Category Archives: Workers Compensation

Past-Present-Future: The Actual Impact of Claims Costs on Workers’ Compensation Premiums

A common scenario when we at Aurenda first meet a prospective client is that a poor claims history has led to a whopping increase in the organisation’s workers’ compensation premium. Sure, the immediate consequences of a poor year are often apparent in the direct increase in premium – but have you considered the past and future cost implications as well?

Past

Contrary to popular belief, it only takes one bad year of workers’ compensation costs to have an impact on your workers’ compensation premium, particularly in a hardening insurance market.

  • Higher workers’ compensation costs can be attributed to one or many variables, including:
  • Increase in the frequency and/or severity of injuries
  • Increase in the number of claims as a result of changing business conditions
  • Lack of control over the injury and claims management process
  • Lack of internal responsibility and/or accountability for managing and supervising the recovery of injured workers
  • Failure to provide suitable/ alternate duties in every instance
  • Lack of understanding of the implications of poor injury management
  • Poor communication between the injured worker, employer, medical treatment providers and insurer
  • Poor organisational morale
  • A single claim that blows out because of severity of injury and/or complexity of the issues surrounding the claim

Whilst the primary concern with a premium increase is centred on the immediate financial impact on the bottom line of the organisation, there are very good reasons to remain focussed on the past.

  1. Is there a Claims Experience Discount (CED) for the previous policy period?CEDs can be worth as much as 25% of premium – do you know what your CED is worth? CEDs are paid on a sliding scale – what are the minimum and maximum thresholds for achieving all or part of the CED on the previous policy period? Depending on the actual severity of claims in the previous period, and ratio of paid costs to outstanding estimates, you may still be in a position to obtain some CED from your previous premium at the next insurance renewal.
  2. Future premiums will be calculated on the basis of past claims history.Workers’ compensation is a long-tail insurance product so you need to continue to manage all open claims to achieve the best possible outcome for both the injured worker and your future premium. Outstanding estimates are just that: “estimates”. Anything that can be done to get a better ‘picture’ of the final outcome of the claim in terms of actual paid costs will assist your broker to negotiate the next premium. Finalisation of outstanding claims is obviously the goal, but other strategies can also result in far lower estimates for claims that will remain open over a longer period.

Present

As Tony Robbins says, “If you do what you’ve always done, you’ll get what you’ve always gotten”. Now that you’ve absorbed a massive hit to your premium, what are you going to do about it?

Understanding the reasons for the escalation in claims costs is a good starting point. They could be the consequence of one or many of the reasons outlined above. A note of caution: don’t lay (all) the blame on third parties. The Western Australian workers’ compensation system allows for an incredible amount of employer input and direction into the management of workplace injuries and claims. If, as a business, you are not aware of this or you are not exercising your rights and responsibilities in this area, then you need to understand what they are and how to use them to reduce claims costs – and achieve better outcomes for your injured employees.

In addition, there’s the potential CED on the new premium – likely to be worth much more than last year, now that your premium has increased. Do you know what the financial targets are to achieve the CED? What strategies will you put in place to do something different this year?

Future

Future premiums are affected by past and present claims costs – pure and simple. You may be reeling from a premium increase right now, but if you do nothing to change how you control claims costs going forward, you haven’t seen the worst of it. It can take up to five years of good claims history to counter the impact of one bad year on premiums.

Not only will you face an immediate increase in premium, but the recurring impact means that you may be paying the price for years to come – even without consideration for increases due to the growth of the business.

Of course, the greater the impact you make on reducing claims costs immediately, the lower the potential long-term recurring impact on premiums.

What Now?

Consider the scenario of a company with a gazetted premium rate equating to $250,000. With a 50% loading due to a poor claims history, the actual premium cost is $375,000 in the first year. Assuming that it takes this company five years to get back to their Gazette Rate, the total additional premium paid over that period is $375,000. What could you do with that money?

There are three key factors to address the impact of claims costs on premiums:

  1. Understand which drivers are determining your claims costs – it may be any or all of those outlined above.
  2. Implement specific strategies to counter the individual cost drivers that are impacting your business.
  3. Establish financial targets to reduce claims costs and achieve CEDs – and monitor these targets in conjunction with the people who have responsibility for injury management in your workplace.

As Einstein said, “Insanity is doing the same thing, over and over again, but expecting different results”. Contact Deb Macksy at Aurenda on (08) 6389 8900 or email dmacksy@aurenda.com to discuss how Aurenda can assist you to stop the insanity.

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Kobayashi Maru – What Will You Do?

