We asked Konekt business partner Willis to provide their view on the impact of the NSW WorkCover premium changes. Willis is a leading global risk advisor, insurance and reinsurance broker.
The details of WorkCover’s premium reforms were recently released. The background to the changes is the improving Scheme surplus following claim benefit reform in 2012-13, and premium reforms for small and medium employers in 2013-14.
The reforms announced in June 2015 apply to all employers with a Base Tariff Premium greater than $30,000, and substantially change the way that premiums are calculated, including how claim costs are calculated.
WorkCover’s intention is twofold. Firstly, to change the way employers manage return to work and safety, by linking premiums to specific claims payment categories. Secondly, to move away from cross subsidisation within the Scheme and toward ‘risk rated premiums’.
WorkCover had advised that the changes would be cost neutral to the Scheme, and indicated that approximately 70% of employers would be better off under the new formula. Current feedback in the market suggests that this is not the case. While we are seeing some clients’ premiums reducing, it appears that premium increases are more common than premium decreases, and the increases tend to be larger than any of the decreases.
Summary of the Key Changes
What have we seen
At the date of writing, no NSW workers compensation has had a 2015-16 premium notice issued using the new formula. However Willis has run simulations for clients using the gazetted methodology. For larger clients with claims, we are generally seeing higher premiums under the new formula, than would have been calculated under the old formula. Examples are shown below:
How can Willis help?
Willis is available to work with you and your insurer to review the impact of the changes on your premium. Willis has been in regular discussion with WorkCover around the changes, and can represent you at that level.
Willis can also assist you in reviewing your calculations when received and strategies to help your business adapt to these changes. Willis has offices in Sydney, Melbourne, Brisbane, Perth, Adelaide and Hobart. www.willis.com.au