• Burning Cost Premium Model
  
• Greater incentive to improve performance 
  
  • Introduction of a simpler, fairer experience formula based on an employer’s claims experience relative to their industry’s (WIC) experience.

• Increased protection for small employers:
  
  • Two-tiered threshold to be applied for experience rating - experience rating to apply to those employers with wages greater than $300,000 and a basic tariff premium greater than $10,000. This will mean greater protection for employers following a claim, as only the largest 8 per cent of NSW employers will have their premium adjusted to take into account claims costs.
  • New caps to be applied to maximum premium increases to provide greater protection to medium sized employers when they experience high claims costs.

• Fairer determination of experience rating
  • Employers will be assessed for experience rating at the start, and again at the end, of the policy year to help prevent premium avoidance. Where a small number of employers seek to avoid paying their fair share of premium the result is premium increases for all other employers in the Scheme.
    

• Additional incentives to employers to reduce the cost of claims
  • Claims excess payment to be changed from $500 to the equivalent of one week of the injured worker’s weekly compensation to provide employers with a greater incentive for earlier management of workplace injuries.
  • The claims excess will be waived for all employers, if the injury is notified within five days of the employer becoming aware of the injury. The option for small employers to buy out the claims excess payment by a surcharge on their premium will be discontinued.
  • New employers who have a basic tariff premium greater than $10,000 and wages greater than $300,000 will be experience adjusted for their first and second policy years using the wages and cost of claims incurred in these periods. In the past, new medium and large employers were only experience adjusted after two years in the Scheme. This change will ensure a fairer sharing of claims costs by all employers. 

• Grouping arrangements
  • For policies commencing on or after 30 June 2006, employers that are related entities with combined wages of more than $600,000 will be grouped for workers compensation purposes. All members of a group may continue to have separate policies but are required to be insured with the same Scheme Agent and have a common renewal date for all policies. The experience adjustment factor (S factor) of the premiums of grouped employers is calculated using the combined basic tariff premium of the group.
    
    Some charities and other not-for-profit organisations will be able to apply to WorkCover for exclusion from grouping status if those group members are not in direct competition with for-profit businesses.

Next Stage of Reforms

Making premium forms easier to understand

• Scheme agents to implement changes to premium forms to clearly outline how employers’ premiums are calculated and the impact that claims have had on a business’ premium.

Instalment Options

These reforms also provide for payment of workers compensation premiums by monthly or quarterly instalments, to enable businesses to better manage their cashflow.

Under the reforms all Scheme Agents must provide the new instalment options by 30 June 2007, however, instalments may be made available earlier where an Agent is able to offer this option.

  For more information on the Premium Review reforms