The complexity that surrounds Workers Compensation premiums and claims management often means that workplace injuries cost businesses far more than they need to and take up valuable time and resources.
While managing Workers Compensation insurance and claims appears relatively simple on the surface, in practice it can be anything but. Submitting claims, ensuring that they are paid correctly and reimbursements are processed in a timely manner, injuries are effectively managed and appropriate return to work programs are put in place can be time consuming, confusing and costly for businesses and their owners.
Hiring an internal Workers Compensation specialist only makes financial sense for very large businesses with a high volume of claims. This means that in most businesses responsibility will fall with HR, Accounts or Payroll personnel, who have minimal or no training in Workers Compensation regulations and limited time to deal with the complexities of the claims and the needs of employees affected.
This can lead to mistakes being made, which in turn can lead to higher claim costs, increases in Workers Compensation insurance premiums and in some cases fines or penalties. Why?
There is not a single set of rules
Unlike OHS / WHS where attempts have been made by the states to harmonise the legislation, the same cannot be said for Workers Compensation. Each state and territory has its own complex statutes which vary greatly and can lead to confusion and often overpayment.
Strict, but differing timelines and requirements can result in fines
The timeframes for submitting claims and preparing return to work plans must be strictly adhered to, but differ greatly from state to state.
Remuneration declarations are easy to get wrong
To calculate Workers Compensation premiums, regulators and insurers require a wages declaration that details estimated wages for the coming year and confirms the figures for the previous year.
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 and thus many employers unintentionally submit incorrect declarations.
Calculating employee’s wage entitlements can be confusing
Each State statute has different stipulations for when and what should be paid and how to calculate a worker’s wages while they are in receipt of Workers Compensation wage reimbursements and payroll departments often get it wrong.
Submitting and managing claims is labour intensive
Submitting and managing claims requires a lot more than just filling in a few forms. Talking with the injured worker, liaising with their line manager, calculating the employee’s wages, submitting the forms, consulting with the worker’s doctor, the insurer, the rehabilitation provider and medical specialists is a slow, complex and time consuming process. Even when everything is correctly completed and submitted on time, prompt reimbursement from the insurer is not guaranteed. Frequent follow up is required to ensure claims are progressing and being managed proactively by the insurer. This is a specialised area and ongoing proactive management takes time and experience to get it right.
Outsourcing Workers Compensation premium and claims management has many benefits for businesses
Outsourcing Workers Compensation premium, claims and injury management to a specialist partner allows many businesses to:
reduce premium costs
reduce the number of claims and claim costs
improve return to work timeframes