How to minimise your
workers’ compensation premiums:
a client story

For many businesses, workers’ compensation premiums are their single largest expense (second only to payroll expenses). But the good news is, it is possible to control these premiums – while also keeping your people safe at work and injury-free.

In this article, we show you how we did exactly that for a client who was under financial duress from their workers’ compensation premiums.

THE CHALLENGE: Feeling powerless in the face of soaring premiums

This client faced two key challenges:

1. Rapidly increasing premiums that made the company financially unsustainable and would put them at risk of having to cease operations
2. Inaccurate advice from their previous insurer which resulted in huge claims costs and increasing premium forecasts.

The impact of these two challenges alone would result in a near 500% increase in premiums over three years.

What’s more, our client’s insurer refused to meet with them to resolve these concerns – despite repeated requests.

Understandably, our client was feeling frustrated and powerless to resolve these very serious issues.

OUR APPROACH: Getting things on track

Through our review of the client’s workers’ compensation program, we identified the key causes of underperformance – and took the following steps to rectify them:

1. Appointed a dedicated account manager

One of our client’s main challenges was communication with their insurer. Because their insurer would not engage with them, they couldn’t take corrective action.

To increase the insurer’s accountability for our client’s portfolio performance, we spoke to the insurer and insisted they appoint a dedicated Account Manager who would be responsible for our client’s program. We then transferred our client’s claims management to an office that was closer to them to make communication easier.

2. Fixed industry classification errors

Our client has specialist licences for demolition and asbestos removal, which they advertise to differentiate themselves in the market. However, this is not their predominant business activity.

When we reviewed our client’s workers’ compensation program, we discovered their insurer had made an error. Their industry classification had been re-classified from ‘site preparation services’ to ‘demolition’.

This attracted an industry rate increase of around 60%.

So how did this happen? The insurer conducted an online review of the business and incorrectly concluded that demolition/asbestos removal was their primary business activity. And they did not engage with our client during this process.

As soon as we discovered this error, we gathered information to demonstrate that our client’s primary business activity was in fact site preparation services. We then submitted a formal premium review to the insurer to have the policy re-rated.

3. Convinced the insurer to concede

We conducted a detailed review of our client’s claims and discovered that wages had been incorrectly paid on a single claim – which resulted in a ~$60K premium increase.

The insurer had incorrectly reimbursed wages to a worker who chose to abandon his employment following an injury. However, when our client protested paying these wages, these objections fell on deaf ears with their insurer.

After discovering this error, we submitted a review for reimbursing wages during the period that the injured worker had abandoned his employment. We gathered evidence that showed that the worker:

• Had not been terminated
• Was fit for suitable full-time duties at the time
• Chose to be absent (making it unrelated to his workers’ compensation claim)

After presenting this evidence, the insurer conceded that the wages should not have been paid under workers’ compensation.

Going that extra step  

We set about systematically addressing the issues our client faced, supporting them to maintain a financially successful business. Throughout this process, we provided regular updates and communicated any roadblocks we encountered.

Thanks to this transparency and robust communication, the client quickly placed their trust in us.

All in all, the full range of services we provided included:

• Complimentary review of the client’s workers’ compensation program
• Industry classification review
• Retrospective premium adjustment
• Strategic technical advice for complex claims
• Premium forecasting
• Policy management
• Insurer management

THE OUTCOME: Keeping Aussie businesses operating

Austbrokers Corporate successfully removed the unsustainable financial pressure the client faced – and turned its poorly managed workers’ compensation program into a well-oiled machine.

This meant that we prevented an Australian business from collapse.

In summary, we were able to:

• Re-classify the client’s primary business activity – returning their premium to its original rate
• Adjust the policy back to the correct rate for the current year (as well as all historic years)
• Convince the insurer that wage payments for an absentee worker should not have been paid under workers’ compensation
• Introduce a dedicated Account Manager to our client’s insurance program
• Prompt the client to remain with their insurer at renewal – which benefited both parties

Thanks to our intervention, our client achieved a huge saving from their past and future premiums. And we turned an underperforming claims portfolio around, making our client’s business profitable once again.

How can we help you?

At Austbrokers Corporate, we’ve invested heavily in our workers’ compensation capabilities and services.

With our expertise and guidance, we can help your business minimise costs and exposures of workplace risks. This includes workers’ compensation premiums and claims/injury management expenses.

Our team has been in the Australian workers’ compensation industry for over 50 years, working with large insurers, regulators and global brokers. We are specialists in alternative premium models such as the loss prevention and recovery (LPR) scheme in NSW – and burner programs in the privately underwritten states.