Premium calculation for small employers

You are considered a small employer if your average performance premium is $30,000 or less. This means your premium will not be impacted by your claims costs.

Premium formula

The formula below shows you how your premium is calculated. Please refer to the table below for definitions of each component. 

Small employer premium calculation formula

Calculation example

Bills Butchery - small employer

 

Bill's Butchery

Annual wages bill $750,000
WIC Rate 3.51%
Average Performance Premium $26,325
Small Employer Safety Incentive -$1974
Dust Disease Levy $60

Ben injured his wrist and was off work for 15 weeks and returned on a graduated RTW plan.

Claims costs incurred $14,000 (Ben's wages for 15 weeks)
Payment in full discount -$1220
Premium charged $23,191

As a small employer, Bill does not pay any additional premium for his claims experience.

Premium formula definitions

Acronym Term Description Details
P Premium Total premium payable including adjustments.

Premium is calculated twice annually:

  • at renewal (based on estimate of wages)
  • at adjustment (based on actual wages)
APP Average Performance Premium (previously known as Basic Tariff Premium BTP)
  • wages x WIC Rate (%)

OR

  • number of plates, rides, bouts, drives x WIC rate ($) - for per capita WICs
CPA Claims Performance Adjustment

The CPA rate for the employer is:

  • a decimal number (in the CPA table) at the intersection of an employer's claim performance rate (CPR) AND the employer size or group size (APP or GAPP)

How is CPA calculated?

CPA rates contained in the CPA table are determined by icare’s Actuarial team.

  • CPA is used to adjust (discount or load) an employer’s APP based on their claims performance compared to the Workers Insurance Scheme performance

Adaptive Maximum CPA

  • An employer who has a maximum CPA cap for more than one consecutive year will have an increased CPA rate. 
CPM Claims Performance Measure

The CPM for an experience-rated employer is:

  • a percentage rate derived by dividing an Employer’s individual Claims Costs for the last three consecutive periods of 12 months by the employers total APP for the same three-year period
  • Note: If a prior period is less than 12 months, the APP for the short-term period is annualised.

CPM informs the CPA component and does not appear in the main premium formula.

CPM determines an employer’s individual claims performance.

It is compared to the Scheme’s performance to determine if a loading or discount should be applied to the premium.

CPR Claims Performance Rate The CPR for the employer is: A percentage rate derived by dividing an employer’s CPM/SPM.

CPR informs the CPA component and does not appear in the main premium formula.

The CPR and the employer size (or group size, if grouped) will determine the employer’s claims performance adjustment rate (CPA).

  • If the employer’s CPM is lower than the SPM, the premium will be reduced.
  • If the employer’s CPM is higher than the SPM the premium will increase.
SPM Scheme Performance Measure A percentage rate determined by icare’s Actuarial team and used to benchmark an employer’s individual claims performance (CPM).

SPM informs the CPA component and does not appear in the main premium formula.

How is SPM calculated?

  • SPM is the percentage rate derived by dividing the Schemes Claims Costs for three previous premium years (36 months) by the Schemes total APP for the same three-year period.
  • See current SPM rates
ESI Employer Safety Incentive
  • APP x ESI%
  • Discount off premium payable (before adjustments)

Employers get to keep this incentive regardless of claims.

  • The percentage discount may vary from year to year.
  • This is a contribution to assist employers to implement Workplace Health and Safety.
ESR Employer Safety Reward A percentage discount applied to (APP - Apprentice APP)
  • Currently set to ‘0’
  • Applies only if employer has NOT incurred any in the previous 4 consecutive x 12 calendar month periods (including policy period being calculated)
RTWI (Experience-rated employers) Return to Work Incentive

A percentage discount applied directly to individual claim costs where an injured worker is returned to work (from Date of Injury) between:

  • 0<13 weeks – 15% discount
  • 13<26 weeks – 10% discount
  • 26<52 weeks – 5% discount

The RTWI does not appear in the main premium formula.

  • An incentive to encourage early return to work of injured workers.
PD Performance Discount A percentage discount applied to (APP - Apprentice APP)
  • Applied at hindsight adjustment
  • Based on employer’s claims performance
  • May not be applied every policy year - depends on Scheme financial performance
Q Premiums Adjustment Contribution Additional levy (available if required by icare)

Set to '0'

  • Not applied to date
D Dust Diseases Contribution An additional amount included in total premium payable
  • Applies to all employers except those with per capita WIC Codes (for example taxis)
  • Dust Diseases Contributions are contained in the premium rates table
  • Paid by icare to Dust Diseases Authority to administer and pay for claims made under the Workers’ Compensation (Dust Diseases) Act 1942
M Mine Safety Fund premium adjustment
  • Wages x MSFPA%
  • Percentage rate per annum applied to wages of Division B Mining employers (WIC Codes 120000 to 152000)
  • An additional amount included in total premium payable
  • Collected for the Mine Safety Fund
  • Paid by icare to NSW Department of Planning, Industry and Environment under Mine and Petroleum Site Safety (Cost Recovery) Act 2005
A Apprentice incentive
  • Apprentice wages x WIC Code % rate
  • Discounted from premium after premium payable is calculated
  • Eligibility - NSW employers who employ apprentices under NSW Training Services contract
  • Incentive for employers to hire apprentices and address NSW skills shortage