{"id":"nsw:sl-2012-0273","name":"Insurance Premiums Order (Retro-Paid Loss Premium Method) 2012–2013","slug":"insurance-premiums-order-retro-paid-loss-premium-method-2012-2013","collection":"regulation","jurisdiction":"nsw","status":"in_force","isInForce":true,"actNumber":"273 of 2012","makingDate":null,"administeringDepartment":null,"currentVersion":{"id":178116,"registerId":"nsw-nsw:sl-2012-0273-current","compilationNumber":null,"startDate":"2026-04-05","status":"InForce","reasons":null,"registeredAt":null},"sections":[{"sectionNumber":"1","sectionType":"section","heading":"Name of Order","content":"#### 1 Name of Order\n\n1 Name of Order\n\n> This Order is the [Insurance Premiums Order (Retro-Paid Loss Premium Method) 2012–2013](/view/html/inforce/current/sl-2012-0273).","sortOrder":0},{"sectionNumber":"2","sectionType":"section","heading":"Commencement","content":"#### 2 Commencement\n\n2 Commencement\n\n> This Order commences at 4 pm on 30 June 2012 and is required to be published in the Gazette.","sortOrder":1},{"sectionNumber":"3","sectionType":"section","heading":"Interpretation","content":"#### 3 Interpretation\n\n3 Interpretation\n\n> > (1) In this Order, words and expressions have the same meanings as they have in the General Order, unless this Order provides otherwise.\n> \n> > (2) In this Order:\n> > \n> > adjustment date, in relation to a policy of insurance, means each of the following dates:\n> > \n> > > (a) the date that is 15 months after the date of the commencement of the period of insurance (the first adjustment date),\n> > \n> > > (b) the date that is 24 months after the date of the commencement of the period of insurance (the second adjustment date),\n> > \n> > > (c) the date that is 36 months after the date of the commencement of the period of insurance (the third adjustment date),\n> > \n> > > (d) the date that is 48 months after the date of the commencement of the period of insurance (the fourth adjustment date),\n> > \n> > > (e) the date that is 60 months after the date of the commencement of the period of insurance (the fifth adjustment date).\n> > \n> > cost of claims has the same meaning as in Division 4 of Part 18 of the [Workers Compensation Regulation 2010](/view/html/repealed/current/sl-2011-0037).\n> > \n> > General Order means:\n> > \n> > > (a) the [Insurance Premiums Order 2012–2013](/view/html/inforce/current/sl-2012-0272), or\n> > \n> > > (b) if no such order has been made, the [Insurance Premiums Order 2011–2012](/view/html/inforce/current/sl-2011-0283).","sortOrder":2},{"sectionNumber":"4","sectionType":"section","heading":"Application of Order","content":"#### 4 Application of Order\n\n4 Application of Order\n\n> > (1) This Order applies only to and in respect of policies of insurance for employers to whom the optional alternative method of calculating premiums under section 168A of the Act applies (retro-paid loss premium policies).\n> \n> > (2) This Order applies to and in respect of retro-paid loss premium policies that are to be or have been issued or renewed so as to take effect on or after 4 pm on 30 June 2012 and before 4 pm on 30 June 2013.\n> \n> > (3) If, before 4 pm on 30 June 2013, an insurance premiums order that applies only to and in respect of retro-paid loss premium policies has not been made in respect of such policies of insurance taking effect on or after that time, this Order applies to and in respect of those policies pending the making of such an order.\n> \n> > (4) The General Order (other than clauses 3 and 4) applies to and in respect of retro-paid loss premium policies, unless this Order provides otherwise.\n> \n> > (5) This Order does not apply to a policy of insurance issued or renewed by a specialised insurer that is exempted from insurance premiums orders by clause 165 of the [Workers Compensation Regulation 2010](/view/html/repealed/current/sl-2011-0037).","sortOrder":3},{"sectionNumber":"5","sectionType":"section","heading":"Classification of large employers","content":"#### 5 Classification of large employers\n\n5 Classification of large employers\n\n> A large employer within the meaning of the General Order is classified as a large employer under this Order.","sortOrder":4},{"sectionNumber":"6","sectionType":"section","heading":"Retro-Paid Loss Premium Method of premium calculation","content":"#### 6 Retro-Paid Loss Premium Method of premium calculation\n\n6 Retro-Paid Loss Premium Method of premium calculation\n\n> For the purposes of section 168A of the Act, the alternative method is to calculate the premium for a policy of insurance at the commencement of