July 2024 Market Update – Workers Compensation

As workers’ compensation schemes across Australia continue to face financial pressures, significant changes in premium rates and regulatory measures have been introduced this year. Here’s an overview of the latest updates for key regions:

Scheme rates in NSW have increased again by an average of 8 per cent for the 2024-25 financial year. The rise aligns with a statutory direction from Workplace Health and Safety Minister Sophie Cotsis in 2023, capping the average rate of growth at 8 per cent annually over a three-year period (2023/24 to 2025/26). Adjustment rates in the Loss, Prevention and Recovery (LPR) Model have remained the same as the expiring 2023-24 rates.

To aid in improving return to work rates, starting from 30 June 2024, employers above $200,000 Average Performance Premium (APP) will now be provided with greater choice in NSW, as icare allows more employers to choose their claims service provider (CSP). See our recent article here for further details. The introduction of additional market competition for claims agents is poised to drive enhancements in both the scale and quality of claims services offered to employers.

icare has also introduced a new product, Loss Prevention & Recovery Plus (LPR Plus), specifically tailored for the largest employers in the Nominal Insurer scheme. LPR Plus is a specialised workers’ insurance product designed to reward employers who prioritise injury prevention, return to work, and effective claims cost control. This LPR Plus model will adjust premiums based on the employer’s risk profile, offering potential savings for those with strong performance in these areas. Employers with an APP exceeding $3M may qualify for LPR Plus, depending on their capability, resources, and claims performance.

Despite a 4 per cent rise for 2024-25, Queensland continues to offer one of the lowest average premium rates in Australia, set at $1.343 per $100 of wages for 2024-25. This incremental increase in the premium rate is driven by mental injury claims increasing 28 per cent compared with the previous year, while time-lost benefits were up 9 per cent. WorkCover QLD has subsidised over $2.5B in premiums from investment reserves over the last decade and announced that incremental premium adjustments aim to balance the financial needs of the scheme with the interests of workers and employers. The focus remains on maintaining scheme viability while managing cost-of-living pressures.

For 2024-25, South Australia’s workers’ compensation premium rate remains steady at 1.85 per cent, the same as the previous year. This stability supports the scheme’s financial health and provides consistent support for injured workers. Employers can continue to manage their premiums by actively managing claims through effective return-to-work strategies and workplace safety improvements. Additionally, implementing proactive risk management practices and staying updated on best practices can help employers maintain control over their workers’ compensation costs.

Victoria has maintained its average premium rate at 1.8 per cent for 2024-25, offering stability after a 42 per cent increase in the previous year. New regulations have also been implemented through this year which require workers on the scheme for over 130 weeks to undergo work capacity and whole-person impairment tests to continue receiving payments.

Stress and burnout claims are limited to 13 weeks of provisional payments, and a new body, Return to Work Victoria, will support injured workers. These changes aim to streamline processes and improve support for return-to-work efforts.

The Workers Compensation and Injury Management Act 2023, effective from July 1, 2024, has introduced major updates to the scheme, including enhanced financial support such as doubling the medical expenses limit and extending weekly compensation payments from 13 to 26 weeks. Additionally, the new legislation offers comprehensive coverage for catastrophic injuries, ensuring lifetime care and support. Administrative changes include revised income calculation methods and extending the claim submission deadline to seven days. Employers should review these updates to ensure compliance and optimal management of their workers’ compensation obligations, with penalties for non-compliance substantially increasing.

For the 2024-25 financial year, Western Australia has set the average recommended workers’ compensation premium rate at 1.732 per cent of total wages, a slight increase from the previous year’s 1.727 per cent. This change accounts for rising claim sizes and numbers.

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: