Why your premium changed

Where the rate comes from

WorkCover WA publishes a recommended premium rate for every industry class, once a year. Those rates are calculated on the weighted six year claim experience of each class, and they change from year to year, sometimes by a lot.

Your insurer is not obliged to charge the recommended rate. They can load it or discount it based on your own risk profile. What feeds that, in the regulator's own description, is the nature of your business activity, your risk profile, the actual and projected frequency, cost and loss ratio of your claims, and your demonstrated commitment to safety and risk management.

So the rate on your policy is a recommended rate for a class, adjusted for you.

The four things that move your premium

1. What you declared. More remuneration at the same rate is more premium, and remuneration is a longer list than payroll. It is also the one you control, and it can be wrong in either direction. What counts as remuneration

2. Your classification. Which industry class you sit in sets the recommended rate the whole calculation starts from. If the class is wrong, everything downstream is wrong, and it stays wrong until it is corrected. How labour hire classification works

3. The schedule. Recommended rates are set again each year on six years of claim experience for your whole industry, not just you. Your rate can move without anything in your business changing at all.

4. Your own claims. Claim costs are typically built into premium calculations, including estimates of claims that are still open. An estimate on an open claim is the insurer's figure for its future cost, and you can ask for the rationale behind it.

Four causes, and they leave different fingerprints. Establishing which one it was is the whole exercise.

You are entitled to the workings

WorkCover WA's Insurer and Self-insurer Principles and Standards of Practice set out what insurers are expected to do. Three of those standards are about exactly this.

4.4 Premium determination. Insurers will have a documented methodology and reasoning for determining the premium and will provide the information to WorkCover WA and the employer on request.

4.5 Claim costs. Insurers must make employers aware all claim costs are typically included in premium calculations. Insurers must provide a rationale for the value of estimated claims on request.

4.6 Premium transparency. Insurer issued quotes and policy schedules will clearly distinguish between the workers compensation statutory components and anything else.

Insurer and Self-insurer Principles and Standards of Practice, v2, July 2024

Under 4.4 the methodology and the reasoning are available to you on request. It is information your insurer is expected to hold and provide.

If you still think it is wrong

There is a formal review, run by WorkCover WA, and it has two limbs.

Industry classification. You can ask WorkCover WA to review the classification your premium is determined from. There is no threshold on this limb. Any employer can ask, whatever the size of the premium.

The premium itself. You can ask WorkCover WA to review the premium your insurer determined, but only where it is 75% more than the recommended premium rate. Where an insurer proposes a premium that high, they are required to tell you about your right to seek a review and point you to the WorkCover WA website.

Both limbs can run at once, and where they do, the insurer has to put up a proposed premium for both the current classification and the one you are asking for.

The deadline

You have to talk to your insurer first and genuinely try to resolve it.

If it stays unresolved, the application to WorkCover WA has to be made within one month of the date you received the quote. Miss that and you are waiting for the next policy period, which means carrying a rate you think is wrong for a year. WorkCover WA can allow longer in extenuating circumstances, which is not something to rely on.

There are dates on the insurer's side too, and they are worth knowing because they set your runway. For a new policy, a written quote with full terms within 14 days of your request. For a renewal, a written invitation at least 30 days before expiry, with full terms within 14 days of you providing the renewal information and before the policy expires. And if either side intends to change the industry classification on a current policy, the other has to be told at least one month before expiry.

What the insurer has to give you once a review is on foot

For a premium review: the premium rate determined as a percentage of wages, the industry classification and its corresponding recommended rate, the requested loading percentage, the total premium excluding things like commission, brokerage and GST, and a claim and policy data extract.

For a classification review: the information supporting the classification they have assigned, including your business profile and activities, your predominant business activity by location, and a breakdown of wages.

That list is the workings behind your premium, and your insurer holds it whether or not a review is lodged.

Three things to be realistic about

Changing your classification does not automatically reduce your premium. The Review Guidelines say so directly. A different class carries a different recommended rate and a different claims history, and it can land higher.

You keep paying while the review runs. Cover has to be maintained and the premium requested has to be paid on the insurer's terms. If WorkCover WA later decides a lesser sum was payable, the insurer must repay the difference.

Claims you think are unfair still count. The assessment runs on an actuarial model built from claims history and current claim liabilities. The Guidelines note that an employer may regard certain claims as one offs, and that those claims are still relevant and are still considered. Only information known to all parties as at policy expiry is looked at. The decision is made by the WorkCover WA Board and it is final, with no resubmission and no further review.

What we do, and what we do not

We work out which of the four things moved, from your declarations, your classification and the published schedules, and we tell you which one it was and what the correct position is, with the provision it rests on cited.

Where the answer is your classification, you get the determination and the reasoning in a form you or your broker can put to your insurer. Where the answer is your declaration, you get the correct figure and how it was arrived at. Where the answer is that the schedule moved or your claims moved, you get that too.

What we do not do. We do not deal with your insurer, your broker or WorkCover WA on your behalf, and we do not lodge review applications for you. We are not insurance brokers and we give no advice on which insurer or policy to choose. What we produce is the analysis, and it is yours to use.

Fees are fixed, agreed in writing before any work starts, and never a percentage of anything found.