WorkCover SA has introduced an experience rating system for medium and large employers as it struggles to lower costs and stay competitive with other states’ workers’ compensation systems.

The new experience rating system will calculate premiums based on size, industry risk and claims experience.

CEO Rob Thomson says it’s expected to help reduce average premium rates within the next two years.

“The experience rating system is one of a number of major reforms aimed at improving the scheme’s overall performance,” he told insuranceNEWS.com.au.

He says the new system gives employers more financial incentive to prevent injury and reduce claims.

“Later this year the outcome of our claims agent procurement process, which also focuses on improving return-to-work outcomes, will be announced.

“If injuries do occur, the system also provides a financial incentive to improve their return-to-work performance and reduce the cost of any claims,” he said.

There will be no change in premium for small employers that have a base premium of less than $20,000 and/or pay less than $300,000 in wages, as they lodge a claim once every 14 years on average.

Medium and large employers comprise less than 10% of registered employers yet account for 75% of claim costs.

“Our modelling indicates that approximately 63% of employers who will be experience-rated will receive a reduction in their premium when compared to what they would pay based only on their industry rate,” Mr Thomson said.

SA has the highest average premium of the states at 2.75%, compared with 1.68% in NSW, 1.298% in Victoria, 1.45% in Queensland and 1.691% in WA.