How premiums are calculated
A premium is the amount an agency is required to pay Comcare for workers’ compensation insurance.
Premiums fully fund the forecasted cost of claims occurring that year, including Comcare's claims management costs.
How premiums are set
Premiums are based on general trends in the premium pool (the total premium to be charged across all agencies) and the individual agency’s claim performance.
Every year, agencies submit their payroll and full time equivalent (FTE) estimates to help us calculate their premiums for the following year. The high-level steps to setting premiums are:
Step 1: Forecast the overall scheme performance
Comcare uses independent actuaries—professionals who measure and manage risk and uncertainty—to forecast the lifetime cost of claims arising from injuries and diseases sustained in the financial year.
This is done for the overall insured scheme, including claims management costs, and includes analysis of claims performance up to December of the previous year.
Step 2: Set the final premium pool
Comcare sets the pool to fund the forecasted lifetime cost of claims arising from injuries and diseases sustained in the financial year.
The pool includes a margin to allow for:
- the inherent uncertainty in the forecast of the cost of claims
- Comcare’s ability to fund this uncertainty using the insured scheme’s assets.
Step 3: Determine agency prescribed amounts
The prescribed amount is an agency’s contribution to the premium pool. It is calculated as:
Prescribed amount = prescribed rate x estimated payroll.
The prescribed rate determines your agency’s share of the final premium pool. It is calculated as:
Prescribed rate = previous year’s prescribed rate x pool trend x performance adjustment
Estimated payroll = last reported payroll figure x (1 + inflation rate)
- The pool trend reflects the changes in the scheme’s claim performance since the previous year’s premium pool.
- The performance adjustment alters the previous year’s prescribed rate for changes in your agency’s claims performance relative to the overall insured scheme’s claim performance.
Step 4: Determine agency bonus or penalty adjustments
The previous year’s prescribed rate is revised using the agency’s performance adjustment, as calculated in Step 3.
The difference between revised and initial previous year’s prescribed rate is multiplied by the previous year’s estimated payroll to determine the bonus or penalty.
This allocates the previous year’s premium pool between agencies more equitably by reflecting changes in claims circumstances.
Step 5: Indicative premium notice
Agencies are advised of their indicative premium amount in March.
Step 6: Final premium notice
The final prescribed amount is recalculated using agency provided payroll estimates for the premium year and is sent to agencies in July.
Guides and frameworks
Comcare Premiums guides
The guide outlines how we set premiums for the period.
- Comcare Premiums for 2017–18 guide (PDF, 2.4 MB)
- Comcare Premiums for 2016–17 guide (PDF, 2.4 MB)
- Comcare Premiums for 2015–16 guide (PDF, 1.6 MB)
- Comcare Premiums for 2014–15 guide (PDF, 803.4 KB)
- Comcare Premiums for 2013–14 guide (PDF, 1.7 MB)
- Comcare Premiums for 2012–13 guide (PDF, 5.8 MB)
- Comcare Premiums for 2011–12 guide (PDF, 344.0 KB)
- Comcare Premiums for 2010–11 guide (PDF, 977.2 KB)
Framework for Setting Premiums
The Framework describes how Comcare determines the premiums payable by agencies each financial year.
- Framework for Setting Premiums – March 2018 (PDF, 177.3 KB)
- Framework for Setting Premiums – April 2016 (PDF, 171.2 KB)
- Framework for Setting Premiums – April 2015 (PDF, 186.0 KB)
- Framework for Setting Premiums – April 2014 (PDF, 95.8 KB)
- Framework for Setting Premiums – April 2013 (PDF, 114.7 KB)
The revised premium model
In 2015–16, Comcare engaged actuaries, Taylor Fry, to review how we calculate premiums to ensure we provide value for money in a financially sustainable scheme and maximise agency engagement in managing the cost of claims.
Taylor Fry consulted with premium paying agencies and the Safety, Rehabilitation and Compensation Commission (SRCC) throughout the process to help design the revised premium model.
The revised Premium Model (PDF, 118.8 KB) uses fewer assumptions and calculation steps, creating a more transparent link between an agency’s claim performance and their premium.
Taylor Fry published its Premium Model Review final report (PDF, 2.0 MB) in December 2015 and the SRCC approved it in March 2016.
The revised premium model has been used to calculate agency premiums from the 2016-17 financial year.