For most businesses, June is the renewal month for your Workers Insurance (WI) premium…which means that by now you will have received your renewal or pre-renewal pack from icare.
At MTC, we want to make this renewal process as simple and easy to follow as possible for businesses in the Motor Trades Industry, so along with our June Edition of InMotion which aims to give you hints and tips on how to help your business navigate the process to the best of your advantage, we’ve also provided some more in-depth information around what Workers Insurance is, what’s included in your renewal packs from icare as well as some helpful calculations.
The basics
Workers Insurance (WI) provides support and assistance for people injured at their workplace or while performing their work duties, including illness from an occupational disease.
Support and assistance can include such things as wages, medical and hospital expenses and a range of other benefits to help with injury recovery and timely return to pre-injury work.
WI is compulsory for all Employers in NSW, unless you are1 exempt. Your WI policy premium depends on the size of your business and what you do. The State Insurance Regulatory Authority (SIRA) is the NSW Government agency responsible for regulating the states Workers Insurance System or Scheme. Insurance and Care NSW, aka icare, provide WI policies and services to NSW businesses and they have a number of Authorised Service Providers (ASPs) that help them administer any claims made against these policies. No doubt, if you are a WI Policy holder you would have dealt with one or more of these ASPs which includes:
- Employers Mutual NSW Limited (EML)
- Allianz Australia Workers Compensation (NSW) Limited (Allianz)
- GIO General Limited (GIO)
What WI applies to your business?
Your WI policy and the premium you pay is largely based on the industry you’re in (classification), the cost of your annual wages and a range of other factors including incentives and discounts, however, we can simply categorise policies and premiums into two employer groups, Small Employers and Experience Rated Employers.
The starting point for all premiums is a calculation of your estimated annual wages and your workers compensation industry classification (WIC). This calculation is called the Average Performance Premium (APP).
Operational hazards and the risk of injury or illness can differ from one industry to the next, which is why a risk based industry classification rating is used in calculating APP. What this means is that those industries with a higher risk rating may have a higher premium than another less risky industries, even though their annual wage costs are the same.
So, for example, let’s say you are a car dealership and your annual wages is estimated at $1 million. The industry classification that would be applied to your APP calculation would be Car Retailing, code 531100 and the WIC rating would be 1.110%, therefore, the calculation would look something like this:
|
Wages |
X |
WIC Rate |
= |
APP |
or in real terms
|
$1,000,000 |
X |
1.110% |
= |
$11,100 |
It is the starting point APP calculation that determines what employer group you fall into and consequently what other factors may be applied to finalise your annual total premium amount.
The links below provide further guidance on industry WICs and are useful reference tools when reviewing your Workers Insurance policy and premium information.
Small Employer?
If your APP is calculated at $30,000 or less you are considered to be a Small Employer (SE). The premium you will pay is generally calculated (for our industry) as follows:
|
Small Employer |
||||||||
|
Premium |
= |
APP |
+ |
Dust Disease |
– |
– Employer Safety
Incentive (ESI) – Performance
Discount (PD) – Apprentice
Incentive Discount (A) |
+ |
– Premiums – Catastrophic |
Additional premium inclusions:
- insurer administration charge
- scheme administration charge
- goods and services tax
IMPORTANT NOTE: Claims history i.e. premium impacting costs of your claims is not part of the SE premium calculation, however, we must keep in mind that claims performance does impact the overall scheme and therefore our Industry WIC rate. This means that if our claims performance is poor our industry pays more which results in you paying more premium!
The link below provides more information about the premium calculation, definitions and an easy to follow example.
Small Employer Premium Calculation
Experience Rated Employer?
If your APP is calculated at more than $30,000 you are considered to be a Medium to Large Experience Rated Employer (ERE). ERE’s premiums are claims performance adjusted, i.e. three years history of premium impacting costs of your claims are included in the calculation. The premium you will pay is generally calculated (for our industry) as follows:
|
Experience Rated Employer |
||||||||||
|
Premium |
= |
APP |
X |
Claims (Three year claims history) |
+ |
Dust Disease |
– |
– Employer Safety
Incentive (ESI) – Employer Safety
Reward (ESR) – Performance
Discount (PD) – Apprentice
Incentive Discount (A) |
+ |
– Premiums – Catastrophic |
Additional premium inclusions:
- insurer administration charge
- scheme administration charge
- goods and services tax
IMPORTANT NOTE: Claims performance has a direct and indirect impact on the premium you pay. If your claims performance is poor it impacts the overall scheme and therefore our Industry WIC rate. This means you could feel the cost impact of a poor claims performance in both a WIC Rate increase (indirect) and an adjustment to your APP (direct). Simply put, poor claims performance is not good for the bottom line!
The links below provide more information about the premium calculation, definitions and an easy to follow example.
- Experience Rated Employer Premium Calculation
- Loss Prevention and Recovery (LPR) Model for Eligible Employers
Renewal Pack Information – small business
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Renewal Pack Information – Small Business – May 2020 |
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|
Pack |
Information Included |
Call to Action |
|
Single Renewal Pack received by:
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1. Make sure you read this document as it provides you with information about what to do with your pack and gives you a brief explanation of your premium calculation. The Small Employer Premium Calculation link has definitions to help you understand the different components included in the calculation. Make sure that the correct WIC has been used in your APP calculation. Make sure that the Wages amount used in your APP is an accurate estimate of your next 12 months wages for the policy period. If there is a material difference, the fastest and easiest way to update this is to call icare workers insurance support on 13 44 22. |
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2. Provides information about adjustments to your premium due to COVID-19, specifically how JobKeeper payments are treated.