Every employment situation seems to result in a “no-win scenario”.  What might be the “right thing to do” from a workers’ compensation and/or safety perspective seems to fly in the face of good industrial relations practice – and the law!

In Star Trek lore, Kobayashi Maru describes a situation that is destined for failure.  However, in the words of the legendary Captain James T Kirk, “I don’t believe in the no-win scenario” – and neither do we!

Aurenda and lawyers Jarman McKenna have explored the supposed “No-Win Scenarios” around hiring and terminating employees.  The challenges are created from conflicting legal obligations as set out in workers’ compensation, safety, industrial relations, discrimination and equal opportunity legislations. And as we travel at warp speed through these exposures – and understand the solutions – you will see how “original thinking” can result in wins.

Managing the No-Win Scenario: Getting the Most from Your Pre-Employment Process

Some of the issues that we cover when we study the injury, safety and legal risks associated with the pre-employment process:

  • How do I balance potential workers’ compensation exposures against the risk of discrimination?
  • What questions can I ask – and what questions do I ask?
  • What financial considerations are there – if I get it right and if I get it wrong

Managing the No-Win Scenario: Competing Obligations in the Termination Process

Sometimes there is no “right” answer when looking at your exposures if someone just can’t do their job safely anymore – so understanding which obligation to discharge is a critical aspect of the decision-making process. Your questions might be:

  • What do I do when I know someone is no longer fit for their position?
  • When do I keep someone, and when do I let them go?
  • How do I choose between being “safe” and being “fair”?

Contact Aurenda if you are interested in more on this topic. We are conducting two separate Breakfast Workshops, where our clients will discover how being selective and smart with your employment practises can mitigate your exposure to accusations of adverse action during the hiring and termination process.

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Filed under Aurenda, Pre-employment, Workers Compensation

Workers’ Compensation Payment Amendments for 2012

The annual review of workers’ compensation rates, fees and payments in Western Australia have been published by WorkCover WA. Variations to the Prescribed Amount come into effect on 1 July 2012.

Some of the notable changes include:

The capped amount for weekly earnings has increased from $2,156.60 to $2,351.80 ($112,293.60)

The maximum payment of the prescribed amount (100%) has increased from $190,701 to $198,365.

The amount allocated for capped Common Law has increased from $400,475 to $416,569.

What does this mean for you? If you have workers who are currently on the ‘capped amount’ for weekly earnings, their rates of pay should be reviewed to ensure you are paying them their correct entitlement after 1 July. If in doubt, check with your insurer.

Increases to other entitlements will have an impact on claims costs as they flow through the claims management process, making it more important than ever to ensure that you are managing each and every claim as effectively as possible to mitigate your cost exposures.

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Filed under Aurenda, Insurance premiums, Workers Compensation, workers' compensation amendments

New workers’ compensation laws proclaimed – common law insurance

Following up from Aurenda‘s blog last year (Unintended Consequences of WA’s WC Amendments) the Governor in Executive Council proclaimed 1 August 2012 for the commencement of the Workers’ Compensation and Injury Management Amendment Act 2012.

The supporting Workers’ Compensation and Injury Management Amendment Regulations 2012 are also effective from 1 August 2012.

These legislative changes clarify common law insurance requirements under the Workers’ Compensation and Injury Management Act 1981 (the Act) as a result of legal uncertainty over the scope of the insurance obligation introduced on 1 October 2011 by the Workers’ Compensation and Injury Management Amendment Act 2011.

The legislative changes:

  • Clarify the definition of ‘damages’ for insurance purposes.
  • Provide that employers do not require common law insurance under the Act for ‘deemed workers’ – that is, workers of whom the employer would not be the employer but for being deemed an employer under sections 175 or 175AA for compensation purposes.
  • Retrospectively preserve insurance arrangements for employers of deemed workers insured under public liability insurance arrangements by preventing the denial of cover on the basis that the employer was required to be insured under the Act from from 1 October 2011 to 1 August 2012.
  • Limit, modify or exclude any requirement to hold insurance in respect of liabilities in prescribed circumstances or out of prescribed events. These are consistent with current employer indemnity arrangements and include:
    • a $50 million insurance limit on common law liabilities arising out of a single event.
    • an insurance exclusion regarding any liability to pay compensation or damages arising out of events such as war, military or usurped power.
    • an insurance exclusion regarding any liability to pay damages in respect of injuries occurring outside of Australia or in a jurisdiction outside of Australia.
    • an insurance exclusion regarding any liability to pay compensation or damages in respect of specified industrial diseases arising from employment in any mine or mining operation.
  • Preserve terms, conditions and exclusions in employer indemnity policies to the extent these comply with the corrective amendments in the Amendment Act and Regulations.

