Workers Compensation premiums are a significant cost for many businesses. The complexity surrounding premiums, injury and claims management, and return to work programs often means it ends up costing many businesses more than it needs to and taking up valuable time and resources.
While it all sounds very simple in principle, in practice Workers’ Compensation claims management is anything but. For employers, it can be confusing and costly to get claims submitted on time, paid correctly and reimbursements processed in a timely manner and many employers end up paying more in claims costs and premiums than they needed to!
This is why more and more businesses are outsourcing their Workers’ Compensation to specialists that focus on this exact area of expertise.
Here are 7 reasons you may consider doing the same.
There is no single set of rules Unlike OHS / WHS where attempts have been made to harmonise the legislation, the same cannot be said for Workers’ Compensation. Each of the states and territories has its own complex statutes which vary greatly and often lead to confusion, and overpayment.
Worker’s comp can be difficult to manage and requires a high level of expertise Most businesses find it doesn’t make financial sense to hire an internal expert, relying instead on personnel with minimal training in Workers’ Compensation regulations. Poorly informed decisions result in high claims costs and impact premiums for up to 3 years. There are many ‘rules in the book’ that only an expert with years of experience would be aware of.
Strict timelines for injury notification, payment of wages and return to work plans Did you know that in NSW an employer has to notify icare within 48 hours of becoming aware of a work-related injury or illness (regardless of whether the worker choses to claim compensation or not), however in Victoria you only have to lodge the claim form within 10 days of receiving it from the employee? Each state and territory have different timeframes for submitting claims and preparing return to work plans, which must be adhered to exactly, or the employer risks a fine for failure to do so. Ignorance is not a defence.
Submitting and managing claims is labour intensive Talking with the injured worker, liaising with their line manager, calculating the employees wages, submitting the forms, consulting with the worker’s doctor, the insurer, the rehabilitation provider, medical specialists is a slow, and often labour-intensive process. Frequently follow-ups are needed with the insurer/agent to ensure claims are being managed proactively. That takes internal personnel away from higher-value work.
Calculating employees wage entitlements can be confusing Each State statutes lays out when and what should be paid, how to calculate a worker’s wages while in receipt of workers compensation wage reimbursements. This can be complicated for even experienced claims managers and often payroll get this wrong, either paying too much or too little of the workers entitlements.
Frequent follow-up is needed Even when everything is submitted properly and on-time it does not guarantee reimbursement from the insurer will be prompt. Employers often have to follow up frequently to ensure claims are being managed proactively and that the insurer is working in the best interests of you – the employer. Again, this is a specialized area. Untrained account representatives may not know how to make these calls and spur action or might not be aware of what they can and can’t ask the insurer to do on their behalf.
Remuneration must be declared accurately To calculate workers compensation premiums, regulators and insurers require a wages declaration detailing estimating wages for the coming year and confirming the figures for the year just gone. Under declaring wages by more than 20% can result in penalties. Remuneration is defined differently for workers compensation purposes than it is in financial reporting, meaning many employer get caught out unintentionally declaring incorrect figures. Audits are possible and are taking place more and more frequently.