WORKERS’ COMPENSATION MARKET UPDATE: Q1 FY22

Workplace Risk
By Sharon Rutherford – Head of Risk Consulting

 

KEY TAKEAWAYS FROM FY22: Q1?

Employers are reminded of the Victorian changes around primary psychological injuries that came into force on July 1, 2021.  These changes help eligible workers and volunteers receive treatment for work-related mental injuries. Employers are required to report these injuries within three business days. More information about the provisional payments is available via WorkSafe Victoria

Employer actual wage remunerations are now due and should already be closed for the FY21 policy period. Penalties can apply where wages are not declared. 

 

KEY MILESTONES / CONSIDERATIONS FOR CLIENTS FOR THE NEW QUARTER (FY22-Q2): 

WorkCover WA has announced significant changes to the Workers Compensation and Injury Management Act 1981. The Bill proposes recommendations by Workcover WA in its 2014 Review of the Workers’ Compensation and Injury Management Act 1981: Final Report. The proposed changes have the potential to alter the way workers’ compensation claims are managed and resolved, in addition to increased costs and burdens on employers in WA.  

A copy of the draft Bill, along with an explanation of key materials and details about making a submission, is available via WorkCover WA. Honan’s Workplace Risk team is committed to keeping you updated on the impacts to businesses and employees as this situation evolves – please reach out at any time with further queries.  

 

ANY INDUSTRY TRENDS YOU CAN SEE ARISING IN  OVER THE REMAINDER OF FY22?

The National Return to Work Strategy 2020 – 2030 (the Strategy) drives national action to improve return to work outcomes for Australian employees with a work-related injury or illness. Under the Strategy, Safe Work Australia and Griffith University have produced two reports examining the psychological response to injury among support workers, and the stigma injured or ill employees experience in the workplace. Crucially, both reports provide recommendations around supporting employees and facilitating a successful return to work.  

While the onus of responsibility remains on employers to manage their risk exposures, organisations’ Leadership Teams and WHS Systems alongside wider cultural forces are enhancing awareness about safe work environments and reducing stigma associated with workplace injuries.

 

 

Market Update: Q1 FY22

 

 

Superannuation Stapling is coming on November 1, 2021

Employee Benefits
Introduced as part of the recent Your Future, Your Super Federal Government measures, superannuation stapling will apply from 1 November 2021.

 

WHY ARE THE CHANGES HAPPENING?

Under the new measures, working Australians will belong to one superannuation fund for life unless they choose otherwise. The measures aim to reduce the number of superannuation accounts people may acquire throughout their working life, minimising the likelihood of additional fees for holding multiple accounts, lost superannuation, and lower interest due to unconsolidated funds, all of which erode the superannuation balance.

WHAT DO THE CHANGES MEAN?

From November 1st, 2021, Superannuation Stapling rules come into effect for all new hires which will determine the superannuation fund into which employers’ Super Guarantee Charge (SGC) contributions are made. The Australian ATO will be writing to all employers advising of this change and employers will be required to play a key role in the implementation of the measures. This is explained below.

 

MAKING SUPERANNUATION CONTRIBUTIONS FOR NEW EMPLOYEES:

STEP 1

Employers will need to provide their new employees with the superannuation standard choice form.

New employees can elect to join their employer’s default superannuation fund or elect to have the company contribute to an existing fund they hold. Employers will be required to provide this form to employees, but completion is optional for employees.

If the employee nominates a superannuation fund of choice then the employer must acknowledge this and provide the relevant details to Payroll and make contributions to the chosen fund. In this case, no further action is required.

If the employee does not nominate a fund of choice and does not elect to join the default plan, then as an employer you will need to move to Step 2.

 

STEP 2

To try and limit the current situation where employees hold various superannuation funds, as an employer, you will be obliged to identify your employee’s stapled fund and make contributions to this fund. If the new employee does not nominate a superannuation fund, employers are required to make contributions to the employee’s ‘stapled’ super fund (if they have one).

The ATO is responsible for identifying an employee’s stapled super account and provide employers with the required account information to contribute to that fund. A stapled fund is usually the superannuation fund that received the employee’s most recent contribution. The legislation provides specific requirements around what constitutes a stapled superannuation fund. Other rules determine stapling classification in the event a member has multiple accounts and where the most recent contribution is not easily classified. These rules set out by the ATO consider factors such as account balance and attributes about the ‘active’ status of the account (known as ‘tie breaker’ rules).

To search for an employee’s ‘stapled’ super fund, or determine if they have one:

  1. Log into the ATO Services website and search for the employee using their payroll information. 
  2. The ATO portal will provide details of the employee’s stapled fund (if they have one)
  3. Make future contributions to:
    •  the employee’s ‘stapled’ fund provided by the ATO, or
    • the employer’s default fund if you hold one where the employee doesn’t have a ‘stapled’ fund and they haven’t chosen a super fund. 

Following completion of the Step(s) above, employers can contribute through their normal contribution method (e.g., clearing house, etc.).

 

CAN A NEW EMPLOYEE JOIN THEIR EMPLOYER’S DEFAULT FUND?

Yes. Employees who wish to join their employer’s default fund can join even if they have a stapled fund. Employees can join their employer’s default fund by completing the Superannuation standard choice form and selecting ‘Join my employer’s default fund’, or electronically through the employer’s onboarding system (if available).

