Understanding workers’ compensation insurance
If you operate a business with employees, you are required to have workers compensation insurance in place to protect your employees for injuries or illnesses they may sustain while they are at work. Workers compensation laws vary from state to state, so it can be a complex area, particularly if you operate a business nationally or across multiple states.
All workers in Australia are required to be covered by workers’ compensation insurance including employees on a full-time, part-time or casual basis, workers hired under a verbal or written contract and apprentices. The insurance provides benefits to injured workers such as covering medical, hospital and rehabilitation costs and lump sum payments in cases of permanent impairment.
Workers compensation protects injured workers by ensuring they continue to receive an income, receive the necessary medical services and are provided with recovery and support services to support rehabilitation and their return to work. All states have back to work provisions that provide a wide range of services and systems to enable injured or ill employees to return to the workforce including - If unable to return to their previous position, finding a more suitable role or employment.
Workers may be eligible for part of lump sum payments depending on the nature of the injury.
Each state or territory in Australia has its own set of workers’ compensation laws and regulations, and how the compensation scheme operates varies. Private insurers underwrite the workers compensation scheme in Western Australia, Australian Capital Territory, Tasmania and the Northern Territory, while in New South Wales, Victoria and South Australia, authorised insurers operate as agents on behalf of the government. The scheme in Queensland is entirely operated by the Queensland government agency.
Employers who fail to take out adequate workers’ compensation insurance, or any at all, will be liable to the respective state government in the event of workplace incident resulting in an injured worker. The relevant state agency will support the injured worker and take action to recover costs from the employer and where necessary the business owner(s).
The employer may also be liable for hefty fines for failing to have appropriate cover in place.
A complex system
There are two components to workers compensation cover that make it a complex purchase: industry and the state government involvement.
Workers’ compensation is structured according to the occupational risk of the industry, so selecting an insurer that understands your industry is important. Premiums will depend on the nature of the work undertaken, the industry’s claims history and your business’ claims experience. Lower rate may be applied to occupations that are considered lower risk (for example, office jobs), discounts applied to businesses with a low number of claims and surcharges applied to occupations and businesses that are consider higher risk and have a history of a high number of claims such as construction and mining.
A risk and insurance adviser can assist business with both the industry-specific requirements, and in securing an insurer that can cover your business effectively if it operates in multiple states.
In the event of a claim, your risk and insurance adviser can help in dealing with the insurer, and the state government, to ensure all aspects of your claim are covered efficiently and with accuracy. Having support during the workers’ compensation claim process can be invaluable for a small business.
Speak to one of our experienced risk and insurance advisers to see how we can help tailor insurance cover that’s right for your business. Call 1300 242 136 or email email@example.com
The information provided in this flyer is factual information only and not intended to be advice about which financial products are suitable for your circumstances. Before you make any decisions about whether to acquire an insurance product we recommend you obtain advice by contacting an AB Phillips risk adviser.