As many employers know, the 2023/2024 premium period in Victoria proved to be a challenging and difficult time. Following the admission by the Victorian Government in March 2023 that the workers compensation system was “broken”, significant increases were made to industry rates (an average increase of 42%) and to capping, which saw significant upsurges in premium for many employers, even if they had an improving claims performance.
Since that time, the Government has introduced a Bill to parliament that aims to reduce claims costs and therefore contain premium, but at this point it has not yet passed into law.
WorkSafe has now begun releasing indicative premium information for 2024/2025, which includes some key differences in the way claims costs are included in the calculation. Overall, it appears that the premium calculation will rely less on the opaque Statistical Case Estimating Methodology.
Whilst a reduced reliance on Statistical Case Estimates would, in our opinion, be a step in the right direction, the changes will make an already confusing system even more impenetrable, adding frustration for employers who want a transparent, simple to understand and fair premium calculation methodology.
At first look it appears these changes may reduce premiums for some employers, however until the Bill becomes Legislation the government is not committing to a scheme target rate and have instead suggested further rate increases of 33% are possible if the bill does not pass. Likewise, none of the other proposed premium calculation changes are likely to be confirmed until gazetted in late May 2024.
Key insights for employers
1. Exercise caution when budgeting
Whilst these changes have the potential to reduce premium for some employers, it is essential to exercise caution. Until the government confirms the scheme rate and WorkSafe finalises the methodology, budgeting for reductions may be premature.
2. Stay informed and proactive
In light of these developments, it is imperative for employers to stay informed and proactive. Engaging in discussions with trusted advisors, such as Lockton, can provide valuable insights into WorkSafe’s indicative premiums and the proposed changes, comparing them to anticipated outcomes based on the existing methodology.
By leveraging the latest data and expertise, employers can better navigate the evolving landscape of workers’ compensation and make informed decisions to optimise outcomes.
3. Leverage expertise and insights from trusted advisors
Ultimately, the most effective strategy for reducing premiums lies in preventing injuries and effectively managing any incidents that do occur.
Lockton’s workers' compensation specialists stand ready to assist employers in achieving better outcomes through tailored risk management solutions and proactive injury prevention measures.
Remaining vigilant and adaptable in the face of uncertainty will be crucial in navigating the evolving landscape of workers’ compensation in Victoria.
The contents of this publication are provided for general information only. Lockton arranges the insurance and is not the insurer. While the content contributors have taken reasonable care in compiling the information presented, we do not warrant that the information is correct. It is not intended to be interpreted as advice on which you should rely and may not necessarily be suitable for you. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication.
