Splitting a premium within your organisation
You can monitor differences in claim performance and increase management accountability by splitting a premium across different areas of your organisation.
The decision to split premiums
Each organisation decides whether, and how, to split premiums. Comcare cannot do this for you and has no authority to make this decision.
Ways you may consider splitting a premium
We outline some ways to split premiums as a guide only.
By workers’ compensation claim experience
You use each area’s contribution to the claim experience of your organisation to allocate the premium. For example, if an area has incurred 10 per cent of the agency’s workers’ compensation claim costs, then you allocate 10 per cent of the premium to that area.
- Using claim experience to allocate the premium provides a financial incentive for each area within an agency to reduce the cost of their workers’ compensation claims.
- Workers’ compensation claim experience, especially for smaller areas, can be extremely volatile. For example, an area may incur no claims for several years and then one very large claim. In this case, the amount of premium allocated to this area can increase from nothing to several hundred thousand dollars in one year.
- Some areas do not make any contribution towards the premium.
By payroll or number of employees
You may choose to allocate the workers’ compensation premium based on the payroll or the number of employees in each area. For example, if a part of an agency makes up 10 per cent of the agency’s payroll, then you allocate 10 per cent of the premium to that area.
- The approach is simple.
- All areas in an agency make some contribution towards the premium every year.
- There is no extra financial incentive for an area that has a poor record of claims compared with an area that has a good record of claims.
Using some claim experience and some payroll
You allocate some of the workers’ compensation premium using the workers’ compensation claim experience approach and the rest using the payroll or number of employees approach. For example, you might choose to allocate half of the agency’s premium using claim experience and the other half using payroll or number of employees.
You can produce a summary of claims split by areas within your agency or organisation using the Comcare Customer Information System.
If you have any other questions:
- email firstname.lastname@example.org
- call us directly on (02) 8218 3792 or 1300 366 979.