Insurance Premium Reductions – Follow Up #2

Following WorkCover NSW’s recent announcement of industry rate reductions (see the original article here, and our follow-up here), further details of changes made to the Scheme for small employers have now been made available.

WorkCover states that the changes are intended to decrease administration and create savings for smaller businesses, while increasing focus on injured workers, and providing small employers with more incentive for proactive claims management.

These changes will be effective for policies renewing 30 June 2013 onwards, and please note that all of these changes relate ONLY to small employers.

Changes include:

  • Small Employer Definition – The small employer limit has been increased from $10,000 to include employers with an annualised Basic Tariff Premium (BTP) of less than or equal to $30,000. This means that premiums of employers with an annualised BTP of $30,000 or less will not be impacted by claims cots. BTP is calculated by multiplying your wage roll by the WorkCover set rate for your industry.
  • Renewal Premium – Agents will no longer ask small employers to provide a declaration of estimated wages. The 2013/2014 premium will be based on the current year’s estimate. From 2014/2015 onward, the renewal premium for small employers will be calculated on the actual wages, plus a determined adjustment factor such as the CPI (Consumer Price Index). If actual wages are not submitted, the renewal premium will be determined using the estimated wages plus 30%. If wages are expected to differ by 25% or more from the renewal figure, the agent can be advised and the premium amended.
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  • Adjustment Premium – The timeframe to submit the declaration of actual wages has been increased from two months after the end of the insurance period, to four months. If the declaration is not received within six months, the premium will be nil adjusted.
  • 5% Premium Discount – If the annual premium is paid in full by the due date, the early payment discount is now 5% instead of 3%.
  • Employer Safety Incentive (ESI) – Each policy year if all injured workers’ return to full time pre-injury duties with 4 weeks of the date of injury a 10% reduction in premium will be given by WorkCover. This discount will be automatically applied, and will only be removed if the employer doesn’t meet the conditions during the year.
  • Return to Work Incentive (RTWI) – If the employer doesn’t meet the conditions for the ESI (above), they can still get a 10% discount if every worker injured during the policy period returns to work within 13 weeks from the date of injury. The RTWI is applicable only if the employer is no longer eligible for the ESI.
  • Renewal Dates – A small employer’s policy will be adjusted to align to the end of the calendar month prior to the current renewal date, if it does not already align to a calendar month end. E.g. a 29 September policy will be shortened to expire on 31 August.

If you have any questions or would like further information about these changes, please contact Caleb Kleinig at WCD on (02) 8745 2020.