the period of insurance (the deposit premium), and then recalculate the premium at each adjustment date (the adjusted premium), in accordance with this Order.","sortOrder":5},{"sectionNumber":"7","sectionType":"section","heading":"Minimum premium","content":"#### 7 Minimum premium\n\n7 Minimum premium\n\n> Despite any other provision of this Order, a deposit premium and an adjusted premium in respect of any policy of insurance is to be no less than $175.","sortOrder":6},{"sectionNumber":"8","sectionType":"section","heading":"Calculation of required deposit: section 172A of Act","content":"#### 8 Calculation of required deposit: section 172A of Act\n\n8 Calculation of required deposit: section 172A of Act\n\n> The required deposit for an employer in relation to a policy of insurance is to be calculated in accordance with the following formula:\n> \n> > (a) on or before the third adjustment date:\n> > \n> > ![](/image/((Type%3D%22subordleg%22)%20AND%20(No%3D0273)%20AND%20(Year%3D2012)%20AND%20(%22Historical%20Document%22%3D0))/g1.gif)\n> \n> > (b) after the third adjustment date:\n> > \n> > ![](/image/((Type%3D%22subordleg%22)%20AND%20(No%3D0273)%20AND%20(Year%3D2012)%20AND%20(%22Historical%20Document%22%3D0))/g2.gif)\n> \n> where:\n> \n> RD is the required deposit in respect of the period of insurance to which the policy relates.\n> \n> T is the basic tariff premium for the employer, calculated with respect to the period of insurance in accordance with the General Order.","sortOrder":7},{"sectionNumber":"9","sectionType":"section","heading":"Schedules form part of Order","content":"#### 9 Schedules form part of Order\n\n9 Schedules form part of Order\n\n> Schedules 1–4 form part of this Order.","sortOrder":8},{"sectionNumber":"Schedule 1","sectionType":"schedule","heading":"Method of calculation of deposit premium and adjusted premium—general","content":"# Schedule 1 Method of calculation of deposit premium and adjusted premium—general\n\nSchedule 1 Method of calculation of deposit premium and adjusted premium—general","sortOrder":9},{"sectionNumber":"Schedule 2","sectionType":"schedule","heading":"Method of calculation of deposit premium and adjusted premium—member of a group","content":"# Schedule 2 Method of calculation of deposit premium and adjusted premium—member of a group\n\nSchedule 2 Method of calculation of deposit premium and adjusted premium—member of a group","sortOrder":12},{"sectionNumber":"Schedule 3","sectionType":"schedule","heading":"Experience adjustment factor","content":"# Schedule 3 Experience adjustment factor\n\nSchedule 3 Experience adjustment factor\n\n(Schedule 1, clause 2 and Schedule 2, clause 6)","sortOrder":19},{"sectionNumber":"Schedule 4","sectionType":"schedule","heading":"Claims adjustment factor","content":"# Schedule 4 Claims adjustment factor\n\nSchedule 4 Claims adjustment factor\n\n(Schedule 1, clause 2 and Schedule 2, clause 6)\n\nGeneral\n\nThe claims adjustment factor for an employer (“V”) (or for a group (“VG”)) at the adjustment date set out in Column 1 of the Table to this clause is, if the employer has (or all the members of the group of employers of which the employer is a member have) elected a large claim limit for the purposes of clause 154 (5) of [Workers Compensation Regulation 2010](/view/html/repealed/current/sl-2011-0037) of:\n\n> (a) $350,000—the factor set out in Column 2 of the Table corresponding to that date, and\n\n> (b) $500,000—the factor set out in Column 3 of the Table corresponding to that date.\n\nTable\n\n| Column 1 | Column 2 | Column 3 |\n| Adjustment date | Adjustment factor “V” (or “VG”) for $350,000 large claim limit | Adjustment factor “V” (or “VG”) for $500,000 large claim limit |\n| First adjustment date (being commencement of policy period plus 15 months) | 3.05 | 2.95 |\n| Second adjustment date (being commencement of policy period plus 24 months) | 2.10 | 2.00 |\n| Third adjustment date (being commencement of policy period plus 36 months) | 1.80 | 1.70 |\n| Fourth adjustment date (being commencement of policy period plus 48 months) | 1.75 | 1.67 |\n| Fifth adjustment date (being commencement of policy period plus 60 months) | 1.75 | 1.67 |","sortOrder":23}],"analysis":{"issue_detection":{"absurdities":[],"contradictions":[]},"flash_summary_failed":{"failed":true,"reason":"Unauthenticated. Configure AI_GATEWAY_API_KEY or use a provider module. Learn more: https://ai-sdk.dev/unauthenticated-ai-gateway","source":"analysis-cron"},"kimi_summary":{"content_quality":"ok","complexity_score":8,"scope_assessment":{"changed":false,"description":"This Order appears tightly scoped to its original purpose: providing the specific mathematical methodology for the retro-paid loss premium calculation system established under section 168A of the Workers Compensation Act. It does not expand beyond this technical administrative function into broader policy areas. The inclusion of group-specific calculations (Schedule 2) and the five adjustment dates with declining factors (Schedule 4) are necessary implementations of the core retro-paid loss mechanism rather than scope creep."