million ($50.1 million in 2019) for Class A through Class D employers’ share of the long latent occupational disease liability and $16.3 million ($14.4 million in 2019) for the future cost of administering existing claims.7615. PREMIUM REVENUEAccounting policy In accordance with Section 73(2) of the Act, the operations of the WCB are categorized into several classes of employers.General Employers Pool Employers registered within Class E are subject to collective liability and premium revenue is estimated by applying applicable industry assessment rates to the employers’ reported assessable payrolls for the current year. Any difference between the estimated premium revenue and the actual premium revenue is credited or charged to income in the year the determination is made.Premium revenue is fully earned and recognized over the period that coverage is provided. Premium revenue reported in the period is recorded net of prevention rebates, uncollectable account write-offs, interest and penalties on overdue amounts and adjustments of premiums for prior periods. The Prevention Rebate Program (PRP) reduces the risk of workplace injury and illness by rewarding employers who have developed and maintained meaningful workplace safety and health management systems. SAFE Work Manitoba administers the PRP, determines employer eligibility and issues the prevention rebate. SAFE Work Certified employers who have met all criteria are eligible for the prevention rebate. The rebate is calculated using the actual payroll associated with the rebate eligibility period. Other Classes of Employers Employers in Class A through Class D – principally government bodies and employers named by Regulation 278/91 – are subject to individual responsibility for costs attributable to claims arising from their employees, as well as a proportionate share of administration expenses. As such, premium revenue from Class A through Class D employers is recognized as these costs are incurred. Current costs are collected as billed while future costs are recorded as deferred assessments (Note 7). 20202019Premiums — Class E employers$177,419$186,600Prevention rebates (5,984) (6,063)171,435180,537Assessments — Class A through Class D employers 32,772 28,976Increase in deferred assessments (Note 7) 13,192 4,586Total premium revenue$217,399$214,099*Due to the exceptional impact of COVID-19, Premiums – Class E employers includes a reduction of $6.4 million, the difference between estimated 2020 premium revenue reported at December 31, 2020 and actual 2020 premium revenue reported to March 5, 2021.2020 WCB ANNUAL REPORT7716. OPERATING EXPENSES20202019Salaries, employee benefits and training$ 70,972 $67,487Information technology service fees 2,681 2,806Occupancy costs 3,074 2,709Lease depreciation 821 816Lease interest 203 219Office supplies, services and projects 910 2,171Communications 2,819 3,328Professional fees 2,249 2,393Donations 126 128Amortization of capital assets 5,792 6,205 89,647 88,262 Appeal Commission 1,342 1,393 Research and Workplace Innovation Program grants (64) 921 Recoveries from the Government of Canada (1,788) (2,098)SAFE Work Manitoba 6,797 4,396 Province of Manitoba Workplace Safetyand Health Department funding (Note 17) 8,101 8,232Total operating expenses$ 104,035 $101,106Of the total operating expenses, $11.4 million ($9.9 million in 2019) was allocated to Class A through Class D employers based on the current year’s transaction volumes.The WCB administers the Government Employees Compensation Act program for the Government of Canada. The Government of Canada reimburses the WCB for all claims paid out on their behalf plus a recovery of operating expenses.7817. RELATED PARTY TRANSACTIONSThe WCB is a statutory corporation created by the Manitoba Legislature. As a corporation 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 2020, the amount charged to operations under this provision was $7.5 million ($7.7 million in 2019).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 2020, the amount charged to operations under this provision was $0.6 million ($0.5 million in 2019).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 a Class C employer under The Workers Compensation Act of Manitoba. Accordingly, the Province of Manitoba was allocated $4.8 million ($3.9 million in 2019) 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, 2020, are guaranteed debentures issued by the Province of Manitoba in the amount of $4.5 million ($5.0 million in 2019).Other Related Party Disclosures In addition to the related government entities above, the key management personnel of the WCB (comprised of the WCB executive personnel and the Board of Directors) are deemed related parties. By definition, close family members of the key management personnel are also related parties of the WCB. Any transactions or business relationships are incidental, and carried out at normal trade terms.The WCB has a pension plan for the benefit of WCB employees, which is a related party by definition of IAS 24 Related Party Disclosure. Detailed information on transactions with the pension plan are included in Note 12.2020 WCB ANNUAL REPORT79Key Management Compensation The following table shows total compensation for the executive personnel of the WCB:20202019Short-term employee benefits$ 2,019 $1,694Post-employment benefits 456 455Total key management compensation$ 2,475 $2,149Short-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 Board of Directors of the WCB 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. For 2020, total compensation paid to the Board of Directors was $0.1 million ($0.2 million in 2019).18. CONTINGENCIES The 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.Next >