Workers Compensation d’finitive keeps you up to

date with happenings in private and government

schemes around Australia and New Zealand.

October 2018

In this edition:

Premium rate movements for 2018/19

Recent developments across jurisdictions

A feature article on national recognition of the need for action on work-related mental health.

finity.com.au

WorkersCompensation

| Workers Compensation | October 2018 02

Premium Rates

PREMIUM RATES FOR 2018/19 ARE STABLE OR DECREASING, EXCEPT FOR WA.

% o

f W

ag

es

3.0%

2.5%

2.0%

1.5%

1.0%

0.5%

0.0%

Note: for centrally funded schemes, this is the target average rate set by the scheme; for privately underwritten schemes this is the suggested/recommended rate published by the regulator (rates achieved by individual insurers will vary).

2014/15 2015/16 2016/17 2017/18 2018/19

NSW VIC QLD SA COMCARE

Centrally Funded Privately U/W

NZ WA TAS ACT NT

State 2018/19 Premium

Commentary

NSW 1.40%unchanged

Unchanged for four years

VIC 1.27%unchanged

Unchanged for five years

QLD 1.20%unchanged

Unchanged for five years, even with removal of the Common Law threshold, which is perhaps due to the significant funding surplus

SA 1.70% 6%

Premium rates decreased from 1.80% in 2017/18, and are now down by nearly 40% since the 2015 reforms

COMCARE 1.06% 14%

Significant reduction due to favourable experience: both lower numbers of claims, and reduced duration of incapacity benefits. The additional margin of 13.5% to improve funding was also removed from 2017/18

Now the lowest average premium rate in Australia

NZ 0.72%unchanged

Unchanged from 2017/18

WA 1.59% 4%

4% increase due to increasing claim costs and lower wages growth

TAS 2.10% 10%

10% reduction driven mainly by lower claim numbers

ACT 2.58%unchanged

Unchanged from 2017/18

As this shows, premium rates for 2018/19 are generally stable or decreasing, with WA the exception to this with a small rate increase for the second year in a row.

While it should be remembered that the rates insurers achieve in the privately underwritten schemes tend to be around 15-20% below the published recommended rates, it is clear that the centrally underwritten schemes are generally costing less than the privately underwritten schemes. We wonder whether a 1% to 1.5% premium rate is now the target range for designing an ‘affordable’ workers compensation scheme when reform is being considered.

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Recent developments across jurisdictions

NSW

New claims management model

icare introduced a new claims management model for private sector workers from 1 January 2018. The new model triages claims based on factors such as the nature of injury, likelihood of returning to work, and degree of pain, and provides a level of support based on this triage. The majority of claims are simple and expected to return to work quickly, and do not have a dedicated case manager and are instead self-managed. During 2018 icare expects to get to the stage of automatically approving treatment requests for many claims.

5 year limit on Weekly benefits takes effect

The 2012 legislative reforms introduced a 260 week limit on Weekly benefits where a claimant’s Whole Person Impairment is less than 21% (section 39 of the Workers Compensation Act 1987). Across NSW, nearly 3,500 claimants have had their benefits cut off by 30 June 2018 as a result of these new rules (this basically covers the first six months that transition claims could have reached the 260 week cutoff).

This was a significant event for the scheme. The Workers Compensation Independent Review Office, which pays for injured workers’ legal costs on a case by case basis, paid for more than 2,250 injured workers to receive legal advice relating to section 39 and their WPI scores. To date, close to 400 claims have lodged a dispute at the Workers Compensation Commission, either disputing their WPI assessment or claiming they were not medically stable and hence could not undergo a WPI assessment.

There will now be a lower level of claims reaching this boundary each month as it becomes a business as usual part of the scheme.

Changes to Scheme Agents

NSW previously had five Scheme Agents (working on behalf of icare) in the private sector workers compensation scheme. QBE and CGU ceased managing claims during 2017, with their open claims largely being transferred to GIO. GIO will exit during 2018, and Allianz during 2019, leaving EML as the sole Scheme Agent. EML has been managing all new claims since January 2018.

Dispute resolution system changes

In May 2018 the NSW Government announced proposed changes to the dispute resolution system. The aim is to make the process of resolving disputes less complex and more consistent, regardless of the nature of the dispute. Currently some disputes are determined by SIRA (Work Capacity Decision merit reviews), some by WIRO (Work Capacity Decision procedural reviews), and some by the Workers Compensation Commission (all other disputes). The proposal will see the Workers Compensation Commission undertake all dispute resolution once an internal review is conducted by an insurer.

