Moving to Comcare has the potential to save a company millions of dollars within just a few years. But with a transition time of about 12 months, combined with a frustrating wait for two bills improving the scheme to pass an unpredictable Senate, some companies may be tempted to put the move across on ice.
But rather than waiting to see what happens in the Senate before taking action, brokers are working with companies to help get their ducks lined up in a row. In doing so, they’ll be ready to act as soon as any beneficial changes to the government-regulated self-insurance scheme come into effect.
Testing the waters
While self-insurance under unified workers compensation and work health and safety laws saves a lot of headaches for multi-state companies, broker Gary McMullen, the National Practice Leader at Willis Workplace Risk Practice, warns Comcare is “not a one-size-fits all” scheme.
One big sticking point is that the scheme is still pension-based, says McMullen, meaning that in the event of an employee being seriously injured, compensation must be paid up until retirement.
“A number of our clients see this as a major hurdle,” says McMullen. Put bluntly, companies with a poor safety and return to work record need not apply. “Companies with well-established prevention, rehabilitation and claims management systems … are most likely to reap the benefits of self insurance,” a Comcare spokesman says.
McMullen says the most suitable companies are large national employers, with the majority of their workforce based on the east coast of Australia, with a premium spend of at least one million dollars.
If a company ticks those initial boxes, an in-depth six-month eligibility analysis then begins, usually kicked-off with a thorough financial analysis.
“We look at the last ten years of their claims performance, premium performance, their remuneration growth, and then start a forecast,” McMullen says.
Following a look-at-the-books, the next major criteria to pass is a workplace health and safety analysis across all of the company’s Australian work sites.
Other steps taken before even looking at an application form include a prudential analysis, legislative assessment, and ensuring appropriate policies are in place to support an employee’s
early return to work – all of which will need to be gone over with a fine-tooth comb at a board briefing.
Flying a holding pattern
According to Comcare, there are 33 self-insured licensees currently participating in the scheme. But many other companies are keeping their eye on two bills due to appear before the nation’s fractured Senate.
The Coalition Government made its first moves in this arena in 2013, when it lifted the moratorium on private corporations joining Comcare that Labor had introduced in 2007.
A Comcare spokesman said the further proposed changes aim to streamline the application process, allow for group licences to be issued, and extend federal work health and safety law to apply to new self-insurers.
McMullen says many companies have made a strategic decision to wait until one or both of the bills pass.
“So we’ve got a number of customers who have stopped before the end of step one, who are waiting,” he says.
“We’ve been gearing then up to ensure they’re ready for when the bill is passed.”
Applying to Comcare
Once a company’s board makes the decision to apply to Comcare, “there’s really no turning back,” McMullen says.
“This process is collecting all the evidence from the eligibility phase and collating it into a single application,” he adds.
What’s next for Comcare
Before applying, Comcare warns brokers to check the company’s current insurance policy for hidden exit costs.
McMullen adds it’s also a good time for brokers to remind employers of the importance of strong employee consultation.
“Because in some cases employees will be better off under Comcare, and in some cases they’ll be worse off,” he says.
After Comcare approval has been granted, the final phase is all about ensuring the self-insurance licence doesn’t go belly up on day one.
Brokers should look at recommending new self-insurers implement a 12 to 36 month strategic workers compensation plan, focussed on liability reduction and then monitored monthly by performance score cards.
“It’s basically making sure the board has no surprises at the end of the first 12 months. And the objective is to drive liabilities down,” McMullen says.