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An employer's premium is calculated twice during the period of the insurance policy. The initial premium (called the premium estimate) is calculated at the beginning of the policy period. It is based on an estimate of wages that an employer is likely to pay during the policy period. The final premium (called the hindsight premium) is calculated at the end of the policy period. It is calculated using the actual amount of wages paid by the employer during the policy period. If the hindsight premium is higher than the initial premium, the employer will need to pay the difference to their Agent. If the hindsight premium is lower than the initial premium, the employer’s Agent will repay or credit the employer any overpayment. Basic tariff premium An employer’s basic tariff premium is calculated by multiplying the employer's wages by the percentage WorkCover Industry Classification (WIC) rate of the applicable industry class. Where the employer has a multi-tariff policy, this formula is repeated for each applicable industry class, and the outcomes added together to produce the total basic tariff premium. For a small number of industry classes, basic tariff premium rates are expressed as a per capita rate (eg. professional sport) or a per plate rate (eg. taxis and hire cars). The minimum premium is $175, even if the calculation produces a lower amount. For policies covering domestic workers - ie. a policy for a householder to cover a person employed to clean a private residence - the minimum premium is $38.00. Employer categories for new or renewed policies commencing after 4.00pm on 31 December 2005: Small employers Have a basic tariff premium of $10,000 or less or annual wages equal to or less than $300,000. Small employers do not have their premiums experience adjusted. Medium employers Have a basic tariff premium of more than $10,000 and equal to or less than $500,000 and annual wages of more than $300,000. Medium employers have their premiums experience adjusted. Large employers Have a basic tariff premium of more than $500,000. Large employers have their premiums experience adjusted. An employer’s category will be assessed for the experience adjustment threshold at both the start and end of the policy year. Experience adjustment formula for medium and large employers The former experience adjustment formula that used experience factors (F factors) has been replaced with a simpler, fairer formula that more accurately reflects the claims experience performance of a business compared to other employers in the same industry WIC. For new or renewed policies commencing on or after 4.00pm 31 December 2005, caps will be applied to provide employers with greater protection from significant experience-based premium increases. For employers with a basic tariff premium: - less than $50,000, the total premium cannot exceed one and half times the basic tariff premium
- is equal to or greater than $50,000 and less than $150,000, the total premium cannot exceed two times the basic tariff premium
- is equal to or greater than $150,000 and less than $300,000 the total premium cannot exceed two and a half times the basic tariff premium.
Experience premiums for medium and large employers For the purpose of calculating a medium or large employer's experience premium, claims costs include: - all payments made by the insurer in respect of the claims, including weekly benefits, medical expenses and service provider costs
- the estimated costs of all future payments arising from the claims, calculated in accordance with WorkCover's Claims Estimation Manual, as at the expiry or renewal date of the policy. See 'further information'.
The initial experience premium is calculated using the employer’s wages and adjusted claims costs for the previous two years of insurance cover. The hindsight experience premium is calculated using the employer’s wages and adjusted claims costs for the previous two years, together with the wages and adjusted claims cost for the current year of cover. Mine Safety Fund The Mine Safety Fund was established with the passing of the Mine Safety (Cost Recovery) Act in December 2005, following recommendations that came out of the Mine Safety Review undertaken earlier that year. The purpose of the Fund is to provide for mine safety regulation in NSW by the Department of Primary Industries. Employers in the WorkCover Scheme with wages in the mining industry will contribute to the Mine Safety Fund through an adjustment to their workers compensation premium. The Department of Primary Industries will determine the contribution required to be made to the Fund annually. For employers whose policies commence on or after 30 June 2006 your workers compensation Scheme Agent will collect your contribution to the Mine Safety Fund. The Mine Safety Fund premium adjustment amount will appear as a separate amount on your premium notice. The adjustment for 2006/07 will be 1.186 per cent of wages and applies to those employers within WorkCover Industry Classification Codes 120000 to 152000. The Mine Safety Fund rate will be set annuallyand published in the Insurance Premiums Order. For more information on the Mine Safety Fund contact the NSW Department of Primary Industries by phoning 1300 736 122 or visit the Department of Primary Industries website.
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