New South Wales regulation

Insurance Premiums Order 2008–2009

In ForceNSW

Jurisdiction

New South Wales

Act Number

157 of 2008

Collection

regulation

Plain English Summary

8/10 complexity

This Order sets the concrete rules and formulas for calculating NSW workers’ compensation insurance premiums for policies effective 4 pm 30 June 2008 to 4 pm 30 June 2009. It prescribes base tariff calculations, size-based experience loadings, an experience premium, tax and fund adjustments, a 3% prompt-payment discount, minimums and caps, and record‑keeping methods for allowances. It affects employers (small/medium/large and groups), licensed insurers and the Authority because it determines who pays what, what must be reported, and insurer premium calculation discretion.

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What it does

This Order sets the mechanics for calculating workers compensation insurance premiums for New South Wales policies taking effect between 4 pm on 30 June 2008 and 4 pm on 30 June 2009 (clause 2; Schedule 2 cl 1). It prescribes the formula by which an employer’s premium payable under a policy is to be calculated (clause 3(1)), identifies the tariff, experience and adjustment components that make up the premium (Schedules 3-11), and specifies a set of operational rules governing classification, wage determination, group aggregation, minimum premiums and special adjustments (Schedules 1, 2, 7-11). The Order also:

Prescribes a 3 per cent discount for employers who pay the initial premium in full for a 12‑month policy and meet notice and payment conditions (clause 4).
Specifies the prescribed excess amount employers must repay insurers under section 160(1) of the Workers Compensation Act 1987, including a $0 excess where the employer notifies the scheme agent within five days, and otherwise the lesser of the worker’s current weekly wage under s 42 or $1,594 (clause 5).
Sets the prescribed late‑payment interest rate for purposes of sections 170(8) and 172(5) of the Act by reference to section 22 of the Commonwealth Taxation Administration Act 1996 (clause 6).
Fixes $1,594 as the amount relevant to calculation of costs of individual claims and provisional payments for particular regulation clauses (clause 7).
Makes Schedules 1-13 part of the Order (clause 8), with Table A and Table B (classification and industry claim cost rates) provided as Schedules 12 and 13 and published in the Gazette (Schedule 1, editorial notes).

Mechanically, the premium P payable is assembled from the basic tariff premium T (Schedule 3), an experience adjustment factor S (Schedule 4), an experience premium E (Schedule 5), premiums adjustment contribution Q, dust diseases contribution D, input tax credit adjustment I (Schedule 9), Mine Safety Fund adjustment M (Schedule 10) and an apprentice incentive amount A (Schedule 11) (clause 3(1)). The Order imposes caps on the extent to which the experience adjusted premium may exceed the basic tariff for non-group employers (clause 3(2)), but treats members of a group differently for those caps (clause 3(3)). The Order also sets a statutory minimum premium ($175) (Schedule 7 cl 1).

Current sections

Direct links to the current provisions in Insurance Premiums Order 2008–2009.

Name of Order

1 Name of Order

This Order is the Insurance Premiums Order 2008–2009.

Commencement

2 Commencement

This Order commences at 4 pm on 30 June 2008.

Calculation of insurance premium payable by employer

3 Calculation of insurance premium payable by employer

(1) The premium payable by an employer for a policy of insurance is to be calculated by requiring the premium to be calculated for a period of insurance of not more than 12 months and:

(a) if the employer is a medium or large employer for the purposes of the policy, in accordance with the following formula:

(b) if the employer is a small employer for the purposes of the policy, in accordance with the following formula:

where:

P is the premium for the time being payable by the employer in respect of the period of insurance to which the policy relates, being:

(a) except as provided by paragraph (b), the initial premium so payable in accordance with this Order, or

(b) where adjustments are required to be made to that premium by reason of the operation of this Order, the premium so payable by reason of those adjustments.

T is the basic tariff premium for the employer, calculated with respect to the period of insurance in accordance with Schedule 3.

S is the experience adjustment factor for the employer determined with respect to the period of insurance in accordance with Schedule 4.

E is the experience premium, if any, for the employer determined with respect to the period of insurance in accordance with Schedule 5.

Q is the premiums adjustment contribution, if any, for the employer.

D is the dust diseases contribution, if any, for the employer.

I is the input tax credit adjustment, if any, for the employer determined with respect to the period of insurance in accordance with Schedule 9.

M is the Mine Safety Fund premium adjustment, if any, for the employer calculated with respect to the period of insurance in accordance with Schedule 10.

A is the apprentice incentive amount, if any, for the employer determined with respect to the period of insurance in accordance with Schedule 11.

(2) However, where the basic tariff premium less the apprentice incentive amount [T − A] for a policy of insurance whose total premium is to be calculated under subclause (1) (a):

(a) is less than $50,000 (or, if the period of insurance is to be less than 12 months, where the basic tariff premium less the apprentice incentive amount [T − A] would be less than $50,000 were that period of insurance to be 12 months), the experience adjusted premium is not to exceed one and a half times the amount of that basic tariff premium , and

(b) is or exceeds $50,000 but is less than $150,000 (or, if the period of insurance is to be less than 12 months, where the basic tariff premium less the apprentice incentive amount [T − A] would be or would exceed $50,000 but would be less than $150,000 were that period of insurance to be 12 months), the experience adjusted premium is not to exceed twice the amount of that basic tariff premium , and

(c) is or exceeds $150,000 but is less than $300,000 (or, if the period of insurance is to be less than 12 months, where the basic tariff premium less the apprentice incentive amount [T − A] would be or would exceed $150,000 but would be less than $300,000 were that period of insurance to be 12 months), the experience adjusted premium is not to exceed two and a half times the amount of that basic tariff premium .

