Broker opportunity? Workers’ compensation schemes are changing

Broker opportunity? Workers’ compensation schemes are changing | Insurance Business Australia

Insurance News

Broker opportunity? Workers’ compensation schemes are changing

Challenges come from budget blowouts, rising premiums and increasing claims numbers

Insurance News

By
Daniel Wood

In recent years, workers’ compensation schemes around the country have faced stiff challenges from budget blowouts, rising premiums and increasing claims numbers. According to a Deloitte report, worker injuries are costing the economy more than $28 billion annually.

Insurance brokers are moving into this sector with risk management offerings that can reduce claims numbers and make workplaces safer and more productive. State governments are also changing legislation and modifying workers’ comp rules, impacting stakeholders including insurance firms.

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Mental health challenges

However, one major hurdle is the rise of mental health claims.

Jason Lardelli (pictured above), executive director of Return to Work Victoria, an agency set up this year to support WorkSafe, said these challenges are reflected across the country.

“The scheme [in Victoria] was designed many years ago, primarily to deal with physical injuries,” said Lardelli. “However, workplace injuries today are very different.”

He said the ongoing growth in mental health claims and the trend of more people staying longer on compensation “have significantly impacted the financial sustainability of the WorkCover scheme.”

A media release from Lardelli’s agency said the recent WorkCover changes “significantly” modify how GPs and medical professionals evaluate and assess patient eligibility for workers’ compensation claims.

“With the rise in mental injuries, change was needed to ensure the scheme remains sustainable and includes eligibility and assessment measures to align with both physical and mental injuries,” he said. “These changes are designed to ensure injured workers continue to receive the support they deserve into the future.”

Lardelli said some of the key changes include a redefinition of mental injury and the exclusion of stress or burnout as eligible for workers’ comp.

Key changes to Victoria’s WorkCover scheme

Mental injury redefined

Mental injury now refers to an injury that causes significant behavioural, cognitive, or psychological dysfunction, and is diagnosed by a medical practitioner according to the most recent DSM.

Amended eligibility criteria

Mental injuries must meet the new definition to qualify for compensation.

Focus on employment contribution

Employment must be the single greatest cause for compensation eligibility in primary mental injury claims.

Exclusion for stress and burnout

Compensation is not granted for mental injuries primarily caused by stress or burnout from usual activities.

New requirement for continued weekly payments after 130 weeks

Workers must have a whole person impairment (WPI) of 21% or more, in addition to the existing work capacity test.

Lardelli said apart from the changed eligibility criteria, these changes won’t result in a reduction of benefits.

“Our scheme will still provide compensation to support injured workers in their recovery which may include weekly payments for time lost from work, treatment expenses, and support with rehabilitation and return to work,” he said.

Insurers and WorkCover

Insurance firms play a central role in many state schemes, including in Victoria.

“WorkSafe Victoria appoints dedicated agents to oversee employers’ WorkCover insurance and handle compensation claims with expert guidance and support,” said Lardelli.

The agents include Allianz Australia Workers’’ Compensation (Victoria), EML VIC, Gallagher Bassett Services Workers’ Compensation and DXC Claims Management Services. “Employers must select one of these agents when applying for or renewing WorkCover insurance and are obligated to stay with their chosen agent for a minimum of 12 months,” he said.

“We know the cost of insurance premiums are an issue for every business and just like every household, they want their bills to be as low as possible,” said Lardelli. “That’s why WorkSafe is committed to delivering enhanced injury prevention and recovery services to reduce the financial burden on Victorian businesses and provide them with maximum value for money.”

Public concern over rising premiums, he suggested, was a reason for the establishment of his Return to Work agency.

Can brokers help?

The challenges facing workers’ comp schemes in Victoria and across the country could be an opportunity for brokers.

Last year, Sydney-based Bellrock Broking launched an offering to help businesses bring down workers’ compensation costs.

Are you an insurance professional involved in the workers’ compensation sector? What’s your biggest insurance challenge? Please tell us below

Broker opportunity? Workers’ compensation schemes are changing