Calculating the cost of your workers insurance premiums

Your workers insurance premium is based on your industry, how much you pay in annual wages, and a range of other factors.

Every business faces different types of risk, which is why we apply a premium rate based on the industry you work in.

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.

Find out more about how to calculate your premium (small employer)

Find out more about how to calculate your premium (experience-rated employer)

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.

Find out more about incentives and discounts

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.

Actual wages declarations

Actual wages declarations will be issued by icare with your renewal pack.

If your declaration at the end of your policy is different to the estimate, the amount of premium your business needs to pay might be adjusted.

What to include in a wages declaration

  • salary/wages
  • overtime, shift and other allowances
  • over award payments
  • bonuses, commissions
  • payments to working directors (including directors' fees)
  • payments to pieceworkers
  • payments for sick leave, public holidays and the associated leave loadings
  • value of any substitutes for cash
  • employer paid or payable superannuation contributions (including the superannuation guarantee levy)
  • grossed up value of fringe benefits (allowances subject to fringe benefits tax are counted at the grossed up value, that is the value of the benefit multiplied by the relevant Australian Tax Office fringe benefit formula)
  • long service leave payments (including lump sum payments instead of long service leave)
  • termination payments (lump sum payments in respect of annual leave, long service leave, sick leave and related leave loadings)
  • trust distributions to workers where the distribution is in lieu of wages for work done for the trust

You don’t need to include:

  • payments to non-working directors
  • compensation payments under the Workers Compensation Act 1987
  • any GST component in a payment to a worker

The Wages Definition Manual (below) provides a comprehensive guide of the wages that should be taken into account when declaring wages.

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 as explained below)

Catastrophic claims contribution 

Fatality claims will no longer be included in the claims experience for your premium. However, your business will be required to pay a one-off contribution amount if a claim is made in relation to a workplace incident or injury if it results in the death of your worker.

The contribution is based on a percentage of your Average Performance Premium (APP) and is capped at a $1,000 minimum and a $250,000 maximum.

The contribution does not apply to uninsured employers with an uninsured liability scheme (UILS) claim, Loss, Prevention and Recovery (LPR) employers and exempt employers. 

Loss prevention and recovery premiums

Loss Prevention and Recovery for large businesses allows you to work with us to implement programs within your organisation to minimise your premiums.

If you have an LPR product and would like to discuss your premiums, please contact:

LPR team
Phone: 13 55 22

    Premium adjustments

  • Dust diseases contribution

    The NSW Government provides compensation to injured workers for dust-related diseases due to exposure to dust during their employment.

    This scheme is administered by icare dust diseases care.

    As an employer, you are required to pay the Dust Diseases contribution to fund this scheme. It is collected by workers insurance on behalf of icare Dust Diseases Care.

    The Dust Diseases contribution is calculated separately and added to the workers compensation premium.

  • Mine safety fund premium adjustment

    The Mine Safety Fund was established by the Mine and Petroleum Site Safety (Cost Recovery) Act 2005 to provide for mine safety regulatory activities undertaken by the NSW Government.

    If you are an employer with wages in the mining industry, you are required to pay a mine safety fund premium adjustment. It is collected by icare.

    The adjustment is calculated separately and added to the workers insurance premium. The mine safety fund premium adjustment rate is set annually.