All enquiries and complaints from injured workers, if not resolved by the insurer in the first instance, will be directed to WIRO for assistance. WIRO will continue to administer ILARS (the Independent Legal Aid and Review Service, which provides funding for legal costs for injured workers). Enquiries and complaints from employers and others will be directed to SIRA.

The changes will require legislation, and a draft bill is expected shortly.

Victoria

Move to Geelong

WorkSafe Victoria has recently completed its move to Geelong, with over 500 staff making the move from Melbourne. More than 700 jobs have been transferred to the region since the start of the relocation project, which has been part of an ongoing push to establish Geelong as a national centre for social insurance excellence.

Strategy 2030

WorkSafe have announced its new strategy, WorkSafe 2030, based on a prevention-led transformation which will involve a significant technology investment and a greater focus on customer experience. A Customer Experience Blueprint will be used to ensure a strategic client-centric vision is driving decisions about technology and business design.

| Workers Compensation | October 2018

South Australia

Return to Work scheme success

In conjunction with major scheme reform that commenced in July 2015, ReturnToWorkSA implemented a number of service innovations including: telephone reporting (80% of claims are now reported by phone), mobile claims management and a more personalised face-to-face service model with low average caseloads.

Three years on and there are a range of positive indicators in relation to these changes:

Return to work and remain at work rates are at an all-time high:

• 4 weeks: 79% (up 6% from pre-reform levels)

• 13 weeks 88%: (up 7% from pre-reform levels)

• 52 weeks 92%: (up 4% from pre-reform levels)

Complaints are down 91% and legal disputes are down 72%

Customer feedback is positive, with 80% of employers and workers rating service at 7/10 or higher, and 50% rating service at 9 or 10/10 in FY 2017/18.

Scheme Review

The Independent Review of the Return to Work Act 2014 was released in June 2018. The Hon John Mansfield AM QC concluded that the experience of the RTW Scheme “generally compares favourably to the [previous] WCR Scheme”. He did not recommend major changes to the Act or benefits available to workers, and has recommended that disputes under the RTW Act remain with SAET for dispute resolution.

Mr Mansfield’s review is publically available here Independent review of the Return to Work Act 2014.

Opioid Projects

Opioid use, or misuse, is becoming an increasingly common factor impacting on an injured worker’s ability to recover and return to work (noting that the opioid use will at times predate the work injury). In response, RTWSA have undertaken a range of initiatives to help identify the impacts and provide options to support workers and clinicians, including:

Services for GPs to educate and support better medication management, including medication reviews for workers

Web based information and resources for workers, employers and health providers

Active partnership with ScriptWise (a not for profit organisation) to prevent the harms associated with prescription medication use

A partnership with the Drugs and Therapeutics Information Service (DATIS) to deliver an in clinic medication education and/or review service to GPs and workers through the Second Opinion Pharmacy service

Second Opinion Medicine service, including access to an addiction and pain physicians for a clinical review and advice

Education for medical practitioners around the preference to use PBS scripts rather than private scripts which can be used avoid the

PBS regulatory prescribing requirements.

04

Queensland

Five-Year review

Part of the range of legislative reforms in 2013 was the requirement for the Minister for Industrial Relations to undertake a review of the workers’ compensation scheme every five years. 2018 saw the first of these take place. The terms of reference were broad ranging, and the committee reported back to the Minister in June 2018. Findings and recommendations are expected to be made public in the near future.

NIIS update

As at March 2018, the NIISQ Agency was managing 34 claims on behalf of workers’ compensation insurers, including 16 claims for injuries sustained as a result of a journey.

Coal Workers’ Pneumoconiosis (CWP)

CWP has been an emerging issue in the Queensland workers’ compensation scheme over the past few years. As at March 2018, 28 CWP-related sclaims had been accepted as CWP, but 19 claims had been accepted with a different diagnosis; 12 claims had been rejected because the worker did not have CWP or the exposure was not in Queensland.

On 23 August 2017, the Queensland Parliament passed the Workers’ Compensation and Rehabilitation (Coal Workers’ Pneumoconiosis) and Other Legislation Amendment Act 2017 based on recommendations from a stakeholder reference group. These amendments:

Introduced free medical examinations for coal workers who left the industry prior to 1 January 2017

Allow claimants to re-open their claims to access further benefits under the workers’ compensation scheme

Introduced new lump sum compensation of up to $120,000 based on the severity as graded under the International Labour Organization (ILO) guidelines.