In essence, the default superannuation fund is no longer the fallback position if a new employee does not nominate a fund of choice.

 

WHAT ABOUT EXISTING EMPLOYEES WHO WANT TO CHANGE SUPERANNUATION FUNDS?

If an employee wishes to change superannuation fund, they are required to complete the superannuation standard choice form. If an employer is concerned about the employee having multiple funds, they should suggest the employee seeks advice from a Financial Adviser, as there can be negative impacts such as multiple fees being charged by not having superannuation funds consolidated.

 

 

 

Find out about changes to Personal Income Protection Policies in 2021

Changes to Personal Income Protection Policies

Employee Benefits
The Australian Prudential Regulation Authority (APRA) is making changes to new individual personal retail income protection policies after years of material losses have made the product offering unsustainable.

 

The changes do not impact Group Income Protection cover (companies with 20+ employees) or existing individual personal retail income protection policies.

 

From October 1, 2021, changes to new individual personal retail income protection policies are as follows:
  • Income replacement ratios will be reduced from 75% to 70%. This means in the event of an income protection claim after October 1, 2021, the claimant would receive up to 70% of their income after 6 months of the claim.
  • During the first 6 months of a claim, a claimant is entitled to up to 90% of their income, depending on the policy they have entered.
  • Income will be calculated over the 12 months before the claim, compared to some current policies which use the highest rolling 12-month income over the last 2 or 3 years to smooth out fluctuating income.
  • Guaranteed renewable policies will no longer exist. Long benefit periods, such as up to age 65, will be managed and reviewed to help ensure there is motivation to return to work. Insurers understand that long-term claims are costly to businesses and in effect, cause premium increases for existing clients.
  • This may include changing from “Own Occupation” to “Any Occupation” definition after 2 years on the claim. “Own occupation” refers to the individual’s job when they make a claim, “any occupation” refers to an occupation the individual can fulfil, despite still being unfit for their own occupation.
  • Income protection policy terms must not exceed five years (from 1 October 2022). After the five years, a new policy must be entered into that reflects the terms and conditions that apply to new contracts then on offer by the life insurance company. If an individual enters a new contract after the initial five years, medical underwriting is not required. Any changes to the client’s occupation, financial circumstances, and dangerous pastimes must be updated and reflected in the new policy.

 

Companies with existing Group Income Protection cover or those looking to establish one (minimum headcount 20+ employees) will not be impacted by these changes.

 

A FINAL NOTE

To find out more about these changes or to understand your options for implementing Group Income Protection cover, please reach out to your dedicated Honan Global Benefits contact.

 

 

Learn about Superannuation Stapling – coming on November 1, 2021

Market Update: Q1 FY22

Construction

Discover our forecast of insurance trends and business implications in the quarter ahead across the following sectors:

 

CORPORATE     FINANCIAL LINES    STRATA & REAL ESTATE    BRIC CONSTRUCTION INSURANCE   WORKERS’ COMPENSATION   

 

 

CORPORATE

By Poppy Foxton – National Head of Corporate Insurance & Risk Solutions
KEY TAKEAWAYS FROM FY22: Q1?

The last quarter has seen further stabilisation within the property and liability insurance markets, as rate increases continue to moderate with insurers clawing back profit following a difficult natural catastrophe season (CAT) season in 2020-2021.  Whilst the cost of transferring risk still favours the seller, the pricing pendulum has started to swing towards buyers. Longtail liability lines however are still seeing rate increases of 15-20%.  Certain segments are seeing much higher increases. For example, purchasing molestation cover remains highly challenging, with markets withdrawing capacity and decreasing appetite for these types of exposures. Honan is continuing to guide clients through more sophisticated risk transfer and retention program structure options as a strategy to manage these risks, either by electing aggregate deductible structures to offset premium increases, or through non-traditional forms of insurance such as discretionary mutuals or captives. 

In addition, the second COVID-19 Business Interruption (BI) test case was heard in the Federal Court recently, with the outcome handed down on October 8, 2021. An overview of the second test case, along with the key findings is available here.  An appeal date has been scheduled for November 2021 – we’ll provide an update when that judgment is delivered. 

 

 

KEY MILESTONES / CONSIDERATIONS FOR CLIENTS FOR THE NEW QUARTER (FY22-Q2): 

As NSW and VIC commence their paths out of lockdown, clients in the hospitality, tourism and retail industries are expecting improved business results for the quarter ahead. Honan is working closely with clients as they navigate the complexity of returning to the office and liability exposures around the relevant State/Territory orders concerning vaccinated vs unvaccinated customers.

Australia’s east coast experienced severe weather over the first weekend in October, a possible harbinger of events to come in the natural catastrophe (CAT) season. Meteorologists are again predicting equal chances of La Niña events, bringing with it a risk of associated storms and flooding.  Marking the official onset of Australia’s CAT season, October is the time for clients to work with their broker to ensure they’re adequately prepared. A CAT plan and undertaking preventative maintenance on your assets in advance are advisable at the beginning of Q2. 

 

ANY INDUSTRY TRENDS YOU CAN SEE ARISING IN  OVER THE REMAINDER OF FY22?

