Suspicious Industry Results Requires Examination

Earlier this year I had a meeting with Deputy Premier Thomas Lakaszuk (former Minister of Employment & Immigration) responsible for Occupational Health and Safety. The meeting was to discuss the state of health and safety in the province of Alberta. During this meeting he cited the exemplary safety record of the oil sands as an example for the world to follow and how well Alberta is doing in this portfolio. He supported his statement based upon the accident claim history as reported by WCB. Interestingly he is not wrong “by the numbers” however; he is seriously misinformed on how those numbers are derived.

WCB is an insurance company and set their rates based upon risk. In setting up Industry Classification they group employers together with similar loss expectations. This makes sense as one would expect the Construction Industry to have higher rates than say Financial Services based purely upon risk. However when one looks at the WCB rates it creates a head scratching moment:

Industry	Rate Classification Description	Rates
Oilsands Mining & Processing	06600	$0.41
Hair Salons	87200	$0.60
Disk Jockey	85907	$0.66
Dry Cleaners	87401	$1.53
Camp Catering - Industrial	87505	$2.10
Fruit Farms	01901	$2.72
Suspended Ceiling Installation	42141	$4.20

This is counterintuitive. Based upon the above one has to conclude that Disk Jockey industry is 161% more risky than Oilsands Mining and Suspended Ceiling installation is over a 1000% riskier. Part of the explanation is that premium rates are also set upon the actual loss experience. However for these numbers to then make sense one would have to believe that Hair Salons etc. are having more injury incidents and are not effectively managing their claims. This would effectively impact industry rates higher. Perhaps an examination of similar risk industries that are highly regulated with implemented Safety and WCB Management Systems provides a better comparison:

Industry	Rate Classification Description	2013 Rates
Oilsands Mining & Processing	06600	$0.41
Coal Mining – Open Pit	06110	$1.44
Construction General Industrial	40400	$1.62
Contract Plant Maintenance	42129	$1.62

Open Pit Coal Mining provides the best comparison both from a risk and management perspective yet, Coal Mining is over 350% higher. The difference is that within Oilsands Mining operations there is an extraordinary reliance on the use of subcontractors for engaging in high risk work. It is not that there are fewer accidents or that they are even being better managed. What is happening is that when an incident occurs with a subcontractor that incident is being assigned to the Contract Plant Maintenance and General Industrial Construction industry accounts. If one included the subcontractors as part of the Oilsands Industry one can easily conclude that Open Pit Coal Mining is more safe that Oilsands Operations. This is a more accurate depiction given inherent risk of work and actual loss experience.

So Deputy Premier Lakaszuk a bit of advice. If something appears to be counter-intuitive do a bit more digging. It is worthwhile to maintain your credibility and to avoid looking ill informed.