For further information on the legislative changes please contact Mr Kevin Gillingham, Manager Policy and Legislative Services at WorkCover WA, on 9388 5640.

Source of this article is Workcover WA

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Filed under Aurenda, Workers Compensation, workers' compensation amendments

Workers’ compensation premiums going up or down over ten years?

Aurenda has been the leader in injury management for ten years and we have seen some interesting changes over that time.

In 2002 the average workers compensation premium rate in Australia was 2.6% of wage roll, compared to 1.6% in 2012 (WorkCover WA).

Average weekly earnings, however, were $697 in 2002 compared to $1526 in 2012 (Australian Bureau of Statistics “ABS”).

This means that if you employed the same 500 people in 2002 as in 2012, your premium would have increased from $470k to $635k. So, you will have to hand over 40% more money and it will be presented as a good news story – maybe some things never change!

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Filed under Aurenda, Uncategorized, Workers Compensation

Injury Management Coordinators Course

Aurenda is excited to announce the introduction of our Injury Management Coordinators Course!

This is the first Employer-Focused program offered of its kind. Learn injury management principles from Australia’s Leaders in Injury Cost Reduction.

Aurenda’s Injury Management Coordinators Course will provide participants with insight into the many aspects of workers’ compensation. Attendees will gain skills and knowledge to enable those who have workplace injury management responsibilities to manage their injured workers in line with the rights and obligations contained in the Workers’ Compensation and Injury Management Act 1981 and Regulations.

Audience: Aurenda’s Injury Management Coordinators Course is designed for anyone who has responsibility for supervising or managing injured workers in the workplace. If you are a Safety Advisor, OSH Rep, Return to Work Coordinator, HR/Administration Advisor, involved in Payroll, or a direct Supervisor or Manager, this is an essential program to learn practical skills to proactively manage injured workers and their claims.

Course Focus: Aurenda’s three day course in injury management encompasses a multitude of topics that are relevant to the effective management of workplace injuries.

Day One:

  •     Workers’ Compensation Legislation
  •     Understanding Workers’ Compensation Premiums
  •     Applying a Compliant Injury Management System
  •     Weekly Payments
  •     Insurer’s Responsibilities
  •     Statutory Settlements and Closures

Day Two:

  •     Injury Management Systems in WA
  •     Planning and Developing an Injury Management Policy
  •     Injury Management Procedure
  •     Processing Claims
  •     Responsibilities of all Parties
  •     Develop rehabilitation programs and return to work plans
  •     Identifying alternate, modified or suitable duties

Day Three:

  •     Implementing Return to Work Strategies
  •     Effectiveness of Rehabilitation Services
  •     Communication Strategies in Workers’ Compensation
  •     Case Studies
  •     Managing Complex Claims

Optional Assessment
Completion of assessment for the unit below will constitute partial completion of Certificate IV of OH&S (BSB41407) or the Diploma of OH&S (BSB51307) qualification: BSBHIRM509A (Manage Rehabilitation or Return to Work Programs)

Our inaugural course is only a few weeks away. Be one of the first to enrol!

Duration: 3 days
Course Date: Wed 25 | Thu 26 | Fri 27 July 2012
Course Times: 8.00am – 4.00pm
Course Fee: $1,100.00 (includes GST component in relation to catering)
Registration Form: To download the Registration form Click here.

Don’t delay, take this opportunity of registering your interest at: training@aurenda.com

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Filed under Aurenda, Health and Safety Representatives, Injury Management, Occupational Health and Safety, Work Health and Safety, Workers Compensation, Workplace Injury

Q. I understand I need an Injury Management Policy? Is this true?

A. In Western Australia, the Workers’ Compensation and Injury Management Act requires all businesses to have an
1.    Injury Management Policy;
2.    Injury Management System; and
3.    Return to Work (Injury Management) Plans for all injured workers with less than a full capacity to return to work.

Just like your OHS Policy, your Injury Management Policy needs to be displayed in the workplace.  There are fines and penalties for not having one in place.  If you are requested to show an employee your Injury Management System you could be fined if you do not have one available.

There are similar requirements in all ten workers’ compensation jurisdictions across Australia; the terminology may change, but the principles are the same!

Your Injury Management System could be developed and maintained –

  • In-house by your own safety or human resources departments; or
  • Externally with the support of Aurenda, who have the expertise and tools to support your team.

Contact Aurenda on (08) 6389 8900 for advice on how to put this in place.

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Filed under Aurenda, Injury Management, Workers Compensation