Insurers will continue to take a conservative approach to underwriting through pricing and capital deployment. For clients, this will mean insurance supply will continue to remain ample, leading to increased competition and further stabilisation of pricing. Following the Haynes Royal Commission, a raft of new financial services industry regulations come into effect in FY22 including the Claims Handling AFSL license requirements, revised Dispute and Complaints Processes, and the implementation of Target Market Determinations. The industry is preparing to implement new policies and processes designed to give greater protection to consumers, particularly retail clients.  

 

 

 

FINANCIAL LINES SNAPSHOT

By Henry Clark – Head of Professional & Executive Risks
KEY TAKEAWAYS FROM FY22: Q1?

In September, the Australian Cyber Security Centre (ACSC) published its annual cyber threat report for the 2020-2021 FY, revealing total self-reported losses from cybercrime in Australia in excess of $33 billion.  The escalating prevalence and severity of cyber attacks, along with changes in governance expectations, director liabilities, and regulatory reform is seeing business leaders place significantly more emphasis on their organisations’ cybersecurity and risk management strategies. Head here for our in-depth analysis of the cyber insurance market and updates across a range of different industries, including financial institutions, professional services, and technology. 

Following consecutive years of rate increases, there is clear evidence pricing is beginning to plateau for the public company D&O insurance market. Whilst insurers still applied rate increases during the Q1 renewal period, these were much lower than the prior quarter. This suggests the corrective portfolio measures required in the D&O space have largely been achieved and pricing is reaching a sustainable level for insurers. Challenges remain for companies with poor financials and industries heavily impacted by COVID-19. The ability of brokers to differentiate these clients by communicating in-depth knowledge of their risk exposures and being able to provide quality information about their risk management and risk mitigation activities is crucial to securing positive renewal outcomes for clients.  

The professional indemnity (PI) market remains challenging for certain professions, particularly design and construct professionals, digital banks, mortgage brokers, financial planners, and non-bank lenders. These professions still face supply and demand issues due to several insurers withdrawing from the market. Premium rates increased on average 15-20% in the last quarter, with insurers being highly selective in risks they choose to insure.  

 

KEY MILESTONES / CONSIDERATIONS FOR CLIENTS FOR THE NEW QUARTER (FY22-Q2): 

For management liability (ML) and insurable exposures for private enterprises, the full effects of COVID-19 remain unknown. As a result, underwriters are cautiously monitoring their portfolios and the solvency of Insureds. Crime and employment practices liability coverages continue to be the main triggers for ML claims, accounting for over 70% of combined losses for ML insurers.   

 

In this hardening insurance market where demand outstrips supply, Honan is working to ensure all clients understand the outlook for their renewal programs to ensure the right level of cover for their organisation. Our insurer partners expect strong underwriting submissions, based on the best available information, in order to optimise the price, terms, and conditions for your risks.  

 

ANY INDUSTRY TRENDS YOU CAN SEE ARISING IN  OVER THE REMAINDER OF FY22?

At the forefront of renewal negotiations are cyber placements. These remain challenging for certain risks and risk management around ransomware attacks in particular. Insurance carriers and cyber underwriting practices continue to evolve from a traditionally narrow focus on factors such as revenue, number of employees, record count and industry class, to a wider underwriting lens encompassing loss modelling tools and continual system scanning, both in-house and via outsourced IT security. Insurers are delicately balancing the growth of their portfolios, whilst remaining disciplined in the face of surging claims and declining profitability.   

As always, engagement with your broker well in advance of renewal dates is essential. 

 

STRATA & REAL ESTATE SNAPSHOT

By Kieran Drum- National Head of Strata
Matthew Henderson – Operations Manager: Underwriting Facilities & Strata
KEY TAKEAWAYS FROM FY22: Q1?

SOCIAL ENGINEERING ATTACKS

The Real Estate sector has been hit hard by an increase in frequency and severity of cybercrime incidents. Having moved much of their interactions and processing online over the last 18 months, real estate agents and property managers are especially vulnerable to social engineering attacks. Social engineering is a general term referring to an attack where the fraudster successfully impersonates a trusted employee, vendor, supplier, customer, or even a CEO or CFO; manipulating the victim into disclosing security details and sensitive information. These attacks often come in the form of phishing emails. Sadly, Honan clients are by no means immune to such threats. In the last quarter alone, we have seen multiple successful cyber attacks on our clients. Fortunately, in each instance, an appropriate level of cover was in place via a bespoke cyber policy.  

While many organisations believe they can rely on extensions to Professional Indemnity and Management Liability policies to provide adequate cover in the event of a cyber incident claim, this is not the case. To ensure their level of insurance is truly fit for purpose, real estate agents and property managers are strongly encouraged to review their internal cyber security strategies with their broker. 

 

EARTHQUAKE

On September 22, 2021a 5.9 magnitude earthquake struck Victoria, with tremors felt across the state and as far away as Newcastle in NSW. While there were no immediate reports of serious injury or death, damage included collapsed walls, shattered windows, and cracked roadsEarly estimates place the total cost of damage at $150 million, with almost 10,000 claims. At the time of publication (October 14, 2021), the earthquake has not been declared a catastrophe by the Insurance Council of Australia (ICA)Head here to find out more about how a catastrophe is defined and what this means. If you believe you have a claim, please contact your broker directly. 

