Contact: Claudia Lassetter
Deloitte
Media Relations
0438 264 530

Contact: Stephen Windmill
Deloitte
Director - OH&S practice
02 9322 7193

Many employers in NSW will be able to reduce the cost of their work cover premiums by up to 30%, following recent changes to the way workers compensation premiums are calculated, reports Deloitte OH&S specialist, Stephen Windmill.

Welcoming the changes, Stephen commented, "The changes, introduced in an effort to move towards a more equitable system where a ‘user pays’, mean that employers with a low cost of claims will see their premiums reduce. For instance, an employer who contributes $600,000 in premiums may be able to reduce this by $180,000 if they improve their management of OH&S and return to work processes.

"This is good news for employers who have been investing time and money in Occupational Health and Safety and return to work strategies," he said.

"The changes will ultimately benefit employees as there will be an even greater focus on injury management, safety at work and on creating a safer work environment, potentially reducing the number and severity of injuries.

"Conversely, employers with a higher cost of claims will pay higher premiums. This will provide a strong incentive for those employers to review their injury management procedures, so as to improve return to work rates and minimise claims," he said.

The new calculations apply to all policies with a renewal date and time of 4PM on 31st December 2005 or thereafter. The formula used to calculate workers compensation premiums will now benchmark the claims cost of an employer against their industry classification, resulting in a fairer system.

By 30th June 2006, approximately 70% of all policies will have been affected.

Windmill recommends employers check that they are appropriately classified in their own industry, as this will impact benchmarking. For instance, a book retailer will have a lower incidence of accidents, than, say a book wholesaler where there is greater risk of accident, resulting in higher premiums.

The change also represents a great opportunity for employers to re-visit Occupational Health and Safety and injury management processes and policies, to ensure they have the most effective systems for the prevention of injuries as well as proven approaches to rehabilitation and return to work procedures.

Further changes to the NSW WorkCover scheme can be expected over the next six to twelve months; these will serve to increase the importance of employers managing their cost of claims and will further impact the premium paid by employers.