Each Australian States & Territory have different workers’ compensation legislation & consequently, the method (or formula) used to calculate a workers’ compensation premium. Workers’ compensation insurance premiums are typically based on the business industry, annual wages & a range of other factors that could include claims frequency/costs, underwriting decisions, and various adjustments. The reason why a workers’ compensation premium increases, therefore, depends on a variety of factors.
Key Reasons Workers’ Compensation Premiums Go Up
1. Higher Claims Frequency or Severity
When employees file more claims—or when those claims involve serious injuries—insurers adjust premiums to reflect the increased risk. A single costly claim can impact your Experience Modification Rate (EMR), which directly affects your premium.
2. Changes in Payroll
Workers’ comp premiums are based on payroll. If your business grows and payroll increases, your premiums will too. Even seasonal spikes or temporary staffing can influence your costs.
3. Classification Code Adjustments
Each job role is assigned a classification code based on risk. If your workforce shifts toward higher-risk roles (e.g., more field technicians vs. office staff), your premium will reflect that change.
4. Statewide Rate Changes
Insurance regulators periodically update base rates for different industries. Even if your business hasn’t changed, your premiums might rise due to broader market adjustments.
5. Lack of Safety Programs
Insurers reward businesses that invest in safety. If your company lacks formal safety training, return-to-work programs, or risk mitigation strategies, you may face higher premiums.
6. Audit Findings
Annual audits can uncover discrepancies in payroll, job classifications, or subcontractor coverage. If errors are found, retroactive premium increases may apply.
How ABILITY GROUP Helps You Stay Ahead
At ABILITY GROUP, we don’t just help you react, we help you plan. Our team offers:
- Risk assessments to identify premium drivers
- Claims management support to reduce frequency and severity
- Safety program consulting to improve workplace practices
- Audit preparation to ensure accurate reporting
Take Control of Your Workers’ Comp Costs
Premium increases aren’t random—they’re signals. With the right partner, you can decode them and take action. Contact ABILITY GROUP today to learn how we can help you reduce risk, improve safety, and keep your premiums in check.
Proactive measures to prevent workplace injuries & illnesses can help reduce the frequency (number) and severity of claims, ultimately leading to more stable or reduced premium costs over time.
ABILITY GROUP specialises in actively working with clients to identify workers’ compensation premium reduction strategies as well as their implementation to achieve sustainable workers’ compensation premiums.
Contact our workers’ compensation specialists for help in reducing your workers’ compensation premiums or for further information, please refer to the information below.
Source: icare
Title: Calculating the cost of your workers insurance premium
Read Time: 5 minutes
Source: WorkCover Queensland
Title: Premium calculation
Read Time: 5 minutes
Source: ReturntoWorkSA
Title: Premium calculations
Read Time: 5 minutes
Source: WorkSafe Victoria
Title: Calculation your premium
Read Time: 5 minutes