 

 

KEY MILESTONES / CONSIDERATIONS FOR CLIENTS FOR THE NEW QUARTER (FY22-Q2): 

With heavy rainfall, hail, and tornadoes marking a busy start to the Australian storm season, the Bureau of Meteorology has predicted a 50% chance that La Niña conditions will return this spring (double the normal likelihood). As a result, there is a higher probability of damaging events taking place such as flooding. Clients are encouraged to prepare early (now) bensuring their level of cover is sufficient for the season ahead. If in doubt, please reach out to your broker to discuss.  

 

ANY INDUSTRY TRENDS YOU CAN SEE ARISING IN  OVER THE REMAINDER OF FY22?

Global supply chain interruptions due (in part) to COVID-19, along with Australia’s Black Summer bushfires in early 2020 have contributed to building material shortages; a trend which is expected to continue over the next 12 months. Materials most affected include steel, timber, roofing products, PVC, and electrical products. In addition, the prices of both containers and dry bulk shipping are increasing, with serious shortages in haulage between Australia and other countries.  

These shortages, together with pricing increases, have driven the cost of insurance repairs and replacements upwards. Unknowingly, many property owners may no longer have adequate insurance in place to reflect such increases in costs to repairs/rebuilds. Two simple insurance solutions can assist clients with this: 1) updated property valuations, and 2) those in strata buildings can review the Catastrophe Insurance percentage of the building sum insured 

 

 

BRIC CONSTRUCTION INSURANCE

By Chris Bovill – Chief Executive, BRIC
Travis Gauci – Head of Professionals, BRIC
Chloe Pham – Senior Consultant, BRIC

 

KEY TAKEAWAYS FROM FY22: Q1?

Building surveyors have continued to experience increases in Professional Indemnity (PI) premiums, excesses, and reductions in limits over the last quarter. However, we are now seeing the emergence of more stable PI premiums. Volatility in engineers’ PI has increased, with multiple insurers leaving the market during Q1, and new entrants simultaneously entering.

Builders operating in the SME construction market have faced several challenges, including shortages in the availability of contractors and sub-contractors, ongoing supply chain problems, and (for some states) restrictions to the number of workers on sites – all leading to increased project costs and delays. This requires constant monitoring to ensure insurance coverage reflects the sums insured, maximum construction periods, and vacant sites.

 

 

KEY MILESTONES / CONSIDERATIONS FOR CLIENTS FOR THE NEW QUARTER (FY22-Q2): 

For clients in the construction professions with upcoming renewals, insurers are paying particular attention to measures taken to limit risk exposures. We encourage clients to carefully consider the following in their applications to help improve the attractiveness of their risks to insurers:

  1. What type of buildings are you are providing services on – high rise, complex builds?
  2. The steps you take to minimise risk – written contracts, client selection, record keeping, etc.
  3. How COVID-19 has impacted your business and your ability to provide your services.
  4. If you or any of your employees have been involved in any disciplinary hearing or investigation, please provide detail around the circumstances, the outcome, and what you have done to remediate your processes to prevent a re-occurrence.
  5. For any claims or circumstances, you have reported, please provide a status update, details of what happened, any aspects that can be attributed to your client, the outcome, and how you intend to prevent a re-occurrence.
  6. Have you or your employees improved their qualifications or become members of a professional institute or association?
  7. As always, clients are encouraged to return their paperwork early.

For builders facing the renewal of their policies, further increases to construction insurance premiums are expected, particularly for material damage and liability (the latter attracting increases of up to 50 percent). Significant losses on long-tail liability claims are also contributing to higher excesses, especially for worker-to-worker claims.

 

ANY INDUSTRY TRENDS YOU CAN SEE ARISING IN  OVER THE REMAINDER OF FY22?

The Limitation of Liability through the Building Surveyors’ Professional Standard Scheme (PSS) will have a positive impact on the risk profile of Building Surveyors. However, this will take several years to be fully realised, and we do not expect any immediate reduction in premiums. More information about the PSS is available here. Together with the Australian Institute of Building Surveyors (AIBS), BRIC has successfully negotiated a premium discount with one insurer as an incentive to enhance your professional qualifications. Please reach out to discuss this with us.

Builders’ construction insurance premiums are not expected to stabilise in the short term, as insurers remain concerned about the profitability of these risks.

Engineers in NSW are now subject to the Design & Building Practitioners Act 2020 (NSW), and insurers are beginning to express concern on claims movement on the Statutory Duty of Care. As new insurance markets are becoming available for consideration, an active and early engagement with your broker ahead of renewal is critical.

 

 

WORKERS’ COMPENSATION SNAPSHOT

By Sharon Rutherford – Head of Risk Consulting
KEY TAKEAWAYS FROM FY22: Q1?

Employers are reminded of the Victorian changes around primary psychological injuries that came into force on July 1, 2021.  These changes help eligible workers and volunteers receive treatment for work-related mental injuries. Employers are required to report these injuries within three business days. More information about the provisional payments is available via WorkSafe Victoria

Employer actual wage remunerations are now due and should already be closed for the FY21 policy period. Penalties can apply where wages are not declared. 