Cross Sector Initiatives

New research provides the first examination of Australia’s compensation and benefit systems to drive improvements in work and health outcomes. The Cross Sector Project study by Monash University was commissioned by the Collaborative Partnership to Improve Work Participation – established by federal workers’ compensation insurer Comcare to drive new approaches to health-related work incapacity.

Monash researchers examined systems covering workers’ compensation, social security, veterans’ compensation, superannuation, life insurance and motor accident compensation to identify the flow of people through them, how the systems interact, and where they can be improved to deliver better health and productivity outcomes.

Comcare CEO Jennifer Taylor says the research delivers the groundwork for change: “This gives us a basis for improving Australia’s service delivery model for supporting people in their return to work”

The Collaborative Partnership – which includes insurers, unions, the medical profession and government agencies – is using the study to consider improvements such as data sharing to help the benefit systems interact more effectively.

Western Australia

On 15 February 2018, the Minister for Commerce and Industrial Relations announced its approval for the drafting of a new workers’ compensation statute, based on recommendations from WorkCover WA’s “Review of the Workers’ Compensation and Injury Management Act 1981: Final Report”. In announcing the drafting, the government acknowledged that the current Act “is outdated, complex and fails to provide sufficient clarity on fundamental aspects of the scheme” as a result of the piecemeal amendments that have been made over time.

The Bill will implement lifetime care and support arrangements for catastrophically injured workers, and amendments will build on the WA Catastrophic Injuries Support Scheme introduced for motor vehicle accidents in 2016.

Public consultation will occur on a draft Bill prior to introduction into State Parliament.

| Workers Compensation | October 2018 05

| Workers Compensation | October 2018 06

Tasmania

Northern Territory

Amendments to Tasmania’s Workers Rehabilitation and Compensation Act 1988 passed through Parliament during October 2017 and took effect on 1 January 2018. The aim of the amendments was to remove excessive red tape so that positive outcomes for injured workers and employers can be achieved.

Key changes are:

Weekly payments expire at pension age rather than age 65

A dependent child of a deceased worker is now able to claim for lump sum payment under section 67 of the Act

Medical practitioners no longer need to hold accreditation from the WorkCover Board to issue workers’ compensation medical certificates, and can now issue certificates of incapacity without having to provide reasons for periods of up to 28 days

New prescribed method for assessing WPI

An employer or insurer’s injury management program no longer needs to be reviewed every 12 months, and a return to work coordinator must be appointed by an employer who employs more than 100 workers (previously 50)

In addition, a review has been initiated into whether the Act should be amended to include presumptive provisions for certain workers in relation to post-traumatic stress disorder. The report and its findings must be tabled in the Parliament by 1 October 2018.

In May 2018 the NT Government announced a best practice review into workplace health and safety. Industry, union and government nominees will assist in the review and public feedback is also being sought.

Comcare

Improved scheme performance

Comcare has reduced its liabilities by $700 million, to $2.4 billion, over the three years to June 2017 (2018 results are not yet available, and so are not included in this saving). The improvements were driven by improved claim management strategies, better RTW outcomes, reduced administrative costs and lower claim frequency. The average scheme premium rate has continued to drop and is now the lowest in Australia.

The results are particularly impressive given there is no ‘reform’ element (proposed wide-ranging reforms to benefits and eligibility proposed in March 2015 were never enacted).

Self Insurance

The SRC Commission continues to issue self-insurance licences. Most recently, licences were granted to the Australian National University and Ron Finemore Transport Services (commencing July 2018). Large self-insurers such as Australia Post, Commonwealth Bank, Telstra, Optus and Linfox have had their licences extended to June 2022 or later.

| Workers Compensation | October 2018 07

National recognition of the need for action on work-related mental health

Mental health is now the leading cause of sickness absence and long term work incapacity in most developed countries, with an estimated cost to Australian employers of $6 billion per annum.

In workers’ compensation, psychological injury claims often present challenges that are not seen with physical injuries, and there are a range of ways this is influencing workers compensation portfolios:

1 in 5 Australians aged over 15 years are affected by a mental health condition each year, and so even when a claim is not caused by a psychological injury, there will very often be mental health factors that are relevant to recovery and RTW

There can be very stark differences between how different people perceive ‘work pressures’ and ‘management actions’, and skills are required to manage this effectively

There are now much higher thresholds for employers to meet WHS requirements and ensure a safe workplace and that employee mental health and wellbeing is maintained.

Research is being sponsored by regulators and insurers in a range of jurisdictions. There is now national recognition of the importance of a person-centred approach to claims management, and of the strategies insurers and employers need to adopt (and avoid) to achieve better claim outcomes. Another focus is to create workplace environments that minimise the risk of workplace-related mental health problems.

