Large employers have the option to choose between an experience-rated premium model, or a loss prevention and recovery (LP&R) model. LP&R uses an alternative method of calculating premiums and provides incentives to improve workplace safety. Employers can access more immediate financial rewards for active loss prevention and recovery at work solutions compared to the standard model of premium calculation.
Who is eligible
Large employers are eligible for the LP&R product.
You are considered a large employer if:
- your average performance premium exceeds $500,000 for a 12 month period of insurance (this can be pro-rated for shorter periods of insurance), or
- you are member of a group of which at least one member’s average performance premium exceeds $500,000.
The model is best suited to large employers because they have the capacity and resources to manage and improve systems for loss prevention and recovery at work.
'Burning costs' model
LP&R premiums are calculated using a burning cost method.
Rather than wages, premiums are calculated based on each employer’s claims costs each year. Burning cost arrangements are commonly used in commercial insurance environments.
This model provides stronger incentives to improve workplace safety and outcomes for injured workers.
We offer you more immediate financial rewards for active loss prevention and recovery at work compared to the standard model of premium calculation.
Your premiums will more closely reflect your individual experience and success in loss prevention and recovery at work.
Premiums are calculated based on each employer’s individual claim costs each year, banded by a minimum premium and a maximum premium.
Maximum premium payable
From 2021/22 an employer’s maximum premium amount is 5.985 times their APP plus levies. This is calculated across Group APP where there are multiple policies.
An employer must elect a large claim limit of $350,000 or $500,000 (per individual claim) to apply to injuries received by workers or deemed to have been received by workers during the period of insurance.
At the commencement of any period of insurance, employers may choose to pay a security deposit or pay the alternative Renewal Premium adjustment (RPA) for the term of the insurance period.
Option 1: Security is represented by cash, bank guarantee or insurance bond which is to ensure payment of premium if employers are not able to meet their workers compensation liabilities.
Option 2: The RPA is an alternative option paid as part of the premium in place of the security deposit.
How to take out a policy
There’s now a single application form that combines three elements:
- Your application
- Declaration of estimated wages.
- A self-assessment of your Work Health and Safety (WHS) and Return To Work (RTW) programs. This same form is used for each renewal.