The 30 June 2015 NSW changes include a new formula to calculate premiums with a range of new metrics replacing traditional measures. Although designed to make premiums easier to understand, many people are saying the actual result is wide of this mark. In a recent report Workcover Independent Review Officer (WIRO) labelled some workers compensation changes as too complex and confusing.
Key Changes Driving Confusion
- Extended Claims History
Under the old scheme, only two years of prior claims costs impacted premiums. The reforms now extend this to three years, amplifying the effect of past claims. - Exclusion of Certain Costs
Rehabilitation, legal, and investigation costs are no longer premium?impacting. While this seems positive, the extended claims history has already caused significant premium increases. - Comparison Against Scheme Performance
Companies that once looked strong against competitors may now appear weaker, resulting in higher premiums. - Penalties for Poor Claims Management
Businesses struggling with claims management face steeper penalties. Even subtle differences in performance can lead to dramatic cost increases.
Impact on Businesses
These reforms mean that premiums are less predictable and harder to manage. Businesses that previously benefited from strong industry comparisons may now face unexpected increases. The complexity of the system makes it difficult for employers to understand how their premiums are calculated, adding frustration to financial strain.
What Employers Can Do
- Improve Claims Management: Focus on proactive injury prevention and efficient claims handling.
- Seek Expert Guidance: Partner with specialists who understand the reforms and can help navigate premium calculations.
- Monitor Performance Regularly: Benchmark against both industry peers and the broader scheme to anticipate potential increases.
Conclusion
The NSW workers’ compensation reforms were intended to simplify the system, but many businesses are finding them complex and confusing. With premiums rising and performance benchmarks shifting, employers must adapt quickly to protect their bottom line.
Contact us to assist.
Read more below:
Source: Sydney Morning Herald
Title: WorkCover: Changes to workers compensation scheme ‘too complex and confusing’
Read Time: 1-2 Minutes