KEY MILESTONES / CONSIDERATIONS FOR CLIENTS FOR THE NEW QUARTER (FY22-Q2): 

WorkCover WA has announced significant changes to the Workers Compensation and Injury Management Act 1981. The Bill proposes recommendations by Workcover WA in its 2014 Review of the Workers’ Compensation and Injury Management Act 1981: Final Report. The proposed changes have the potential to alter the way workers’ compensation claims are managed and resolved, in addition to increased costs and burdens on employers in WA.  

A copy of the draft Bill, along with an explanation of key materials and details about making a submission, is available via WorkCover WA. Honan’s Workplace Risk team is committed to keeping you updated on the impacts to businesses and employees as this situation evolves – please reach out at any time with further queries.  

 

ANY INDUSTRY TRENDS YOU CAN SEE ARISING IN  OVER THE REMAINDER OF FY22?

 

The National Return to Work Strategy 2020 – 2030 (the Strategy) drives national action to improve return to work outcomes for Australian employees with a work-related injury or illness. Under the Strategy, Safe Work Australia and Griffith University have produced two reports examining the psychological response to injury among support workers, and the stigma injured or ill employees experience in the workplace. Crucially, both reports provide recommendations around supporting employees and facilitating a successful return to work.  

While the onus of responsibility remains on employers to manage their risk exposures, organisations’ Leadership Teams and WHS Systems alongside wider cultural forces are enhancing awareness about safe work environments and reducing stigma associated with workplace injuries.

 

 

 

Read more from this issue of HoneIn:

 

Interview with Insurance News

 

 

Honing In on Our Partners: Keep it Cleaner

 

 

Managing Your Business’ COVID-19 Vaccination Risk Exposures

Employee Benefits

With COVID-19 outbreaks continuing to disrupt life around the country, maximising the vaccination rate has become a national priority.  Reaching the vaccination rate of 80% in Australia is now in our sights, raising questions about the best way to navigate a safe and sustainable return to the workplace.

The issue of whether employers should mandate vaccinations is receiving considerable attention around the world.   Multinational companies such as Google and Facebook have introduced a compulsory vaccination policy for staff. This move has been closely followed by Australian companies such as Qantas and SPC, with others indicating they will follow suit.

As businesses seek to understand their risk exposures, we explain how COVID-19 claims and liabilities are currently being viewed and summarise key considerations for employers as they navigate this next phase.

 

LATEST GUIDELINES ON MANDATING VACCINATIONS

In Australia, four tiers have been set out by The Fair Work Ombudsman (FWO) to help businesses assess where it might be “lawful and reasonable” to mandate COVID-19 vaccinations in their workplaces. The tiers range from Tier 1, where workers are exposed to the most risk and therefore it may be reasonable to enforce vaccinations, through to Tier 4, where the risk of transmission or infection is likely to be lower.

Tier 1 work — employees are required to interact with high-risk people (e.g., border control, hotel quarantine)

Tier 2 work — employees are required to interact with vulnerable people (e.g., health care or aged care workers)

Tier 3 work — employees are required to interact with the public in the course of their employment duties (e.g., retail workers at essential stores)

Tier 4 work — employees have minimal face-to-face interaction with others.

A workplace may have employees performing work in different tiers, which might change over time. With no test cases currently available to show the tier system in action, these guidelines raise the question of what steps are considered “reasonably practicable” for employers to help keep staff safe. At the time of publication, this decision sits with employers.

 

NO FAULT COVID-19 INDEMNITY SCHEME

Having consulted with the medical, healthcare, business, and insurance sectors, the Federal Government has released the details of the national no fault COVID-19 Vaccine Claim Scheme (the Scheme). The Scheme will provide Australians with efficient access to compensation for COVID-19 claims related to the administration of a Therapeutic Goods Administration (TGA) approved COVID-19 vaccine delivered through a Commonwealth Government approved program, irrespective of where that vaccination occurs.

From 6 September 2021, Australians who suffer injury and loss of income due to receiving the COVID-19 vaccine can register their intent to claim from the COVID-19 vaccine claims scheme webpage. The Scheme will be backdated to February 2021.

The Scheme will cover the costs of injuries exceeding $5,000 caused by a proven adverse reaction* to a COVID-19 vaccination. Independent experts will assess the claims, and compensation paid based on the recommendations. Compensation payments under the Scheme will be fully funded by the Commonwealth.

Australians who receive a COVID-19 vaccination and experience an adverse reaction are encouraged to report it to their doctor who can provide the information to the TGA.

 

COVID-19 VACCINES & WORKERS’ COMPENSATION

Separate to the COVID-19 Vaccine Claim Scheme, in some circumstances, an adverse reaction to the COVID-19 vaccine may be covered under workers’ compensation. To be covered, the insurer will need to be satisfied that:

  • the vaccine injury arose out of, or in the course of the worker’s employment; and
  • the worker’s employment was a substantial contributing factor to the vaccine injury or was the main contributing factor for a disease, injury; or
  • in the case of heart attack or stroke injury, the nature of the employment was a relevant factor in increasing the risk of the injury (see below).

While each claim needs to be assessed on the relevant facts and evidence, several issues may increase the likelihood that a vaccine injury is covered under workers’ compensation, including whether an employer:

  • took steps to arrange for its employees to receive a COVID-19 vaccine
  • encouraged or induced its employees to receive the vaccination to obtain benefits for its business
  • permitted or directed employees to have a COVID-19 vaccination during ordinary working hours; or
  • provided instructions to employees relating to the administration of the vaccine.

