WorkCover insurance covers you for the costs incurred for a workplace injury or illness occurs. The types of expenses that are covered include weekly compensation (an injured worker’s lost wages), medical and like expenses (GP, physio, psychology etc), and legal and impairment benefits for more serious claims.
While these costs are covered by the insurance, they will impact on your future WorkCover premiums.
As we’ve discussed in the past, your WorkCover premium is based on three factors. One of these is your claims performance. Specifically, this means the amount paid on your claims.
You claim costs are based on four components
What has been paid
The first component is clearly, what has been paid for your claims. All expenses are added, including medical and like payments, legal payments and weekly compensation payments.
Any expenses that formed part of the excess (the first $707 dollars of medical and like expenses, and the first 10 days of weekly compensation), are excluded.
What will be paid (the SCE)
The second component relates to what may be paid on the claims in the future. WorkCover claims can extend for months, years, and for the most seriously injured, even decades. WorkSafe uses a statistical case estimate (SCE) model to estimate what is likely to be paid in the future. The future estimated costs are included in your premium calculation.
An allowance for significant costs
The third component allows for significant expenses on individual claims. The most serious WorkCover claims can incur significant expenses for years on end, and legally complex claims can incur large legal costs. WorkSafe take the view that individual employers should not bear the full costs for these types of claims. Each claim has an overall cap, as well as a legal cost cap. Any claim that has fully developed costs (paid to date plus SCE) of more than $390,600 will be capped at that amount. So, at a maximum, the first $390,600 for an individual claim will be used in the premium calculation.
Claims with significant legal expenses are also capped. If the amount paid or estimated to be paid in legal costs exceeds $73,100, the legal costs will be capped at that amount.
Finally, the fourth component relates to claims where a recovery has been made. This could be in the case of a recovery of an overpayment, or from other insurance. For example, if the workplace injury occurred while driving, some costs may be recovered from TAC.
Of these four components, it is the SCE that can cause the most confusion and angst. A future blog post will deal with questions around this.
If you have any questions, make sure you get in touch.