How are premiums determined?
Each year, an actuarial valuation independent of icare determines the premiums needed to cover the estimated costs for the year, and its future liabilities. icare then reviews the premium model to ensure the scheme remains sustainable and fair for all employers.
When reviewing the premium model, icare listens to customer feedback and works with the NSW regulator to look for opportunities to enhance the model, year on year.
What factors impact premiums the most?
Environmental impacts and economic conditions are also important factors in determining premiums.
We’ve been operating in an environment of uncertain economic conditions, impacted by events such as the bushfires, COVID-19 and global markets.
COVID-19, in particular, has created unprecedented medical and economic impacts across the New South Wales economy. Like other insurers, icare invests its assets to keep premiums as low as sustainably possible for its customers. Due to recent market volatility investment returns are uncertain and this has placed pressure on the scheme.
Over the last 12 months, icare has been working closely with the Joint Premium and Prudential Oversight Committee (JPPOC) which includes the State Insurance Regulatory Authority (SIRA) and independent actuaries, to collaboratively identify opportunities to enhance the stability of the scheme, while still delivering a sustainable premium model that maintains affordable premiums.
Several premium recommendations were made as a result to help keep the scheme sustainable into the future. These included enhancements to the premium model and an increase in premium rates.
Why are premium rate changes on hold?
Despite the pressures on the scheme, icare recognises that the pressure on NSW businesses as they manage the impacts of COVID-19 is far greater.
With this in mind, icare has put premium rate changes on hold.
This is in line with the NSW Government’s priority to stimulate employment as businesses start to recover from the impacts of COVID-19.
icare, in collaboration with the JPPOC, will review the premium model once the full impacts of COVID-19 on NSW businesses are known, and in line with current market conditions and legislative impacts at that time.
Additional support for our customers
We appreciate it has been a difficult time for our customers and we’re here to help as much as we can.
We’ve been offering a range of support measures for our customers, including adjusting wages to reduce premium or deferring premium payments for those experiencing extreme financial hardship.
But the support doesn’t end there. If you have recently reduced your wages due to COVID-19, these reduced wages will apply to your 2020-21 policy renewal. In addition to this, there will be no adjustment for inflation on your wages when you renew your policy for the 2020-21 policy year.
What has icare done so far to support NSW businesses during COVID-19?
To support our customers we have:
Reduced premiums by $84m for 16,300 customers
Placed $47m in premium payments
on hold to assist customers with their financial needs