Workers’ compensation outcomes will always be subject to the individual merits of the claim, however, the key factor determining liability is the relationship between the workplace and how an injury arose out of or in the course of employment.  Therefore, the role of the employer is important when considering the exposures presented by COVID-19 vaccinations and how this can be determined to be in the course of employment. The link between a vaccine injury and the worker’s employment is easier to establish where a worker is influenced by their employer’s requirement to receive the vaccine or is subject to a Government Public Health Order. In these circumstances, there is a greater likelihood of the vaccine injury being covered under workers’ compensation. When lodging a claim, employers and workers will need to provide information on the link between their employment and the serious adverse reaction to the vaccine.

If a vaccine injury is a “heart attack injury” or “stroke injury”, the worker is also required to establish that the nature of their employment significantly contributed to the injury. In practice, this may require the worker to satisfy additional requirements. For example, the worker may need to provide evidence they opted for a particular vaccine brand due to their employment.

 

IMPACTS TO PREMIUM IF A WORKER MAKES A COVID-19-RELATED CLAIM

In NSW, icare has confirmed it will exclude COVID-19 claims and COVID-19 vaccination claims from the individual claims experience, meaning it will absorb the costs of the claim without passing on premium impact to the policyholder. This will protect any individual employer or industry from disproportionate premium increases due to COVID-19. This is a continuation of the Job Keeper exemption during 2020 where regulators supported the exclusion of these payments per the declaration of rateable remuneration. Whether the remaining State regulators follow icare’s lead is yet to be seen, however, Honan is liaising with our regulatory contacts to understand their position.

Businesses are encouraged to report any COVID-19 outbreaks directly to the relevant State or Territory regulator (e.g., WorkSafe Victoria, SIRA, etc.) and consider an employee who has tested positive to COVID-19 as having a reportable injury.

 

COMMUNICATING WITH EMPLOYEES

The TGA has provided guidance on communications regarding COVID-19 vaccinations to support the Government’s roll-out.  Employers should familiarise themselves with these requirements which include conditions around offering incentives to people who are fully vaccinated.

 

A FINAL NOTE

These issues remain a complicated area of discussion in the business community and the situation is evolving each day. We encourage businesses to seek legal advice based on their individual circumstances where appropriate before proceeding.

 

Alexandra Slimming

Head of Global Benefits

alexandra.slimming@honan.com.au

 

Jules Paolino 

Workplace Risk Consultant 

jules.paolino@honan.com.au

 

 

Flexible work: Here to stay, but have you nailed the formula?

 

 

*The TGA will provide clarity on recognised adverse reactions. 

 

Why 24% of Australian Employees are Job Hunting: How Your Business Can Respond

Employee Benefits

As Australia progresses its mass-vaccination efforts and charts its return to “normality”, employees around the country are emerging from the last 18 months feeling burnt out and underappreciated.

Of the 1,557 Australian employees who participated in Gartner’s 2021 HR Survey Report,  just 16% were still willing to go above and beyond their expected responsibilities (slightly less than the global average of 16.5%) and only 9% still considered themselves ‘engaged’ (i.e., willing to work with greater discretionary effort and stay with their current employer).

Knowing this, it is unsurprising that 24% of Australian employees are actively seeking new employment opportunities.

 

WHY ARE AUSTRALIAN EMPLOYEES LEAVING?

Employees are looking for opportunities elsewhere for a range of reasons. The top 3 motivations, according to Gartner’s Global Labour Market Survey are 1) work-life balance, 2) manager quality, and 3) respect. For Australian employees, financial compensation ranked down at number 10 when it came to reasons for attrition. By contrast, work-life balance was the primary driver of employee attraction and attrition in Australia, whereas financial compensation was the main motivator when looking at the international data.

Compounding the issue further, many Australians are just not feeling their best.  Of the 5,000 employees surveyed in a separate study by Gartner, more than one-quarter (29%) reported feeling depressed due to the COVID-19 pandemic.

 

WHAT DOES THIS MEAN?

For many Australian employees, the COVID-19 pandemic has brought the importance of mental health to the forefront and with that, a growing expectation for employers to provide adequate mental health offerings to staff. With a 25% boost to employee business confidence in Q4 2020 from the previous quarter, working Australians are more hopeful about obtaining new employment in the current market. It now becomes a question of whether their current employers offer sufficient support and working flexibility.

 

HOW CAN EMPLOYERS ATTRACT & RETAIN TALENT?

Now, more than ever, to hire and retain top talent, workplaces must be able to offer the right benefits to support their employees. Here are our top tips for levelling up your business’ employee offering.

 

1. Offer EAP & mental wellness programs

Workplace-related mental health issues are estimated to cost the Australian economy between $15.8 and $17.4 billion each year. This provides a significant incentive to implement preventative support programs within workplaces. Providing access to Employee Assistance Programs (EAPs) (employer-funded counselling and confidential health assessments) has shown to be both a moral and intelligent decision for businesses. A 2014 PWC Report noted that every $1 spent on mental health initiatives yields a return on investment of $2.30.  This was due to EAPs and wellness programs contributing to staff retention, improved productivity, and driving down absenteeism.

