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WILLIS COMMENTARY
WORKPLACE RISK
WILLIS WORKPLACE RISK -EXPERIENCE. OUTCOMES. EXCELLENCE.
For further information on the retro-paid loss model please contact:
Peter [email protected]+61 3 8681 9834
Gary [email protected]+61 2 9285 4142
Willis Australia LtdLevel 5,570 Bourke StreetMelbourne VIC 3000www.willis.com.au
Willis Australia LtdLevel 5,179 Elizabeth StreetSydney, NSW 2000www.willis.com.au
On 30 June 2009, the NSW WorkCover Authority introduced a Retro-Paid Loss Premium Model, (sometimes referred to as a ‘Burning Cost’ Premium Model) as an option available to large employers.
The intention of the model was to provide large employers with a real alternative to the other methods of insuring such as traditional and self insurance. The model provides employers with “real’ time” financial incentives to improve their workplace risk performance.
This Willis Commentary has been prepared to provide you with a summary of the retro-paid loss arrangements.
RETRO-PAID LOSS - INSURANCE DETAILS
Effectively, this new option allows large employers, who meet the eligibility criteria, to move to an arrangement whereby their final premium cost is determined by their own claims performance, subject to a set “minimum” and “maximum”’ premium cost.
Some of the relevant details are as follows:
Premium Calculation
Premiums will be calculated by the nominal insurer (WorkCover NSW)
Premium and Claims Management/Administration
These activities will continue to be undertaken by the employer’s WorkCover Agent
Period of Insurance
12 months with a 48 month ‘run off’ period before final premium is calculated.
MinimumPremium
T × (1-S) × year 5 adjustment factor, where:
§ ‘T’ is the basic tariff premium, (wages multiplied by the WorkCover Industry Classification rate) and
§ ‘S’ is the experience adjustment factor
Deposit Premium Minimum Premium plus 25%.
Maximum Premium
2.5 x the employer’s basic tariff premium
Final Premium Cost (after 48 month run-off)
Cost of claims (minus recoveries) × Year 5 Adjustment Factor + dust diseases levy + mine safety premium adjustment (if applicable) - premium collections received to date.
Maximum Claims Cap
An employer has two (2) choices:§ $350,000 or § $500,000 for any one claim. Subject to event cap of 2 x chosen claim cap.
Year 5 Adjustment Factor
§ $350,000 Cap = 175% § $500,000 Cap = 167%
RETRO-PAID LOSS – ELIGIBILITY CRITERIA
The Eligible Criteria parameters for employers wishing to consider / enter the retro-paid Loss arrangement includes the following:1. The employer’s basic tariff premium must be at least $500,000
for one member of the Group.2. All members of a “Group” (as defined within the Scheme)
must enter the retro-paid loss arrangement.3. The employer’s claims history over the past five years has not
experienced any undue volatility.4. The employer’s OHS and workers compensation compliance
history must be satisfactory.5. The employer’s current return to work program is required to
be in accordance with the revised guidelines recently releasedby WorkCover NSW.
6. The employer must be prepared to provide a security deposit (Bank Guarantee or Cash Deposit) equal to the maximum premium less any premium paid to date.
7. The employer is required to establish their own OHS and workers’ compensation key performance indicators together with a plan for achieving them.
8. WorkCover NSW will seek an annual written commitment from the employer’s Chief Executive Officer or Board stating:- that they expect their company will continue to trade for the
duration of the period of insurance including the run off period(s).
- their commitment to participating in the retro-paid loss arrangement for a minimum of 3 policy years.
- that they are confident their company meets minimum standards for workplace safety, injury management and return to work and can make improvements in the future.
9. The employer must be prepared to participate in WorkCover NSW convened quarterly discussion groups that are aimed at sharing ideas on the ongoing evaluation and improvement of the retro-paid loss arrangement.
10. The employer must have an effective Complaint Management and Dispute Resolution System in place for injured workers
DOES THE RETRO-PAID LOSS OPTION INTEREST YOU?
For a number of our clients (see listing over page), we have assessed this option and estimated that their annual premium costcould reduce by as much as 66%.
Our Willis Workplace Risk team can assist you with the entire process, including the following:• Presentation to Management on this premium model;• Cost benefit analysis / feasibility study;• Safety and RTW gap analysis against eligibility criteria;• Application to WorkCover NSW;• Setting OHS and Workers’ Compensation KPI’s;• Stakeholder and Regulator Management; and • Agent and Policy Management.
RETRO-PAID LOSS PREMIUM MODEL OPTION FOR EMPLOYERS IN NSW
WILLIS CLIENTS IN THE
RETRO-PAID LOSS MODEL
REQUIRE ASSISTANCE?If you require a formal presentation on the Retro-Paid Loss model including the potential benefits and associated risks, please contact your Client Advocate or one of your Workplace Risk team.
ABOUT WILLIS WORKPLACE RISK
Willis Workplace Risk is the leading provider of strategic Workplace Risk services to Australian Businesses. We specialise in three core areas of Workplace Risk include:• Workers’ Compensation Insurance • Self Insurance (including Comcare) • Safety
Our services are directed toward achieving beneficial results for our clients across three broad areas:
• Protecting the Corporation and its Executives • Achieving sustained Financial advantages • Streamlining the administration of risk and insurance
