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Premium Reduction

Premium Reduction 3

Reduce your claims costs, reduce your premium.

Our clients save an average of 50% in the first 1-2 years with industry best premium to payroll rates the following years.

Many organisations fail to realise that their WorkCover premium is a variable insurance cost that can be reduced well below their industry rate. Is your WorkCover premium high or on a par with your industry?

Remuneration & Premium to Payroll

Your premium to payroll rate is the only true measure of your WorkCover costs and performance against industry. It shows, as a percentage, what you are spending on WorkCover in relation to you remuneration (payroll). The remuneration of a growing business will increase, but the premium to payroll rate should not increase.

This depends on the size of your remuneration. Typically, the larger your remuneration, the lower your premium to payroll should be. For example,

  • If your remuneration is $5M, you should aim to be slightly less than your industry rate.
  • If your remuneration is $25M, you should aim to be half your industry rate.
  • If your remuneration is larger, you should aim to be a third of your industry rate.

If your premium to payroll rate is less than your industry rate, it demonstrates that your organisation is spending less on WorkCover costs per person than most other comparable organisations in your industry.

If this is not the case, there are opportunities to introduce new strategies, procedures and training to help reduce your premium and save you money. P2 Group can help you achieve this.

All organisations have budgets for stationary, office supplies, machine maintenance etc. However, many employers do not set strategic budgets and targets in relation to their WorkCover premiums. Lowering your WorkCover premiums is an opportunity to reduce labour costs which is often overlooked.

It can be achieved by reducing the most important factor driving your WorkCover premium, which is your claims costs.

WHAT ARE CLAIMS COSTS

Injured workers, with registered WorkCover claims, accrue claims costs each time they are paid weekly compensation (if they are off work) and each time they require support from a medical practitioner. These ACTUAL costs are typically paid by the employer and then the employer seeks reimbursement from the WorkCover insurer. Claims costs consist of many attributes such as:

  • weekly compensation costs
  • medical and like costs
  • legal costs
  • occupational rehabilitation costs
  • estimate costs.

Total claims costs consist of the ACTUAL amount spent on a claim to date + the ESTIMATE costs required for future payments, as calculated by the WorkCover authority and insurer.

WHAT ARE CLAIMS ESTIMATES

Claims estimates are calculated by WorkCover authorities and insurers and represent the likely future costs for each claim. The estimate costs can be significantly higher than the actual costs and offers a great opportunity for employers to reduce their claims costs. Estimate costs are variable and P2 Group has a good track record in successfully reducing estimate costs.

The Victorian WorkCover Authority uses a statistical case estimate (SCE) computer algorithm to estimate the expected cost of a claim based on a number of factors (but not limited to):

  • type of injury
  • age of claimant
  • type of industry
  • weekly compensation costs
  • time away from work
  • medical treatment costs
  • occupational rehabilitation costs.

The SCE is recalculated every month. Employers should obtain claims costs data from the WorkCover authorities and insurers, analyse (not just review) the data and implement action plans to reduce the estimate costs.

SCEs can be confusing and difficult to understand, but if ignored can have a major impact on your final premium. P2 Group can assist with the analysis of your claims costs.

The attribute which has the most profound affect on claims costs is weekly compensation. By taking control internally of your injury management procedures and having your managers implement sustainable return to work plans for their injured workers, your claims costs will reduce.

CONTROLLING YOUR CLAIMS ESTIMATES

We have experts that analyse each of your claims and identify opportunities to reduce estimate costs. We discuss these with you so you understand how the estimate costs are calculated and agree on action plans for each claim. We strategically consult with the WorkCover authorities and insurers in parallel to offering the injured workers advanced injury management plans, which support the workers needs, resolve the claim and reduce the estimate costs.

REDUCING YOUR PREMIUM WITH PEOPLE PERFORMANCE PLANS

Upon engagement our WorkCover analysts complete a comprehensive audit of your WorkCover costs and injury management processes to produce unique financial report called a People Performance Plan.

This plan documents our findings, recommendations and achievable savings  through WorkCover premium reductions.

With your outcomes in mind, we then create strategic action plans for your high costing WorkCover claims and work closely with your line managers and return to work coordinators to implement our unique methodology.