Sometimes, despite our best efforts, things go wrong, and they can go wrong quickly. This is as true in safety and WorkCover as it is in any other aspect of life.
As we know, your WorkCover premiums are in part, driven by your claim costs.. If you have a dramatic increase in your claim costs, you can have a similarly dramatic increase in your premium.
A single claim with high costs and estimates can cause WorkCover premiums to increase substantially.
In Victoria, WorkSafe put a cap on the size of any increase in your premium rate from one year to the next. The cap is set at 30%. That means, if your premium rate would have increased due to a quick deterioration in your claims performance, even if it would have doubled, you will “only” have to deal with an increase of, at maximum, 30%.
That gives a little bit of comfort. But not much.
First of all, a 30% increase can be a significant cost to your business. Secondly, the cap is on your premium rate, not on your premium in dollar terms. Your premium rate is what is multiplied by your remuneration to give you your premium. If you are also increasing the size of your workforce or increasing pay and benefits, then in dollar terms, your premium could increase by more than 30%.
More importantly, unless you turn things around, you could find yourself in the position that your premium goes up by another 30% the following year, and the year after that. It will basically keep increasing at the capped rate until you are paying what your premium “should” be.
In Workers Compensation and Safety as in life, when things go wrong you need to manage the problem, learn from it, make amends, and recommit to doing your best in the future.
If you have any questions, get in touch.