In this update, we share practical insurance insights from the quarter that’s been, and forecasts for the quarter ahead.
KEY TAKEAWAYS FROM FY21: Q3?
Now that JobKeeper payments have ceased and many businesses are operating within the ‘new norm’ of COVID-19, employers will need to consider the impact this will have on projected wage rolls for FY22. Ultimately, any changes to the balance sheet must be reflected in their FY22 insurance policies ahead of June 30 renewal season. Furthermore, with premiums driven by claims performance, clients should begin working more closely with their Broker/Claims Agent to optimise outcomes as we head into 30 June renewal season.
KEY CONSIDERATIONS FOR FY21: Q4?
During the 30 June 2020 renewal season, most regulators excluded JobKeeper payments from premium calculations and held off passing on proposed industry rate increases. This year however, regulators are reviewing their position on this. In New South Wales for instance, regulators have announced premium increases of 1.4% to 1.44% of wages for FY22, with the intent to increase this year on year for the next two years. For employers who struggled during COVID and who are seeing a deterioration in claims performance, this will potentially have significant impacts to premiums. Many employers in NSW had a similar experience in 2016 when icare introduced its new premium methodology, resulting in premium increases exceeding 30%.
Regulators in Western Australia have also confirmed a 4% increase in the 2021/22 recommended premium rates for compulsory workers’ compensation insurance. This translates to 1.7% of total wages (up from 1.64% in the previous year).
Finally, while Victoria is yet to release its premium rates, it has been confirmed that for the FY22 policy year, the premium window for 21/22 premium sensitive claims will be 3 years from January 1, 2018 to December 31, 2020. However, the last 12 months of that experience period (claims received between January 1, 2020 to December 31, 2020), will NOT have a statistical claims estimate (SCE) applied, or any medical and like expenses included. Furthermore, only actual weekly compensation payments will be used. All of this will have a significant impact on employers with developing claims with a high SCE. The full SCE claim experience will be realised in FY23.
WHAT INDUSTRY TRENDS SHOULD CLIENTS MONITOR OVER THE COMING QUARTER?
Now more than ever, it is critical for clients to work closely with their Brokers to understand changes to their premiums, and whether they are likely to be impacted by industry rate changes being imposed by regulators.
As always, Honan is ready to assist with any queries you may have about changing premiums, and the potential implications for your business.
We’re With You All The Way
Feel free to reach out to discuss your risk exposures.
Head of Risk Consulting
Read the Corporate Snapshot: FY21 Q3.