Employers, excluding self-insurers, must pay workers’ compensation premiums to cover their workers in the event of a work-related injury or illness. Premiums fund financial and medical benefits for injured workers, dispute management costs and scheme administration costs. Table 8.5 outlines the provisions in each jurisdiction that apply to uninsured employers, which may include cost recovery and penalties.
Premium rates are generally pooled across similar risk profile groups. This allows employers who share a common set of risks to spread the risk across their industry type. Across the schemes there are hundreds of specified premium rates for industry types. Employers operating in more than one jurisdiction must pay the relevant premium in each jurisdiction.
Premiums are usually expressed as a percentage of employers’ total wages bills. The rates depend on the employer’s:
- size
- industry
- individual claims experience, and
- the way that ‘wages’ are defined for workers’ compensation purposes, which can vary across the jurisdictions (as outlined in Table 8.6).
Standardised average premium rate
In 2023–24, the Australian standardised average premium rate was 1.59% of payroll, slightly higher than the previous year 2022–23 (1.42% cent of payroll). Standardised premium rates are determined by applying factors that adjust the combined average premium rate for employer excess and journey claims in each jurisdiction. An explanation of the adjustments applied to produce standardised average premium rates is available in our data dictionary Jurisdictional Comparison data.
Table 8.7 shows the standardised average premium rate in each jurisdiction over the last 5 financial years as reported in the online dashboard Jurisdictional Comparison
Calculating industry premium rates
Each jurisdiction calculates its industry rates differently. Some calculate certain claims performance elements, while others include current industry premium rates.
Table 8.8 provides an indication of some selected premium rates. Care should be taken when analysing the information in Table 8.8 as it is difficult to make exact comparisons between the states and territories. Industry classification varies from jurisdiction to jurisdiction. Premium category comparisons are done on a ‘best match’ basis and should not be regarded as exact equivalents. Charges in addition to the workers’ compensation premium may be levied in some jurisdictions. The maximum and minimum figures given for experience-rated premium rates represent the extent to which the published rate may be varied according to the various forms of experience rating based on claims rate in a given period. In publicly underwritten schemes, premium rates are set by a central authority based on actuarial forecasts of claim costs across all industry sectors. In privately underwritten schemes, independent insurers charge premiums based on a commercial underwriting basis.
The information below outlines how each jurisdiction calculates their industry premium rates.
New South Wales
There are currently 538 Workers Compensation Industry Classification Rates. Rates are reviewed on an annual basis. Each industry’s rate is calculated based on an actuarially verified methodology considering 5 years of wages and claims data. Further information regarding industry rates and classifications are also published via the icare website.
Victoria
Each industry’s rate is calculated based on claim cost rates and claim frequency rates over a 5-year period with 12 months of development. The rates are calibrated to achieve the average premium rate. Further information regarding industry rates and classifications are available at WorkSafe Victoria website.
Queensland
There are currently 560 WorkCover Industry Classifications. Rates are calculated annually based on an actuarially verified methodology considering 7 years of wages and claims data. Further information is available at WorkCover Industry Classifications.
Western Australia
Recommended premium rates are determined annually according to independent actuarial analysis of claims and wages data provided by current and former licensed insurers and self-insurers. The actuarial analysis includes:
- a calculation of relative premium rates
- examination of the adequacy of the declared outstanding claims reserves
- an analysis of insurers’ expense and contingency allowances
- a projection of the expected incurred cost of claims for the year
- a calculation of the amount of premium expected to meet the cost of claims, and
- a calculation of the implied uniform percentage variation in the relative premium rates to generate the required premium income.
Further information is on recommended premium rates is available on the WorkCover WA website.
South Australia
From 1 July 2015, South Australian industry classifications have been aligned to the Australian and New Zealand Standard Industrial Classification system. Each employer location is allocated to an industry classification that corresponds to the predominant activity for that employer at that location — see Industry classification and rates.
Tasmania
WorkCover Tasmania is required to publish suggested premium rates for employers and licensed insurers. The objective is to ensure full funding, minimisation of cross subsidisation and increased transparency in the premium setting process. The actuarial analysis includes:
- analysis of claim numbers, claim frequency and claim size
- calculation of required premium pool
- examination of effect of legislative change
- analysis of economic assumptions and insurers expense and profit assumptions, and
- a comparison with insurer filed rates.
Suggested premium rates for 2025-26 are available on the WorkSafe Tasmania website.
Northern Territory
The Northern Territory does not provide industry premium rates because the legislation gives insurers the power to set their own industry premium rates and these do not have to be gazetted.
Australian Capital Territory
The Australian Capital Territory releases suggested reasonable rates by ANZSIC class. These rates are determined annually according to independent actuarial analysis of wages and premium data provided by current and former approved insurers and self-insurers. Suggested reasonable industry premium rates and an actuarial review of scheme performance are published annually.
Comcare
In the Comcare jurisdiction industry rates are not applicable as all employers are experience rated.
Seacare
Non-standardised.
DVA
N/A.
New Zealand
In New Zealand there are 538 classification units and 143 levy risk groups. For each classification unit the levy relativities are compared by year for the last 4 years. As a result of this comparison and taking into account such things as the impact of large claims, the number of years experience for a new classification unit, the volume of claims etc., the classification unit will either stay within the same levy risk group or be moved to another.
The credibility-adjusted levy rate relativity of each levy risk group is the expected ultimate cost of claims expressed as a percentage of wages for the levy risk group, compared with the expected ultimate cost of claims as a percentage of wages for all levy risk groups. All the expected ultimate cost of claims and wage quantities used for this calculation are weighted averages of the most recent 6 years of experience. The levy rate relativities are credibility-adjusted (as required) to the self-insurers, then to the levy risk groups, then to the industry groups, and finally to the aggregate rate. The absolute level of the levy rates is set so that the expected costs of the scheme will be met. The classification unit levy rates shown are fully-funded levy rates.
Employer excess
Table 8.9 outlines the type and amount of employer excess payable in each jurisdiction, as applicable.
1 The Australian average premium rate for 2023-24 excludes data from Seacare and DVA