Making Sense Of Workers' Comp
Sydney Morning Herald
Saturday July 10, 1999
Many irritating things fall due at the end of the financial year and one that can't be avoided is your obligation to renew your business workers' compensation insurance.
Most likely, you have already received your "Invitation to Renew", as all underwriters are keen to retain your business. Insurance brokers are also reminding clients that workers' compensation time is here again.
The forms require you to declare wages paid in the previous year and estimated wages for this year - that is 1999-2000. Wage estimates should be reasonably accurate as premiums are calculated on the amount of wages paid and the type of work undertaken by you and your employees.
Workers' compensation is compulsory and there are stiff penalties for anyone ignoring the letter of the law if caught. You can breach the NSW Workers' Compensation Act if you fail to buy insurance; if you get insurance, but under-estimate the amount of wages you pay; or if you falsely describe the work done by workers or subcontractors in your employ.
The State Government had a terrible run with workers' compensation injury claims when it ran the scheme.
But, a few years ago it was privatised and it is now tougher for employers to avoid their obligations, as insurers want to avoid losses incurred by the government scheme.
Two initiatives tighten up the system. The first is random business audits to see whether or not they are complying with the super legislation.
Audits are taken seriously, so do your book work for it to pass inspection.
The second is the speedy sending of renewal forms by private underwriters and immediate penalties for anyone not complying with the terms of the "invitation".
The situation isn't as dire as it may sound. Last year's policy expires at the end of the financial year, but you have until August 29 to complete and return the forms to your underwriter.
Be aware that the signed wage declarations can be held against those signing them if declarations are false.
Up until August 29 you are covered, and shortly after the forms are lodged you will be informed of the required premiums. Payment is expected within about 30 days to maintain cover for the end of the financial year.
Before rushing in to complete the forms, it pays to shop around and make a comparison of premiums on the market.
You can do this by getting insurer quotes on the amount of wages you pay for that type of work, or you can get one or several brokers to do the job for you. Good brokers can usually place your business with the most suitable underwriter. Companies like Commercial Union - recently merged with NZI Insurance - will inform you that if the premium is more than $3,000 it can be paid in instalments, but the first $1,000 must be paid by the end of this month.
If returns showing wage estimates aren't returned to underwriters by August 29, the legislation requires underwriters to "automatically renew" your policy using the previous year's wages plus a penalty of 20 per cent. Commercial Union says if a penalty is imposed, the premium only can be adjusted at the end of the insurance renewal period.
In the forms there is provision for cancellation, covering businesses which have stopped trading or those which have been sold. There are also special provisions available if you are no longer employing anyone, or if you have another underwriter. Please note that if you are self-employed you require workers' compensation.
If you have another insurer, you are obliged, under the act, to name the new underwriter and new policy number. Unless all the information is provided, your insurer can't cancel existing arrangements and you remain liable for the premium.
© 1999 Sydney Morning Herald