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Workplace Injury Insurance – Claims estimates

Workplace Injury Insurance – Claims estimates. Information for employers. September 2006. Claims ESTIMATE is just that. There’s no crystal ball to be able to predict with absolute certainty what the actual cost of every claim will be

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Workplace Injury Insurance – Claims estimates

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  1. Workplace Injury Insurance – Claims estimates Information for employers September 2006

  2. Claims ESTIMATE is just that • There’s no crystal ball to be able to predict with absolute certainty what the actual cost of every claim will be • But we do have 20 years of data of similar types of claims which is what the model uses to calculate an estimate • Over time, these estimates closely match what’s paid out • Initial estimate on a claim is an average – for that type of injury, industry, worker etc. • It’s how employers work with their agents to manage claims that determines if estimates then become higher/ lower

  3. A way to measure performance • Using statistical model to be consistent and objective (statistical case estimate, or SCE model) • All employers treated the same – no more lobbying agents for lower estimates • Claims costs are used as a relative measure of your performance – comparing you to your peers • All estimates, whether “high” or “low”, are included in the overall claims data for your industry • If you manage your claims better, you are rewarded with a lower premium rate than your industry, and vice versa

  4. Business size affects impact of claims costs Premium rate Possible rate surcharge to industry rate Industry rate Potential rate discount to industry rate Small employer <=$200K Medium size$5-$10m Very large >$100m

  5. What influences an estimate?

  6. How claims attract an estimate • Model looks at a range of characteristics of a claim, and how they interact, to allocate an “average” estimate • This estimate is based on years of data of what has actually happened to similar sorts of claims • There are millions of different combinations of factors so a “dollar breakdown” of each component does not exist • Estimates updated regularly to reflect recent Return To Work activity • Inactive claims still have estimates – 30% of claims “come back again” but we don’t know which ones

  7. Return To Work activity key driver of estimates The model looks at six main payment types: • Weekly • Medical & Rehab • Maims and Impairment Benefits • Medico-Legal • Legal • Common Law (new & old) • The model also looks at the interdependencies between some payment types

  8. Example: status of weekly benefits paid At the point of calculation, is the worker considered to be: • “on benefits” – thus high probability of receiving future benefits • “off benefits” – lower probability of receiving future benefits • “yet to commence benefits” – no payments made, therefore lowest probability of receiving future benefits Payment status changes over time, affecting the estimate

  9. How various characteristics affect estimates Note: estimates respond to how the characteristics interact, so the table below is a guide only.

  10. Examples of average claim estimates • Where weekly compensation is estimated: • Initial average for weekly benefits $30,000 • Incapacitated (on benefits) $160,000 • Yet to commence weekly benefits $5,000 • Previous activity (fully or partially off benefits) $20,000 • Where medical costs are estimated $8,000 Any claim can have one or more estimate categories depending on the characteristics of the claims

  11. Key myths

  12. Myths of claims estimates • It’s not worth reporting claims now, especially minor ones • Estimates are high to get more money out of employers • High claims estimates equal high premium costs • I’m not rewarded for my good claims performance • My estimates are too high – that cost will never be realised Remember, claims costs are simply a measure to compare you with your industry

  13. Main points to remember • It’s insurance – employers pay their premium share based on whether they perform better or worse than their peers • Everyone is treated the same – claims costs are calculated objectively and consistently • Large estimates do not necessarily equal large premiums – your own claims costs contribute to your industry’s costs • Fastest way achieve lower estimates is to get your injured workers back to safe, sustainable work quickly

  14. Where to go for more information • Your Agent • www.workcover.vic.gov.au • premium_information@workcover.vic.gov.au • VWA Advisory service – 1800 136 089

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