Calculating the cost of your workers insurance premium
Your workers insurance premium is based on your industry, how much you pay in annual wages, and a range of other factors.
All premiums are calculated by taking your industry classification rate and multiplying it with how much your business pays in wages. This is called average performance premium.
If that number is $30,000 or less, you’re considered a small employer and your premium remains unaffected by claims costs if a worker is injured.
If your average performance premium is over $30,000, you’re considered a medium to large employer and your premiums are experience-rated. This means your premium will be impacted by your claims performance.
To help keep premiums affordable, we offer a range of incentives and discounts to businesses that demonstrate a strong safety record and commitment to helping injured workers return to work.
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Understanding industry classifications
When you apply for a workers insurance policy, you are required to give details of your business activities. This helps us allocate a Workers Compensation Industry Classification (WIC) for your business.
If you have multiple separate and distinct business activities, the average performance premium formula (wages x WIC rate) is repeated for each applicable industry class, and the outcomes added together to produce the total average performance premium.
Declaring your wages
All businesses with standard policies must declare their wages annually to icare to ensure they are paying the correct premium.
This is done by filling out the wages declaration form.
You are required to lodge a declaration at the end of your workers insurance policy period.
Factors in claims performance
As an experience-rated employer, your premiums may be affected as the result of a claim.
Your claims performance is calculated at the renewal date of your policy and includes your claims costs for the three years prior to commencement of the policy period.
Your claims performance rate (CPR) rewards you with a lower premium if you have a good record of managing worker safety and recovery at work.
Your CPR is calculated by comparing your claims performance with other NSW businesses.
If your claims performance is better than the Scheme average, then your premium will be lower than your average performance premium.
Your claim costs will be the same for both your initial and hindsight premium calculations. This means the hindsight premium calculation will not include the claims incurred during the policy period.
Claims costs included in experience premium
Certain claims costs are included in the premium calculation, while other claims costs do not impact premium.
Premium impacting costs include:
- Weekly compensation
- Provisional weekly compensation
- Permanent impairment
- Commutation payments
- Common law compensation
Costs that don’t impact premium include:
- Journey claims
- Recess claims
- Health provider costs
- Hospital and medical costs
- Legal and interpreter costs
- Estimates of future costs
- Death benefits (fatality claims incur a separate one-off charge)
Download Cost of Claims definition 2022-23 standard policies (PDF 0.6MB)
Monthly Cost of Claims reporting: experience-rated customers only
If you would like to receive reporting for the claims and related costs which are impacting your premium, you can complete the attached Distribution List Request Form (PDF, 0.08MB). This form is for experience-rated employers only with an average performance premium above $30,000.
By submitting this form, you are agreeing to receive a Cost of Claims report automatically each month, sent via Syncplicity. We currently do not automate cost of claims reports for non-experience-rated employers with an average performance premium $30,000 and below.
How to create an account and receive documents via Syncplicity (PDF, 0.46MB)
Download a copy of our Frequently Asked Questions (PDF, 0.44MB)
Request a monthly Cost of Claims report (PDF, 0.08MB)
Loss prevention and recovery premiums
Loss Prevention and Recovery (LPR) for large businesses allows you to work with us to implement programs within your organisation to minimise your premiums.
If you have a LPR product and would like to discuss your premiums please reach out to your Insurance Specialist or email cis@icare.nsw.gov.au.