- 4.3.1: About Workers Compensation Premiums
- 4.3.2: Claims Costs
- 4.3.3: Workers Compensation Premiums - how can you pay less?
- Workcover: Claims excess
Workers compensation insurance premiums should cost the same for a particular CMO no matter which insurer is used
WorkCover Industry Classification (WIC)
Make sure the WIC noted on your Workers Compensation policy reflects the CMO's primary activities.
Employer Categories for Workers Compensation
…. have a basic tariff premium of $10,000 or less or annual wages of $300,000 or less. Small employers do not have their premiums experience-adjusted.
…. have a basic tariff premium of more than $10,000 and less than or equal to $500,000 and annual wages of more than $300,000. Medium employers have their premiums experience adjusted.
…. have a basic tariff premium of more than $500,000. Large employers have their premiums experience adjusted.
What is "experience adjustment?"
Experience adjustment is when the premium is adjusted to reflect the organisation's recent claims experience.
From WorkCover: Insurance Premiums Questions and Answers (2010-2011)
What is the "basic tariff premium?"
The basic tariff premium (BTP) is your salary cost multiplied by your industry classification rate (ICR). The 2012 Health & Community Services industry classification rate (non-residential) is 3.184%
Eg Salary cost $240K multiplied by ICR 3.184% = $7,641.60
Basic tariff premium less than $50,000:
Total premium cannot exceed 1.5 times the basic tariff premium
Basic tariff premium between $50,000 and $150,000:
Total premium cannot exceed 2 times the basic tariff premium
Basic tariff premium between $150,000 and $300,000:
Total premium cannot exceed 2.5 times the basic tariff premium
Sample claim - with and without quick RTW
- Scenario adapted from the NDS Disability Safe example in its Training Package; figures provided by NDS (April, 2012)
- For more details on calculations related to the above diagram, see the Sample Claim Estimations
What impact does the claim have on the premium?
The impact of the claim depends somewhat on the size of the organisation.
For more details on calculations related to the above diagram, see the MHCC Sample Insurance Premium Estimations
Capping Claims Cost
The cost of an individual claim is capped at $150,000 when used to calculate an employer's premium
The claims excess payment is equivalent to one week of the injured worker's wage.
We act at the very first sign of injury, arranging for early assessment and treatment. If the total expenses required for the claim are less than the worker's weekly wage, it is an "under-excess claim" (which will not increase the premium).
Discount on the premium: a 3% discount (based on the initial premium) applies when a 12-month premium (over $175) is paid in full on or before the due date regardless of the entitlement to instalments. The discount rate is prescribed in the Insurance premiums order.
Make under- excess claims: Act early where possible, and make a claim for less than the excess ("under-excess claim"). This will keep your premium lower.
Better claims performance: Unless you are a small employer, the cost of claims will influence your premium over the following three years.
High claims cost = higher premium.