Safework Australia has adopted a comprehensive national framework that provides a blueprint for better claims management practice. The development of the framework was informed by consultation with workers compensation insurers, regulators and claimants. It provides guidance for improvements across six action areas (see panel), and starts with recognising the complexity of mental health problems.

The six action areas of Safework Australia’s Framework

Develop management practices for psychological claims

Optimise claims management teams

Engage and support employers to enable RTW recovery at work

Bring evidence to treatment and rehabilitation

Effective decision-making supported by analytics and automation

Measure and record progress

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The underlying philosophy is that claims

management should be focused on the wellbeing

of the claimant, and that achieving best practice

requires change at all levels of the system:

Person (micro) level: front line claims

management, interaction with individual

claimants

Process (middle) level: insurers and agents

Systemic (macro) level: workers’ compensation

regulators, industry bodies, superannuation

funds, health insurance and disability support

organisations.

Safework Australia acknowledges that significant

reform is already underway at the micro level, with

better awareness of mental health and differently

structured claims teams more able to meet specific

needs. At the middle level, progress is mixed;

while many insurers and agents have adopted

risk-based triaging of claims, the approaches vary

in sophistication and many are unvalidated, and

so there is scope for more work on improving

and automating segmentation. At the macro level,

systemic level issues including the exploration

of the interface between workers’ compensation,

group life insurance, superannuation, health

insurance and disability support, has only

just begun.

There is much employers can do to create more

‘mentally healthy’ workplaces . The Mental

Health Commission identifies strategies in six key

workplace domains (see panel). Safework Australia

has developed a risk assessment tool for use by

employers, and in June 2018 released National

Guidelines that outline a systematic approach

to creating and maintaining mentally healthy

workplaces.

Strategies for workplaces identified by the Mental Health Commission:

Better work design

Build employee resilience

Build a better work culture

Early recognition and intervention strategies

Better support for RTW

Greater awareness of mental health

Sources:

ACT: ACT Workers’ Compensation Review of Scheme Performance to 30 June 2017, April 2018, prepared by Finity Consulting

Comcare: 2018-19 Premium Pool Factsheet; Safety, Rehabilitation and Compensation Commission website

NSW: icare website; WIRO website; NSW Government Finance, Services & Innovations website; NSW Budget Estimates hearings

NT: NT WorkSafe website

Qld: Worksafe QLD website

SA: RTWSA website

Tas: Suggested Industry Premium Rates for 2018/19 WorkSafe Tasmania, April 2018, prepared by PwC

Vic: WorkSafe Victoria website

WA: WorkCover WA website

The evidence-base, tools and guidelines are

available to help embed a better approach for

preventing and managing work-related mental

health problems. Regulators can lead, but the call is

out for workers’ compensation insurers to measure

themselves against best practice, continually

improve their own operations and those of

their client employers.

Sue Freeman +61 2 8252 3431

sue.freeman@finity.com.au

Sydney Office

Andrew McInerney +61 2 8252 3372

andrew.mcinerney@finity.com.au

Sydney Office

David McNab + 61 3 8080 0903

david.mcnab@finity.com.au

Melbourne Office

Contact the author

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Six time winner ANZIIF Service Provide of the Year, ANZIIF Hall of Fame

AUSTRALIA

Sydney

Level 7, 68 Harrington StreetThe Rocks NSW 2000+61 2 8252 3300

Melbourne

Level 3, 30 Collins StreetMelbourne VIC 3000+61 3 8080 0900

Adelaide

Level 30, Westpac House 91 King William Street Adelaide SA 5000+61 8 8233 5817

NEW ZEALAND

Auckland

Level 5, 79 Queen Street Auckland 1010+64 9 306 7700

Finity’s Workers’ Compensation Team

Finity’s Workers’ Compensation Team prides itself on looking beyond the pure analytics to gain a deeper understanding of the cost drivers for schemes. This means we can respond appropriately in valuations, premium setting and scheme design.

In addition to our actuaries, Finity has a dedicated group of claims and operational insurance experts in our Management Consulting practice, who can assist with claims and expense management.

If you would like to receive future editions of Workers Competition, please contact Renae Hoskins on +61 2 8252 3350 or at renae.hoskins@finity.com.au.

This article does not constitute either actuarial or investment advice. While Finity has taken reasonable care in compiling the information presented, Finity does not warrant that the information is correct.

Copyright © 2018 Finity Consulting Pty Limited

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