 

2. Provide tailored group insurance & private health cover

For many Australians, the motivation to work long hours is to provide financial stability and support for their loved ones. Recognising this, many industry-leading employers offer employer-funded life and disability insurance, as well as corporate private health plans for employees and their families to enhance the employee value proposition.  A 2018 Forbes HR Report stated that displaying a strong sense of empathy and community to employee’s families allowed businesses to hire and retain the top talent within their industry. This gesture demonstrates a willingness to invest in the wellbeing of their employees and their families, something that goes a long way, particularly at a time when employees are feeling increasingly burnt out and underappreciated.

 

3. Flexible work arrangements & mental health leave

COVID-19 restrictions have meant many employers and employees have adopted flexible working or work-from-home arrangements. Employees have regained valuable time with their families and friends, which would otherwise have been spent in the office or transit. Moving forward, employers may consider continuing to offer flexible working arrangements that provide the work-life balance that many employees value.

 

A FINAL NOTE

Our Global Benefits team has extensive experience working with clients of all sizes across the globe and offers local expertise in the Australian market. Our mission is to work closely with your business to tailor the ideal Employee Benefits and Wellness Plans to help you support your greatest asset – your people.

 

Terry Le

Client Manager, Employee Benefits   

terry.le@honan.com.au

 

 

Learn more about Employee Wellness – the buzz word that is here to stay

Regulatory Changes to Income Protection Policies: What You Need to Know

Insurance Updates

Australian Prudential Regulation Authority (APRA) is making changes to income protection policies to ensure the product can continue to be offered in the market. This article outlines the changes coming into force from October 1, 2021, and how these changes may affect you, whether you have an existing policy or not. 

 

WHY ARE THE CHANGES HAPPENING?

The income protection sector has lost more than $3 billion over the last 5 years, after paying out approximately $5 billion in claims during this period (KPMG, 2020). With generous products being offered by insurers to win business, a 53% increase in mental health claims over the last 5 years, and a 36% increase in length of claim time, changes are needed to ensure the industry and income protection product is sustainable (KPMG, 2020).

In a recent insurer webinar hosted by TAL Insurance, it was stated that the original purpose of insurance was not intended to put the claimant in a better position, but to provide a level of cover throughout a time of need. Geoff Summerhayes of APRA said, “life [insurance] companies have been keeping premiums at unsustainably low levels and designing policies with excessively generous features and terms that, in some cases, provide a financial disincentive for policyholders to return to work”. Changes need to be made to ensure the longevity of income protection policies.

 

WHAT IS CHANGING?

One key change to income protection policies occurred on April 1, 2020, namely removing the agreed value. This change means a claimant’s income is assessed at the time of claim, as opposed to at the time of application. The largest effect is likely to be felt by those with fluctuating year-to-year incomes such as the self-employed.

The biggest changes will be imposed for all new policies from October 1, 2021.  These are:

  • Income replacement ratios to be reduced from 75% to 70%. This means in the event of an income protection claim after October 1, 2021, the claimant would receive up to 70% of their income after 6 months of the claim.
  • During the first 6 months of a claim, a claimant is entitled to up to 90% of their income, depending on the policy they have entered.
  • Income will be calculated over the 12 months before the claim, compared to some current policies which use the highest rolling 12-month income over the last 2 or 3 years to smooth out fluctuating income.
  • Guaranteed renewable policies will no longer exist. Long benefit periods, such as to age 65, will be managed and reviewed to help ensure there is motivation to return to work. Insurers understand that long-term claims are costly to businesses and in effect, cause premium increases for existing clients.
  • This may include changing from “Own Occupation” to “Any Occupation” definition after 2 years on the claim. Own occupation” refers to the individual’s job when they make a claim, “any occupation” refers to an occupation the individual can fulfil, despite still being unfit for their own occupation.

 

WHAT ACTIONS CAN YOU TAKE AHEAD OF THE CHANGES?

If you already have an income protection policy:

No immediate action is required.  You will be able to maintain your policy. However, a review to ensure the policy is appropriate is encouraged.

If you do not have an income protection policy:

Until October 2021, you can still take out aincome protection policy that has a 75% income replacement ratio, an indemnity definition with the best 12 month income period over 3 years, and many additional benefits such as a critical illness benefit, defined/scheduled injury benefit, a bed confinement benefit, and minimum weekly working hours.

 

 

WITH YOU ALL THE WAY

Find out more about Income Protection and how it works in our guide Income Protection: Your Top Five Questions Answered. With the changes set to take effect from October 1, this is an opportune moment to review your existing policy or understand your options.  Feel free to reach out at any time.

 

Tyler Scarce

Risk Adviser 

tyler.scarce@honanlife.com.au

 

 

Discover more abouincome protection.

WORKERS’ COMPENSATION SNAPSHOT: FY21 Q4

Workplace Risk

By Jules Paolino – Workplace Risk Consultant

 

KEY TAKEAWAYS FROM FY21: Q4?

All States (except for QLD) have applied premium increases to workers’ compensation schemes. The highest year-on-year impact is within NSW, with increases of 1.40% – 1.44% of wages. Find out more here about the changes to workers’ compensation premiums for individual States and Territories. As always, our dedicated Honan Workplace Risk team is mobilised to provide innovative, cost-effective solutions to all clients, and to assist them in achieving premium savings wherever possible.

