Even though the business was lodging only a small number of claims for workplace injuries, this large New South Wales company was paying twice the industry average in workers compensation premiums.
The high workers compensation cost was due to a confluence of the cost of claims involving extended periods of time off work and the premium calculation which was directly affected by claims made. Under this arrangement premiums could increase by as much as 30% a year and after three years the cumulative effect was severely cutting into the business's profit margin.
The incumbent broker advised leaving the scheme in favour of self-insurance — but Gallagher was able to provide a solution.
The Gallagher Workplace Risk team completed a preliminary review and considered all the premium options available in the NSW market and quickly identified that the loss prevention recovery (LPR) model would be financially feasible and deliver immediate savings.
An alternative calculation model for large employers with a base premium of at least $500,000 the LPR model is far more appropriate for large businesses, compared to the conventional methodology.
Advantages to the LPR model include:
Gallagher supported this client with the application process to icare as well as the LPR preparation. This included ensuring the finance controller understood the new calculation and how to accrue credits, updating the return-to-work (RTW) program to comply with requirements and educating the insurer and RTW team around LPR nuances such as the importance of estimates and timing of key adjustments.
This business is now in its third year using the LPR methodology and has saved millions in premium by abandoning the conventional workers compensation calculation.
Gallagher continues to support the business's LPR program with monthly reporting that tracks claims cost development, giving the business visibility of throughout the policy year over how it is performing financially and the size of the return premiums it can expect to receive.
Workplace risk and mitigation is a specialty area that Gallagher provides to businesses Australia wide, and globally. For consultation, advice or solutions, we're here to help.
Our Workplace Risk team offers everything from safety mentoring and training through to health and wellness programs, hazard and risk profiling, and incident management and investigation for larger companies.
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