(3) However, if the employer is a member of a group:

(a) subclause (2) does not apply, and

(b) where the sum of the basic tariff premiums less the sum of apprentice incentive amounts [TG− AG] for all the members of that group:

(i) is less than $50,000 (or, if the period of insurance is to be less than 12 months, where the sum of basic tariff premiums less the sum of apprentice incentive amounts [TG− AG] would be less than $50,000 were that period of insurance to be 12 months), the experience adjusted premium for the employer’s policy is not to exceed one and a half times the amount of the employer’s basic tariff premium , and

(ii) is or exceeds $50,000 but is less than $150,000 (or, if the period of insurance is to be less than 12 months, where the sum of basic tariff premiums less the sum of apprentice incentive amounts [TG− AG] would be or would exceed $50,000 but would be less than $150,000 were that period of insurance to be 12 months), the experience adjusted premium for the employer’s policy is not to exceed twice the amount of the employer’s basic tariff premium , and

(iii) is or exceeds $150,000 but is less than $300,000 (or, if the period of insurance is to be less than 12 months, where the sum of basic tariff premiums less the sum of apprentice incentive amounts [TG− AG] would be or would exceed $150,000 but would be less than $300,000 were that period of insurance to be 12 months), the experience adjusted premium for the employer’s policy is not to exceed two and a half times the amount of the employer’s basic tariff premium ,

where:

AG is the sum of the sum of apprentice incentive amounts (if any) for all the members of the group calculated:

(a) where the period of insurance to which the premium relates is 12 months—in accordance with Schedule 11 with respect to that period of insurance, or

(b) where the period of insurance to which the premium relates is not 12 months—in accordance with Schedule 11 as if the policies to which the premiums relate had a period of insurance of 12 months.

TG is the sum of the basic tariff premiums for all the members of the group calculated:

(a) where the period of insurance to which the premium relates is 12 months—in accordance with Schedule 3 with respect to that period of insurance, or

(b) where the period of insurance to which the premium relates is not 12 months—in accordance with Schedule 3 as if the policies to which the premiums relate had a period of insurance of 12 months.

Discount available for premiums paid in full

4 Discount available for premiums paid in full

An employer is entitled to a discount of 3 percent on the initial premium payable by the employer for a policy of insurance if:

(a) the period of insurance to which the policy relates is 12 months, and

(b) the employer has paid the discounted amount of the premium in full by the date on which payment of the premium is due, and

(c) the employer has not elected to pay the premium by instalments, and

(d) the employer has notified the insurer, in accordance with the regulations, of the reasonable estimate of the wages that will be payable during the period of insurance.

Note—

Clause 130 of the Workers Compensation Regulation 2003 requires an employer to notify the insurer concerned of the matter referred to in paragraph (d).

Recovery of excess from employer: section 160 of Act

5 Recovery of excess from employer: section 160 of Act

For the purposes of the definition of prescribed excess amount in section 160 (1) of the Act, the following excess amount is specified:

(a) if the employer concerned notified the relevant insurance scheme agent of the injury that led to the weekly compensation claim of the worker within 5 days of the employer becoming aware of it—$0,

(b) in all other cases—the lesser of the following:

(i) the amount that is the current weekly wage rate of the worker as determined by section 42 of the Act,

(ii) $1,594.00.

Note—

Under section 160 (2) of the Act, an employer is required to repay the prescribed excess amount to the insurer under a policy of insurance in respect of each weekly compensation claim that the insurer has paid under the policy. However, if the amount that the insurer has paid in respect of any such claim is less than the prescribed excess amount, the amount the employer must repay is that lesser paid amount.

Late payment prescribed interest rates: sections 170 (8) and 172 (5) of Act

6 Late payment prescribed interest rates: sections 170 (8) and 172 (5) of Act

For the purposes of sections 170 (8) and 172 (5) of the Act, the prescribed rate of interest is the interest rate referred to in section 22 of the Taxation Administration Act 1996.

Calculation of costs of individual claims and provisional payments of compensation: clauses 137 (2) (c) (ii) (C) and 138 (2) (c) (ii) (C) of Regulation

7 Calculation of costs of individual claims and provisional payments of compensation: clauses 137 (2) (c) (ii) (C) and 138 (2) (c) (ii) (C) of Regulation

For the purposes of clauses 137 (2) (c) (ii) (C) and 138 (2) (c) (ii) (C) of the Workers Compensation Regulation 2003, the amount specified is $1,594.00.

Schedules form part of Order

8 Schedules form part of Order

Schedules 1–13 form part of this Order.

Explanatory note

9 Explanatory note

The explanatory note does not form part of this Order.

Schedule 11

Apprentice incentive scheme

Schedule 11 Apprentice incentive scheme

(Clause 3)