Your premium explained

How is my insurance premium calculated?

ReturnToWorkSA's insurance premium system applies to all registered employers regardless of their size.

Your insurance premium is calculated using the remuneration you pay to workers, your industry premium rate and the income support costs paid to your worker/s with time lost claims.

The premium calculation formula is:

Premium = BP x (1 – D) + C – A + SUR + GST + WHS

Where:

BP = Base Premium (remuneration x industry premium rate)
D = Discount factor
C = Claims costs
A = Apprentice incentive
SUR = Supplementary Underwriting Rate (to allow adjustment of premium)
GST = Goods and Services Tax
WHS = Work Health and Safety registration fee (collected on behalf of SafeWorkSA)

Base premium is calculated by multiplying your total remuneration (actual or estimated) by your industry premium rate. For employers with multiple locations, the base premiums will be added together.

How do claims costs impact my insurance premium?

An employer with no claims will pay the discounted premium. An employer with time lost claims will have the income support costs from the previous year added to the discounted premium, capped at a maximum of three times the discount applied.

Discount factors and penalties based on employer size

Base PremiumDiscount Factor (D)Discount Factor (%)Maximum Penalty (%)**
$0 to <$10k 0.05 5% 10%
$10k to <$50k 0.10 10% 20%
$50k to <$100k 0.15 15% 30%
$100k to <$500k 0.20 20% 40%
$500k to <$1m 0.25 25% 50%
$1m + 0.30 30% 60%

** Maximum penalty is added to Base Premium

The cost of claims are those costs paid in the financial year preceding the premium period, for claims with a date of injury in the previous three financial years, as demonstrated in the table below.

Cost of claims applied to insurance premium calculations

2019-20 premium year2020-21 premium year2021-22 premium year
Cost of income support paid in 2018-19 Cost of income support paid in 2019-20 Cost of income support paid in 2020-21
For claims with a date of injury in:
2018-19
2017-18
2016-17
For claims with a date of injury in:
2019-20
2018-19
2017-18
For claims with a date of injury in:
2020-21
2019-20
2018-19

The same income support costs will not be used in more than one year.

The cost of claims will only include income support paid in the premium calculation, excluding:

  • unrepresentative injuries
  • income support costs associated with successfully prosecuted fraud claims
  • income support payments for the first 2 weeks of incapacity where the employer has met their responsibilities under the Act to forward a claim within 5 days.

The use of income support costs aligns with our key focus of return to work, which can be directly influenced by an employer through provision of suitable duties and proactive return to work strategies.

Note: new employers (who are not subject to a transfer of business) will be required to have 1 full financial year paying base premium before the Return to Work Premium System will apply.

Premium calculation examples

Example 1: employer with no time lost claims and no apprentices

Remuneration (R) = $450,000

Industry Premium Rate (IPR) = 2%

Base Premium (BP) = $450,000 x 2% = $9,000

Discount factor (D) is 0.05 (5%)

Discount amount is $9,000 x 0.05 = $450

Discounted premium is $9,000 - $450 = $8,550

Premium payable is $8,550 + GST + WHS

Example 2: same employer with cost of claims totalling $2,500

Remuneration (R) = $450,000

Industry Premium Rate (IPR) = 2%

Base Premium (BP) = $450,000 x 2% = $9,000

Discount factor (D) is 0.05 (5%)

Discount amount is $9,000 x 0.05 = $450

Discounted premium is $9,000 - $450 = $8,550

Cost of claims of $2,500 are then added to the discounted premium subject to a maximum

= 3 x D x BP

Maximum cost of claims is 3 x 0.05 x $9,000 = $1,350

In this example, premium is capped by the maximum cost of claims, the cost of claims increase has been reduced by $1,150 Premium is $8,550 + $1,350 = $9,900

Premium payable is capped at $9,900 + GST + WHS

Example 3: different employer with cost of claims totalling $5,000

Remuneration (R) = $1,000,000

Industry Premium Rate (IPR) = 6%

Base Premium (BP) = $1,000,000 x 6% = $60,000

Discount factor (D) is 0.15 (15%)

Discount amount is $60,000 x 0.15 = $9,000

Discounted premium is $60,000 - $9,000 = $51,000

Cost of claims of $5,000 are then added to the discounted premium subject to a maximum

= 3 x D x BP

Maximum cost of claims is 3 x 0.15 x $60,000 = $27,000

In this example, the cost of claims is under the maximum cost of claims so the whole $5,000 of costs is added to the discounted premium.

Premium is $51,000 + $5,000 = $56,000

Premium payable is $56,000 + GST + WHS

WHS fee

The Workplace Health and Safety (WHS) fee is collected by ReturnToWorkSA on behalf of SafeWork SA.

This fee is added to the ReturnToWorkSA premium and covers costs associated with work health and safety activities undertaken by the state government.

The WHS fee is not subject to GST.

Employer claim summary reports

Employer claim summary reports are sent quarterly commencing in September, providing details of your claims and the associated costs. These reports are issued to all employers with claims and will allow you to monitor your time lost claims.