A number of high cost injuries resulted in surging workers compensation premiums for a large New South Wales labour hire business when workers failed to return to work either for the original host employer or at head office.
Through analysis of previous costs and adopting a new approach to managing claims the Gallagher Workplace Risk specialism succeeded in enabling the business to regain control over its workers compensation expenditure.
Background
The premium rate had been increasing at the maximum rate of 30% year-on-year — the maximum premium can increase due to claims costs incurred — severely impacting the business's profit margins.
Gallagher Workplace Risk completed a preliminary review and determined that workers compensation premium would be raised again for a further policy period, based on costs already incurred.
Even if there wasn't a single new workplace injury there was no way to avoid an increase for the new financial year but there was an opportunity to make a positive impact on future premium costs if new claims were managed well while the older legacy claims cycled out of premium sensitivity.
Essentially the business needed to decide between investing now for a return in 18 months' time or continue to budget for steep workers compensation premiums and hope that they can be passed on to host employers.
Addressing legacy cases and an overhaul of injury management processes
Upon appointment Gallagher partnered with the business's return to work coordinator to reassess some of the legacy claimants and to redevelop the systems and processes in place to manage any new workplace injuries.
Specific approaches taken to improve the workers compensation risk and cost management included:
- respectfully and lawfully transferred several long-term claimants who were never returning to work for ongoing direct management by the insurer. This eased the payroll burden and terminated their annual leave accrual
- developed return to work processes including injured work care packs to guide the injury management and the return to work process from day one of the injury
- developed a suitable duties library to outline the alternative activities available in the workplace while employees recover from their workplace injury
- provided training to line managers and supervisors regarding their role in the process and how they can support a successful recovery from injury
- reassigned the management of all new claims and ensured that insurer service levels and communication were of a high standard.
Outcome
The Gallagher Workplace Risk expertise and partnership with this client over two years achieved a positive trend in the business's workers compensation premium spend, despite industry rate increases.
Further reductions are forecast as injured workers return to work more quickly, which leads to reduced claims costs.
The business's workforce and host employers are also more educated about the benefits of early return to work and recovery at work, while the stakeholders are working to support injured workers and to control insurance spend.
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