 

KEY MILESTONES / CONSIDERATIONS FOR CLIENTS FOR THE NEW QUARTER (FY22-Q1):

The Victorian Parliament has passed new laws to help eligible workers and volunteers receive treatment for work-related mental injuries.

From 1 July 2021, eligible Victorian workers and volunteers who suffer a work-related mental injury will be able to access ‘reasonable treatment’ and services for up to 13 weeks while their claim for compensation is being determined, regardless of the outcome of their claim. More information about these provisional payments is available from WorkSafe Victoria.

 

ANY INDUSTRY TRENDS YOU CAN SEE ARISING IN  FY22?

The liability complexities associated with working from home and work-related mental injury claims continue to challenge the insurance market. This, coupled with the mismanagement of accepted claims has resulted in increased premium for clients.

At Honan, we have identified a gradual increase in the prevalence of liability exposures and subsequent claims activity. With this in mind, we are working with our clients on critical injury and illness prevention initiatives. For example, for clients that we identify as having a high risk of claims, we partner with rehabilitation experts to provide physical and mental health webinars and ergonomic assessments.

We encourage clients to adopt a proactive approach in the management of potential injury and illness. This includes empowering management teams to identify potential injuries and register concerns with Honan as early as possible.

 

 

Discover more market updates from this edition of HoneIn.

The Rise of Employee Wellness – The Buzz Word That is Here to Stay

Employee Benefits

The Future of Employee Health and Wellness Benefits 

 

The COVID-19 pandemic has truly reshaped the way organisations and their employees approach work. As businesses navigate the transition to the ‘new normal’, those with robust employee health and wellbeing benefits will be best placed to attract and retain the top talent in the market, while enhancing their employee’s organisational performance.

Australia has done relatively well in containing the spread of the pandemic compared to many other countries, however, a recent survey by group insurer Metlife (1) shows our overall health and wellbeing has taken a significant hit in recent months. Some key concerns raised by Australian employees in the survey include:

 

Metlife, 2020.

 

While the statistics paint a somewhat grim picture, they present an opportunity for employers to respond and deep dive into the needs of their greatest assets – their employees.

Honan works with some of the world’s leading organisations in designing and coordinating their Employee Benefit programs. Partnering with these organisations over the past year has shown us the importance of supporting employees’ physical and mental wellbeing and the powerful engagement, productivity, and trust this fosters between employer and employee.

 

Below are three key trends likely to shape the future of employee health and wellbeing benefits in Australia:

Models of holistic wellbeing will be widely adopted

The days of simply providing office lunches or onsite yoga sessions are numbered.  Increasingly, there is an expectation that leading organisations should play a more active role in supporting the overall health and wellbeing of their employees. 

Employees are looking for organisations to demonstrate care and support outside the traditional financial benefits, to help keep them happy, healthy, and engaged in their work lives.  This can be established by designing a holistic wellness offering that provides access to benefits promoting physical health, mental wellbeing, and lifestyle support services, which can be integrated into both the physical office space and remote working environments.

 

Benefits that offer a personalised experience will be key

Health and wellbeing programs that can be customised and tailored to employees’ needs will be an essential part of an organisation’s overall health and wellness benefits proposition. More and more, we expect to see standard ‘wellness webinars’ replaced with relatable, customised experiences, targeting the unique demographics of an organisation to create more impact. Nutrition consultations, 1-1 mental health coaching, skin checks, and health screenings are some great examples of initiatives that can be tailored to each employee and form part of a holistic wellness offering.

 

Technology will be at the centre of wellness benefits

The pandemic forced organisations and employees to adopt new technologies at an unprecedented pace. Employees expect technology to be the default option for most things in life and benefits are one of them. Digital employee wellbeing platforms will play a key role as an increasing number of companies look to bolster their employee wellbeing propositions.

At Honan, we partner with leading providers in the digital wellbeing space, while allowing employees to seamlessly engage with a range of the latest benefits when and where it suits them. Check out the powerful insights from our most recent global partner, CircleIn!

 

HOW CAN HONAN HELP?

Honan has a team of experts ready to assist you in developing the right employee wellness program tailored to your company’s unique needs. We have recently launched our Honan Wellness Hub – a platform where you can discover the different Health, Wellbeing, and Employee Support Benefits we can incorporate into a custom program for your organisation and where you can catch up on the latest insights on our Wellness Blog, all in one place!

Explore the industry-leading benefits here, and feel free to reach out to our team at any time to understand the possibilities for your organisation.

 

Shabab Maqsud

Head of Client Service – Global Benefits

shabab.maqsud@honan.com.au 

 

 

 

1 Metlife Survey: 2020 Employee Benefit Trends Study (EBTS), Key findings from the MetLife Australia 2020 EBTS. https://www.metlife.com.au/about-us/thought-leadership/Employee-Benefit-Trends-Study-2020/

Q&A with Circle In Co-Founder, Jodi Geddes

Employee Benefits

Meet our innovative new Honan partner – Circle In, offering a leading global HR platform to support working parents and caregivers.

Co-Founder, Jodi Geddes shares the latest insights on employee wellbeing, the importance of supporting working parents, and exciting trends to watch in the Employee Benefits space.

 

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