},"complexity_factors":["Multiple mathematical formulas embedded as images (at least 18 distinct formulas) that cannot be read as text, making the actual calculation methods opaque without visual reference","Extensive cross-referencing to the 'General Order' (Insurance Premiums Order 2012–2013) and the Workers Compensation Regulation 2010, including conditional fallback provisions if the 2012–2013 Order doesn't exist","Nested conditional logic: different formulas apply based on adjustment dates (first/second vs third/fourth/fifth), whether the employer is in a group, which group option applies, and whether group claims equal zero","Dual-track system with parallel definitions for individual employers (Schedule 1) and group members (Schedule 2), each with slightly different variable naming conventions (PE vs P, PG vs P, etc.)","Multiple defined terms across the Order and Schedules (approximately 20+ distinct variables: RD, T, C, V, PD, Pmax, Pmin, V5, S, Q, D, M, A, PEd, PGd, PGmin, PGmax, TE, TG, SG, PE, PG, CG, VG, CE)","Temporal complexity with five distinct adjustment dates triggering different calculation rules and declining claims adjustment factors","Integration of external statutory references including sections 10, 11, 168A, and 172A of the Workers Compensation Act, plus clause 154(5) and clause 165 of the Workers Compensation Regulation 2010"],"plain_english_summary":"**What this legislation does**\n\nThis Order sets out a special, optional way for large employers in New South Wales to calculate their workers compensation insurance premiums. Instead of paying a fixed premium upfront based on estimated risk, employers can use the \"retro-paid loss\" method—where they pay a deposit premium initially, then have the premium adjusted over five years based on their actual claims costs.\n\n**Who it affects**\n\n- **Large employers** in NSW who choose this optional method (those covered by section 168A of the Workers Compensation Act)\n- **Employers who are members of corporate groups**, who have additional calculation options\n- **Insurance companies** issuing these policies between 30 June 2012 and 30 June 2013\n\n**How it works**\n\n1. **Deposit premium**: Employers pay an initial premium at the start of the policy period.\n\n2. **Five adjustment dates**: The premium is recalculated at 15, 24, 36, 48, and 60 months after the policy starts.\n\n3. **Claims-based adjustments**: At each adjustment date, the premium changes based on:\n   - The actual cost of workers compensation claims (excluding journey and recess claims)\n   - An \"experience adjustment factor\" (a multiplier based on the employer's claims history relative to their size)\n   - A \"claims adjustment factor\" (a set multiplier that decreases over time, ranging from 3.05 down to 1.75)\n\n4. **Floors and ceilings**: Premiums cannot drop below $175, and there are minimum and maximum caps on how much the premium can change at each adjustment.\n\n**Why it matters**\n\nThis gives large employers with good safety records the chance to pay lower premiums over time if their actual claims costs are lower than expected. However, it also exposes them to higher premiums if claims exceed expectations. The system spreads the risk assessment over five years rather than relying entirely on predictions at the start of the policy period.\n\n**Key features**\n\n- **Group options**: Members of corporate groups can choose between three different calculation methods (Options 1, 2, and 3), allowing them to balance individual versus group risk sharing.\n- **Large claim limits**: Employers can elect a $350,000 or $500,000 limit on individual large claims, which affects their claims adjustment factor.\n- **Required deposits**: Employers must pay security deposits calculated as a percentage of their basic tariff premium, with the percentage dropping after the third adjustment date."