The target collection premium rate will be reduced by 5 percent for policies commencing or renewed on or after 31 December 2007. 

Not all employers will receive a five percent premium reduction.

The reduction will not apply uniformly to all employers, however no employers’ basic tariff premium rate will increase.

This is because the basic tariff premium rates for individual industries will be simultaneously adjusted to more accurately reflect the true cost of claims within each industry.

The size of these adjustments will be capped, so that even where industry claims experience has been poor, an employer’s basic tariff premium rate will not increase. 

Where industry claims experience has been good, basic tariff premium rates may be reduced by more than 5 percent.

Premiums for medium and large size employers will also still be adjusted based on their individual claims experience.

How are tariff rates set?

The target average premium rate is set to ensure that the WorkCover Scheme collects sufficient premium income to cover the anticipated costs associated with claims to be incurred during the year.

Basic tariff premium rates for each industry classification are set to reflect ‘risk’ in that industry. WorkCover's actuaries calculate each WorkCover Industry Classification (WIC) rate using the historical costs of claims - ie. costs associated with all the workplace injuries in that classification over the past five years, excluding the most recent year (as these costs are not yet fully developed) - and the wages of the industry - in terms of wages paid to workers  and declared by employers for premium calculation purposes.

My last policy renewal date was 30 June 2007. Can I have my premium recalculated?

No.  If there is a reduction in your WIC rate, it will only apply to policies that commence or renew on or after 31 December 2007.  Your next premium renewal will be calculated using the new industry rate.  However, you did receive the 5 percent rate reduction that applied to policies commencing on or after 30 June 2007.

My policy commenced on 30 June 2007. Can I short term my policy to a new commencement date of 31 December 2007 so that the new rate will apply to my premium?

No, policy periods must be for 12 months. Short terming is only allowed in certain circumstances, such as to align with the financial year. Any short terming arrangements must be made with your Scheme Agent prior to the commencement date of the current policy period.

Can I cancel my policy and take out a new policy, which commences from 31 December 2007 with another Scheme agent?

No, a policy cannot be cancelled mid term unless the employer has ceased trading.

My policy renews on 31 December 2007. Will the 5 percent average rate reduction apply to my premium?

Yes, however, the five percent average premium rate reduction will not apply uniformly across all basic tariff premium rates. Tariff rates will be adjusted to reflect the level of risk within each industry. As a result, some employers may experience a reduction greater than 5 percent in the basic tariff rate.  Where an industry’s claims experience has not improved at the same level as the overall Scheme improvement, there will be no change in their basic tariff rate.

Premiums for medium and large employers will still be adjusted as a result of individual claims experience.

Will this rate reduction have any affect on the F factors for 2006/07?

Due to the introduction of a new, more equitable experience premium formula from 31 December 2005, F factors are no longer used for premium calculations.

The Industry Claims Cost Rates (ICCRs) that will be used in the experience formula will be calculated to include the premium rate reductions relevant to the policy period.

Will this rate reduction affect the 2007/08 Industry Claims Cost Rates (ICCRs) used for calculation of my experience premium?

Yes. The 5 percent average rate reduction will be incorporated into Industry Claims Cost Rates (ICCR’s) to be used in experience premium calculations from 31 December 2007.