Recent reforms to the NSW WorkCover could send some business to the wall, with brokers reporting some clients are facing shock premium increases of hundreds of thousands of dollars.
The NSW Government unveiled new methods for calculating workers compensation premiums for medium and large businesses earlier this year, following on from similar reforms in the small business sector aimed at addressing long-standing concerns.
However, as notifications of premiums for the coming financial year have been sent, some businesses have been alarmed to receive large premium increases.
Austbrokers AEI Transport Managing Director Tim Wedlock says even clients with good claims history appear to be getting stung with hefty increases.
“We’ve had situations where clients have good claims histories for the last couple of years – who under the old rating method would have been getting rebates – who under the new rating method now have to pay more,” he says.
“We haven’t seen too many examples yet where the reforms have brought positive news.
“From what we’ve seen, the transport and aged care clients are really in quite a difficult situation.”
Wedlock says one of his clients, who had been expecting to pay a premium of around $1.5 million, has been hit with a premium of $2.3 million under the new scheme.
“How is a business meant to survive something like that?” he says.
“Our clients have not really been given any chance to understand the new model and it’s all been dumped on them at the last minute.”
Wedlock says he plans to work with NIBA, local councils and business associations to highlight the damage the reforms are doing to the viability of some businesses.
“WorkCover and the (State) Government need this feedback because I’m not sure they’ve seen examples yet of how big this impact is going to be,” he says.
When the reforms were announced, the NSW Government promised they would be geared toward providing real incentives to businesses to keep their claims low.
Risknet Director Richard Gilley says among his clients he has seen numerous cases of businesses with excellent claims histories being hit with substantially higher premiums.
In one case, he says, a food manufacturer who has had no claims has had an increase.
“The mystery is how to they derive a premium increase if the business has had no increase in claims costs,” he says.
“These are not isolated cases. We understand that there may be thousands of employers similarly affected.”