Can good health and safety practices really reduce your workers’ compensation premiums?
Short answer - yes!
It’s the time of year when many agricultural workers’ compensation premiums get reviewed, calculated and renewed. It’s a necessary cost but it can seem a lot of money – so what can be done to reduce your farm workers premiums?
Premiums are calculated and set each year and are generally determined on a range of factors which may include:
- The level of risk associated with an industry
- Workers’ compensation claims performance in the past 12 months for each industry
- Your business’ claims history
- Number of employees
There are many factors involved but it’s safe to say that improving safety in farming will result in less claims, lower costs and therefore flow on to reducing premiums.
Some states have underwritten insurance policies and you shop around for the best value, like you do for most insurance. Other states have schemes managed by the state, so premiums are based on an industry rate applied by that state’s scheme.
Underwritten or not, the performance of an industry as a whole has an impact on individual premiums.
Industry rates for agriculture vary state by state but can exceed 6% for high risk, high claim sectors.
Base premiums in some states are be calculated by total remuneration multiplied by the industry rate (%), then your business’ claims experience is factored in and other statutory charges are added.
So how does improving health and safety affect how premiums are calculated?
Easy – by having systems in place to manage risk and prevent injury, it’s far less likely anyone will be hurt, therefore there’s less claims and costs.
If this happens across agriculture as a whole, the industry rates will start to reduce effectively lowering premiums.
That does NOT mean avoiding lodging a claim - the penalties for that are pretty tough and often worse than the cost of the claim!
If someone is hurt, lodge the claim and support them back to work as quickly and safely as possible.
By implementing better farm safety practices using Safe Ag Systems or a system that works for your business, you will reduce risks and help keep your people safe at work, and should reduce your workers’ compensation premium as a result. Now that’s a win everyone needs.
Disclaimer: Content on this website may be of relevance to users outside of Australia, but content links and examples are specific to Australia. Please check with your local authority for your country and industry requirements.
Originally published 01 July, 2020.