Workers' compensation remains one of the most challenging costs for NSW employers to control. Economic uncertainty, skills shortages, and rising regulatory expectations are stretching leadership teams. IN May 2026 icare premium update confirms these pressures are intensifying.
icare's update is not just about pricing or premium formula, rather the update explains how icare is now applying premiums, rewards, and penalties in practice and why many employers are facing increases well beyond expectations. Premium outcomes are now directly tied to how well safety, injury management, recovery, and return to work are handled.
What the May 2026 Update Confirms
Average Premium Increase – 8%
- The average NSW workers compensation premium rose 8% for 2025–26, the third and final year of capped increases.
- “Average” does not mean uniform:
- Some employers will see little or no increase
- Others will face rises well above 8%, depending on claims performance and industry risk
- Premiums are now shaped by industry risk, claims history, and injury management effectiveness.
Excess Changes – First 10 Days Employer-Paid
- Employers are now responsible for the first 10 days of excess on claims
- This change increases the importance of early intervention and proactive injury management
Wage Inflation Impact
- Wage inflation of nearly 4% may push some businesses from “small employer” to “medium employer” premium calculations
- For small businesses with claims in the past three years, this shift could significantly increase costs
Minimum Premiums Higher
- Minimum premiums increased from $225 to $240
- For small and micro businesses, accuracy is critical: wage declarations, activity codes, and early claims involvement all help avoid unnecessary escalation
Claims Performance - The Key Cost Driver
- Rising claim complexity, especially psychological injuries, continues to pressure the scheme
- Premiums now hinge on:
- Claim frequency and duration
- Return to work outcomes
- Psychological injury management
Employers with strong systems are better protected, while passive approaches are leading to sharp increases.
Safe Employer Reward (SER) – Harder to Access
- Discounts up to 7.5% remain available, but eligibility is tighter.
- Requirements now include:
- Mandatory wage declarations
- Demonstrated performance in claims and recovery outcomes
- Rewards are no longer automatic; they require active, effective systems
Why Employers Are Paying More Than Expected
ABILITY GROUP sees recurring issues among employers surprised by renewal premiums:
- Late or incorrect wage declarations
- Poorly managed psychological injury claims
- Weak return to work coordination
- Limited suitable duties planning
- Failure to challenge escalating claims
Unmanaged claims rarely resolve themselves; they almost always drive premiums higher.
What Employers Should Do Now
Review Claims Portfolio
- Identify high-cost or long-duration claims
- Re-engage in recovery planning
- Escalate stalled claims early
Strengthen Psychological Injury Prevention
- Conduct psychosocial risk assessments
- Build early intervention pathways
- Train managers in role clarity and support
- Apply consistent performance processes
Prepare Early for Renewals
- Forecast premiums before renewal
- Review classification codes
- Correct wage and activity data
- Engage advisors early
How ABILITY GROUP Helps
We partner with businesses to help contain costs through:
- Proactive claims management
- Injury prevention strategies
- Psychological risk controls
- Return to work optimisation
- Premium forecasting and reduction planning
Our focus is sustainable cost control and resilience, not short-term fixes
Need help?
The May 2026 icare update underscores a fundamental shift: premiums now reflect leadership, systems, and workplace culture, not just claim numbers. Employers who invest in safety, injury management, and recovery are best placed to stabilise and reduce premiums in a tightening scheme. For more information or to get help now, contact us
Further Information
Source: icare
Title: Understanding your premium
Read time: 5+mins