Safety Groups New Rebate Model

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Safety Groups New Rebate Model
The Rubber Association Of Canada Safety Group
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Safety Groups4-2-2 Rebate Formula

• Maximum group rebate of 8 of combined group
  premium
• 4 earned for successful completion of Safety
  Group Achievement Elements
• 2 earned for improvement to LTI frequency for
  the group compared to a three year average (only
  claims gt 7 days)
• 2 earned for improved LTI severity for the group
  compared to a three year average
• -1 for groups with 10 worse LTI frequency
• -1 for groups with 10 worse LTI severity
• Program Cap of 20,000,000.00

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Example of 4-2-2 Formula

• Combined Group Premium 12,879,870
• Safety Group Achievement 80
• Group LTI Freq. reduction 15
• Group Severity reduction 15
• Achievement (80 of 4) 3.2
• LTI Freq. improvement 1.5
• Severity improvement 1.5
• GROUP REBATE (6.2 of premium) 798,551

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New vs Old Formula

• New Formula
• Rebate directly linked to outcomes.
• No risk of a zero rebate.
• Able to calculate rebates by spring following the
  year of participation.
• Able to create accurate estimates of the rebate
  once a group is formed.
• Simple to understand and track performance.
• In line with our current incentive programs.

• Old Formula
• Rebates are based on a comparison
  experience-rating outcomes.
• Risk of receiving Zero rebate.
• Rebates are generated 22 months following a firm
  registering in the program.
• Unable to accurately estimate rebates due to the
  components of the different experience-rating
  programs.
• Not in line with current incentive programs.