},"flash_summary":{"complexity_score":7,"scope_assessment":{"changed":true,"description":"This Order narrows application to employers using the optional retro‑paid loss premium method, and to policies taking effect between 4 pm 30 June 2012 and 4 pm 30 June 2013; it also excludes specialised insurers (cl.4(1)–(3), cl.4(5), cl.2). The General Order continues to apply where this Order does not provide otherwise (cl.4(4)), so scope differs from the broader General Order by limiting method, time period and exempting certain insurers."},"complexity_factors":["Multiple recalculation points (adjustment dates at 15, 24, 36, 48 and 60 months) which change formulas over time — cl.3(2), Sch1","Numerous interdependent formulae with defined variables (P, PD, C, V, S, T, Q, D, M, A) across Schedules 1–4 — Sch1 cl.2, Sch3, Sch4","Different calculation pathways for single employers versus group members, plus three group options and fallback rules — Sch2 cls 1–5, Sch2 cl.6","Minimum and maximum premium constraints and a statutory minimum floor ($175) that can truncate formula outputs — cl.7; Sch1 cl.1(2)","Claims adjustment factors that vary by adjustment date and by elected large‑claim limit ($350k or $500k) contained in a lookup table — Sch4","Cross‑references to the General Order for baseline tariff, contributions and other inputs, requiring integration of two instruments — cl.3(1), cl.4(4), Sch1 cl.2","Different required deposit formula before and after the third adjustment date (two RD formulas), introducing conditional timing complexity — cl.8","Exclusion for specialised insurers and time‑limited application window add scope and application rules to be checked when determining applicability — cl.4(2), cl.4(5), cl.2"],"plain_english_summary":"This Order prescribes how to calculate premiums for ‘retro‑paid loss premium’ workers’ compensation policies issued or renewed between 4 pm 30 June 2012 and 4 pm 30 June 2013. It requires an initial deposit premium and recalculation at specified adjustment dates (15, 24, 36, 48, 60 months), sets a $175 floor and caps, and supplies separate formulae for single employers, grouped employers, experience adjustments and large‑claim adjustments."},"summary":{"complexity_score":6,"scope_assessment":{"changed":false,"description":"Based on the available information, the order appears to remain narrowly focused on its original intent: prescribing the Retro-Paid Loss Premium Method for workers compensation insurance premiums for the 2012–2013 year in NSW. There is no evidence of scope expansion beyond this purpose. The order has remained unchanged since its commencement on 27 June 2012."},"complexity_factors":["The Retro-Paid Loss Premium Method is a technically complex actuarial (statistical risk calculation) mechanism not easily understood without insurance or financial background","The order operates within a broader and intricate NSW workers compensation legislative framework, requiring knowledge of related Acts and regulations to fully understand","Premium adjustment calculations involve retrospective financial true-ups with multiple variables (paid losses, minimum/maximum premium caps, conversion factors), adding mathematical complexity","The legislation is time-bound to a specific policy year (2012–2013), creating complexity around ongoing applicability for historical claims or disputes","The document provided contains almost no substantive legislative text — the actual operative provisions and schedules are not visible, limiting full analysis and suggesting significant hidden complexity","Eligibility thresholds and opt-in conditions for this method add another layer of complexity for employers trying to determine if it applies to them"],"plain_english_summary":"This NSW government order (2012–2013) sets rules for the \"Retro‑Paid Loss Premium Method,\" where a business pays a base workers‑compensation premium up front and the final premium is adjusted after the year based on actual paid claims. It affects larger employers who opt in and insurers applying the method. It matters because it shifts risk toward employers, creates incentives to reduce injuries, and governed premium calculations for that policy year."}},"importantCases":[],"_links":{"self":"/api/acts/insurance-premiums-order-retro-paid-loss-premium-method-2012-2013","history":"/api/acts/insurance-premiums-order-retro-paid-loss-premium-method-2012-2013/history","analysis":"/api/acts/insurance-premiums-order-retro-paid-loss-premium-method-2012-2013/analysis","conflicts":"/api/acts/insurance-premiums-order-retro-paid-loss-premium-method-2012-2013/conflicts","importantCases":"/api/acts/insurance-premiums-order-retro-paid-loss-premium-method-2012-2013/important-cases","documents":"/api/acts/insurance-premiums-order-retro-paid-loss-premium-method-2012-2013/documents"}}