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Insurance Benefits


This is an extract from a letter that a Major Insurance Company wrote to its clients:


Employers with workers compensation claims costs lower than the scheme average through the implementation of

effective safety systems and those who proactively support injured workers to return to suitable work safely are being

rewarded with a performance discount”


Several components add up to how much your annual workers compensation premium will be, if you know what they are

and which ones you can control, you can then work on reducing them.


Workers compensation insurance premiums are based on a number of components including:

The industry in which the employer operates (the industry premium rate takes into account the costs of compensation

claims that have occurred in the industry)


The amount of wages the employer pays to its workers


The costs of any claims made by their workers (for employers with a basic tariff premium greater than $10,000 and with

wages greater than $300,000)


The dust diseases levy

The mine safety premium adjustment (for mining industry employers)

The components that are out of your control are the industry tariff, cost of medical providers and the dust levy.

Following are some ideas on how you can potentially reduce your workers compensation premium.


Ensure proactive safe systems at work to minimise injuries


One of the major components you can control is people not getting injured in the first place. Ensuring safe systems of work

and regular hazard identification and workplace inspections will help with this. Ultimately, the safer workplace you have

will lead to fewer injuries that occur which will result in less claims and a reduced premium. Basically, a reduction in your

workers compensation claims will equal a reduction in your workers compensation premium.



Understand the cost of claims


The main factors to a cost of claim are - the type of injury sustained; the amount of lost time incurred; the length of time a

claim is open; and how many claims remain open from one premium year to the next.



Never use uninsured subcontractors


This is common amongst employers particularly in the construction industry. If you do not ensure a subcontractor has the

correct and proper workers compensation insurance, they will be covered by your workers compensation insurance if the

subcontractors are injured while working for you. This will then in turn increase your premium and you will have an owing

to your insurer for the end of year premium audit, plus it will increase your premium for the next three years policies.


The above list of ideas to reduce your workers compensation insurance premium can be done independently, however,

combining them and implementing them all will provide a greater affect for your organisation and provide a better

reduction in your workers compensation insurance premium.



It is important to remember the best way to minimise your workers compensation insurance premium is by

providing a safe work environment and not injure or cause illness to your employees.



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