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3. This document provides you with an outline of the terms and conditions of workers insurance. Again, it’s important you don’t miss the fine print, so take the time to read this statement. |
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4. This document provides you with an overview of the icare workers insurance product. It’s important you don’t miss the fine print, so take the time to read this statement. |
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5. This is a common definitions supplement and can be used to help you understand the terms and references used in other pack documents. |
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6. You are required by law to display this poster in your workplace where it is easily accessible. Ensure you complete the correct details at the bottom of the poster before displaying it. |
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7. Complete and submit your declaration of actual wages form for the prior policy period as your wages may have changed over the 12 months. Do this within four months. You may be eligible for a refund if your actual wages are less than the amount used in the initial premium calculation. It is particularly important if COVID-19 has reduced your workforce. Also be aware that wages declaration periods need to align with your policy period, not the tax year and that the amount should be exclusive of GST. This could make a big difference to your premium amount. |
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8. If you pay your invoice in full by the end of July you could receive a 5% discount on your premium. If your APP is more than $1000 you may be able to pay your premium in monthly or quarterly instalments. Just keep in mind if you make installment arrangements you will no longer qualify for the 5% discount when paying the full premium by the end of July. If you have contacted icare to make changes to your WIC code or estimated wages for 2020/2021, a new invoice may be required. If you are not expecting a new invoice, keep hold of this invoice for your records as you will not receive another one. |
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9. This certificate is confirmation you have the required workers insurance in place and they send it to you so you can get on with business. Make sure the details are correct and call icare workers insurance support on 13 44 22 if you need to correct any details. Keep this certificate as you may be required to submit a copy to other government agencies or businesses you supply to prove you have the insurance in place. |
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The Renewal Packs – Medium/Large Employers – May 2020 |
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Pack |
Information Included |
Call to Action |
|
Pre-renewal Pack received by:
|
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1. Make sure that the Wages amount for your renewal premium is an accurate estimate of the next 12 months wages for the policy period. If there is a material difference the fastest and easiest way to update this is to call icare workers insurance support on 13 44 22. Updating your 12 months wages now will mean that when you receive your renewal pack in mid-July, the premium calculation will be more accurate to your circumstances, specifically if you anticipate an ongoing impact from the COVID-19 pandemic. |
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2. This document provides you with an outline of the terms and conditions of workers insurance. Again, it’s important you don’t miss the fine print, so take the time to read this statement.
|
|
|
3. This document provides you with an overview of the icare workers insurance product. It’s important you don’t miss the fine print, so take the time to read this statement. |
|
|
4. 1. This certificate is confirmation you have the required workers insurance in place and they send it to you so you can get on with business. Make sure the details are correct and call icare workers insurance support on 13 44 22 if you need to correct any details. Keep this certificate as you may be required to submit a copy to other government agencies or businesses you supply to prove you have the insurance in place. |
|
(this may have been received separately) |
5. Provides information about adjustments to your premium due to COVID-19, specifically how JobKeeper payments are treated. |
|
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The Renewal Packs – Medium/Large Employers – July 2020 |
||
|
Pack |
Information Included |
Call to Action |
|
Complete Renewal Pack received by:
|
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1. Confirmation you’re your premium renewal has been finalised. The letter sets out 2 steps including how to setup your premium payment and a reminder to complete your Declaration of Actual Wages. |
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2. Make sure you read this document as it provides you with information about your workers insurance performance, some tips on how to reduce your premium and how your premium was calculated. You will notice in the “summary of your Claims Performance Calculation” section there are a number of factors considered in the calculation which are not in the actual premium formula. The Experience Rated Employer Premium Calculation link has definitions to help you understand the different components included or considered in the calculation. |
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3. This is a common definitions supplement and can be used to help you understand the terms and references used in other pack documents. |
|
|
4. You are required by law to display this poster in your workplace where it is easily accessible. Ensure you complete the correct details at the bottom of the poster before displaying it. |
|
|
5. Complete and submit your declaration of actual wages form for the prior policy period as your wages may have changed over the 12 months. Do this within four months. You may be eligible for a refund if your actual wages are less than the amount used in the initial premium calculation. It is particularly important if COVID-19 has reduced your workforce. Also be aware that wages declaration periods need to align with your policy period, not the tax year and that the amount should be exclusive of GST. This could make a big difference to your premium amount. |
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6. 1. If you pay your invoice in full by the end of July you could receive a 3% discount on your premium. You may be able to pay your premium in monthly or quarterly instalments. Just keep in mind if you make instalment arrangements you will no longer qualify for the 3% discount when paying the full premium by the end of July. If you contacted icare to make changes to your WIC code or estimated wages for 2020/2021, your invoice is most likely correct, but make sure to check the details again to be sure. If you do not require further changes and therefore do not expect a new invoice, keep hold of this invoice for your records as you will not receive another one. |
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