Minister steps in to prevent 20% insurance shock
Monday, 24 April 2023
The Minister for Work Health and Safety, Sophie Cotsis, has stepped in to save small businesses from being hit with an average 20 per cent insurance premium increase.
Minister Cotsis wrote to icare, the state’s workplace injury insurer, late on Friday directing it to limit average premium increase to 8 per cent in each of the next three financial years.
Minister Cotsis acknowledged this would still be incredibly tough on small businesses, but noted the an average increase was limited to 8 per cent in future years there was a lot more work ahead to put downward pressure on any average increase.
However, the Minister warned against false hope, saying it would still take years to fix a decade of dysfunction in the state’s injured workers compensation system.
Incoming briefs received by the new government warn that the nominal insurer is so seriously run down it will not regain financial sustainability without significant premium increases.
The briefings make clear that the primary reason for this is the previous government’s refusal to put in place adequate rate increases between 2014 and 2021.
The previous government was warned last year it would need to increase premiums by 15 per cent – and if it didn’t, even higher increases would be needed in future years.
Currently the average premium rate is 1.48 per cent of wages, well below both the break-even point of 1.91 per cent and the national average of 1.7 per cent.
This crunch point comes after years of scandal including a $140 million IT contract awarded in a seven-day tender and an $18 million printing contract awarded without tender to the Liberal Party’s printer and a major donor.
In 2018, icare launched a model where the new claims were largely managed by a single claims service provider – a move which injured workers and businesses both agree was a disaster. Icare is now moving away from this model.
“Since taking office I have been advised of the parlous financial state of the workplace injury system. It is entirely unacceptable,” Ms Cotsis said.
“Small businesses have been through so much hardship over the last few years. We are putting in place an immediate process of reform with the needs of both business and workers paramount.
“It will take years to fix a decade of decline in the workers compensation system, but the reform starts now.”
Example Case Study of an 8% average premium increase in FY2023/24
The premium that an individual employer will be charged is dependent on a number of factors including the industry of the employer, the total wages paid and the employer’s claims experience.
For example, a small business restaurant owner whose wages are $200,000 and has a premium of $3,700, can expect a new premium of approximately $4,000 in FY 2023/24, an increase of $300.
icare offers a 7.5% premium discount incentive for employers who have a good safety record. Employers can also pay their premium by the month or if they chose to pay the full amount by the due date, they will receive an additional 3% premium discount.
A focus on prevention and proactively supporting injured workers to return to work is the best way to keep premiums low.
For specific enquiries about their premium, employers can contact icare on 13 44 22, 7am-7pm Monday to Friday.