Workers’ compensation premium increases and other scheme changes announced in NSW and Victoria for next financial year have highlighted the value of having advice to understand and minimise the impacts as much as possible, brokers say. 

AEI Insurance Broking MD Tim Wedlock says in NSW for example, changes will have a significant impact on businesses and may not be well understood, and a broker who understands workers' compensation can certainly assist with providing clarity and make representations if there are issues.

“Unless you understand how the rating works, it’s very confusing for employers out there,” he told insuranceNEWS.com.au. “If they deal with a broker that specialises in workers’ compensation and understands how it works, they’re going to get some clarity as to how their premiums are calculated and how they should handle their claims.”  

NSW state-owned insurer icare has announced premium rates will increase by an average 8%, rising to 1.6% of wages from 1.48%. The increase for different industries varies. Other changes have been introduced around claims performance, when the average performance premium is over $30,000. 

Workers Comp Risk Services Principal Troy Wiseman says minimising claims costs will minimise the overall premium payable, with the initial premium rate just the first part of the calculation 

“The claims weighting has a far greater impact afterwards,” he tells insuranceNEWS.com.au. 

Mr Wiseman says it’s important for employers to identify suitable duties to assist people in returning to work and to be aware of the benefits from early intervention. 

Victoria last month raised its target average premium by nearly 42% to 1.8% from 1.27%, effective from July, and introduced a number of WorkCover reforms following escalating financial pressures on the scheme. 

Changes include establishing a new agency, Return to Work Victoria, different eligibility for mental injury claims and introducing a whole person impairment threshold for claims that receive weekly benefits for more than two and a half years. 

Lockton Manager Workers’ Compensation Craig Simpson tells insuranceNEWS.com.au that brokers can assist their clients by helping them understand their whole risk, and analysing and planning for managing that risk. 

“That can either be through improved risk management strategies and systems, or via alternative risk treatments such as self-insurance, putting together a strategic plan that looks not just at the immediate need, but the longer-term implications of business and scheme changes,” he said. 

Victoria says premiums hadn’t increased in more than 20 years, with the only changes since 2000-01 being reductions, and an increase is needed to ensure WorkCover can fund its long-term liabilities.  

Since 2010, the claims liability has tripled, mainly driven by the increased cost of weekly income support and many workers staying on the scheme long-term, while mental injury claims now represent 16% of new claims, which wasn’t envisaged when the scheme was designed, it says. 

Queensland last week become the latest state to raise workers’ compensation premiums in response to rising mental health and complex claims. 

The state’s average net premium rate will move to $1.29 per $100 of wages after discounts next financial year from $1.23, it said. 

WorkCover Queensland CEO Bruce Watson says disciplined financial management has enabled the government-owned, self-funded scheme to weather the external market pressures of the last few years, but an increase is necessary. 

“The profile of the injuries we cover is changing,” he said. “Mental injury and complex injury claim numbers are rising, which is costing us more and creating pressure on our scheme, mirroring the trends we’re seeing across Australia.” 

An individual employer’s premium rate depends on their wages, the claims performance and that of their industry, WorkCover says. 

“The key way an employer can influence their individual premium is by creating a safer workplace and reducing injuries at work,” Mr Watson said. “More than 50% of our policyholders will see a reduced premium rate this year, due to proactiveness with safety and supporting injured workers to get back to work safely.” 

In SA, the average premium rate for next financial year has been increased to 1.85% from 1.8%,  while WorkCover WA CEO Chris White announced in April that the average recommended premium rate would drop 5.2% to 1.727% of total wages for next financial year from 1.822%. 

Gallagher notes on its website that in states such as Queensland, SA and NSW for SME businesses there is limited choice in selecting who will manage their workers’ compensation policy and claims. But in WA, ACT, Tasmania, NT, Victoria and in NSW for large businesses there is the ability to select an insurer who they wish to partner with in those jurisdictions.