Written by Workers Compensation Report editor Peter Angelopoulos
Insurance broker Marsh Pty Ltd has urged NSW employers to “liaise closely” with their workers’ compensation scheme agents “to satisfy themselves their claims costs are correct and they understand [them]”.
Marsh workforce strategies principal Robert Peseta told WCR the broker’s guidance followed concerns employers would learn of premium “impacts without notice and with little ability to manage the proposed increases within their business life-cycle and financial frameworks”. Peseta said it was “important to note that [as of Friday July 17] no premium notices have been issued for 2015-16 and our current understanding is these will not be issued before end July”. Scheme agent simulations and projections for employers had filled some of that void, he said. “The timing of premium renewal notice [issuance] can differ significantly as under ‘normal’ timing they can commence from mid-July to early September (as the deadline for submitting estimated wages is end August and from there, the scheme agent calculates premium formally and issues the invoice).” Peseta said the “difference at the moment is that employers by this time of year would have had a reasonable sense of their upcoming premium[s] for the purposes of budgeting”.
A WorkCover spokesperson told WCR that for “the first time in the scheme’s history, WorkCover has removed medical costs and other distractions from an employer’s premium, leaving them to focus on recovery at work where it is safe to do so. A worker may concurrently receive ongoing supportive medical treatment and rehabilitation without impacting their employer’s premium”. The spokesperson said the new premium formula provided certainty on the underlying performance and rewarded employers who invested in their own workplace safety. “Every employer will receive a 10% discount to invest in safety and the 70% of employers that perform better than the scheme average will pay less than the industries average premium rate,” the spokesperson said. “Employers who remain claims free will receive a further 5% discount at the end of the year under the new employer safety reward.”
Peseta said WorkCover had made a premium simulation tool available on its website that demonstrated the formula was not subject to change. “While the changes are very different in methodology, strong messaging from WorkCover has centred around the changes proving to be premium neutral, ie no change.” But, Peseta said, “very much could change” with the total premium pool and distribution within the pool. Peseta said “most if not all” scheme agents were holding employer forums to outline the changes and raise awareness.
The WorkCover spokesperson told WCR WorkCover did “not expect an increase to the overall premium pool with the new model. The scheme actuary has set the pricing components to collect the same premium level as the current year”.
Marsh approached WorkCover about premium simulations; potential outcomes
Peseta (above) said while WorkCover had committed to “the opportunity to reward good performance at the end of the period via a performance discount in the formula, this can’t be quantified as yet and will be subject to a number of hurdles (such as the scheme improving overall) and therefore cannot be guaranteed”. He said “while WorkCover has indicated it will review any ‘outlier’ examples, the reality is there may be some disappointed employers out there as increases will stick”. “As employers will only start to receive invoices in the next few weeks and into August, it is still too early to say definitively what the overall impacts are likely to be,” he said. “If the principle of a premium neutral position is accurate, then where steep increases are presently being modelled, there ought to be commensurate savings for other employers. It must be said this is not the experience so far,” Peseta said.
(This story first ran in Workers Compensation Report 1026, 21 July, 2015)
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