January 2024 Market Update – Workers Compensation

In NSW, the workers’ compensation scheme is expected to face continued financial challenges. The 8 per cent average premium rate increase for the 2024 financial year is likely to be enforced by icare over the next three years (including the current period), resulting in a significant 24 per cent increase by the 2026 financial year. The replacement of the Employer Safety Incentive (ESI) discount with SER, coupled with the industry rate increases, significantly impacted employer premiums this year.

While icare have shown their intent to broaden choice for employers in 2024 by expanding Claim Service Provider (CSP) options to 6 (EML, Allianz, QBE, GIO, DXC and Gallagher Bassett) with the expectation of improved claim performance, a clear date has not yet been confirmed.

Employers should continue to prepare for cost increases and focus on improving claims performance to mitigate the impact as much as possible.

In the current 2024 financial year, WorkCover Queensland has seen a relatively modest uptick in its average net premium rate, which rose to $1.29 per $100 of wages, reflecting a slight increase from the preceding year’s rate of $1.23 (in FY23). Notably, this adjustment marks one of the rare instances of premium rate increases in over a decade for the state.

Despite this marginal increase, WorkCover Queensland is well-positioned to maintain its competitive edge in the workers’ compensation landscape for the upcoming year, particularly when compared to other Australian states. Its robust track record of achieving strong return-to-work rates and its traditionally low average premium rates are expected to continue, offering a reassuring outlook for employers and policyholders as they navigate the workers’ compensation landscape in FY25.

ReturnToWorkSA’s (RTWSA) decision to implement an average premium rate increase for the 2024 financial year signifies a proactive effort aimed at achieving greater stability within the workers’ compensation scheme. The government’s legislative modifications in 2022, were introduced by RTWSA to safeguard the scheme’s long-term sustainability. By putting measures in place that help control and manage costs, these legislative changes are anticipated to act as a buffer against significant future increases in premium rates.

While employers in South Australia can anticipate a slight uptick in their premiums, they can take solace in the fact that this adjustment should lead to a more financially secure workers’ compensation scheme, ultimately benefiting both businesses and workers alike by ensuring continued support and coverage in the event of workplace injury.

Victoria’s workers’ compensation scheme is anticipated to undergo significant changes in response to considerable recent financial strain. The 42 per cent increase in premiums for the 2024 financial year, along with the higher premium capping and claim capping, will likely have a substantial financial impact on employers again in FY25. The exclusion of stress and burnout from weekly benefits is expected to continue as one of the main strategies by WorkSafe to address the rising cost of claims across the state however the Victorian government is facing heavy criticism for the proposed laws aimed at limiting compensation for mental health injuries.

In a recent 9news article, it stated that Premier Jacinta Allan has addressed the concerns and warned of potential steep premiums if the laws fail to pass parliament, arguing that they aim to address the rise in mental health claims. The reforms would exclude employees claiming stress and burnout from weekly benefits but offer 13 weeks of treatment support. Business groups support the changes, while opposition and unions deem them “flawed,” expressing concerns about injured workers being left without necessary support.

This debate is likely to continue as the government seeks to ensure the scheme’s sustainability and avoid further premium increases however depending on the outcome, employers in Victoria should budget for these increased costs and explore strategies to manage claims effectively.

The emergence of Trinity Insurance as an alternative Catholic workers’ compensation provider in NSW provided some relief for employers this year following the exit of Catholic Church Insurance (CCI). The scheme is currently in its infancy so it is difficult to assess how it is performing in comparison to icare however several potential areas of focus for the new scheme are likely to include potential expansion into additional jurisdictions, the prospect of competitive premium rates, tailoring services to meet the unique needs of religious institutions, investing in efficient claims management and robust mental health support, adopting innovative technological solutions, and sustaining long-term viability.

As more employers consider Trinity Insurance during the upcoming renewal periods, it will be intriguing to observe how the scheme navigates an increased claim and policy workload while upholding its commitments to policyholders without compromise.

If you would like additional information regarding the national workers’ compensation schemes or to discuss how you can reduce your workers’ compensation premium, please contact Andrew Jamieson and the Bellrock Benefits team.

For more in depth market updates by product class, profession and industry, please see our individual reports below: