Finally, the NSW Government is looking to fix the formula
22 Oct 2026 | By Elizabeth (Liz) Greenwood, Senior Policy Manager
Time to get premiums right
After more than a decade of advocacy, Business NSW welcomes the NSW Government's review of the workers' compensation premium model. Our submission sets out seven recommendations to improve transparency, fairness and confidence in the way workers' compensation premiums are calculated.
One of the NSW workers’ compensation scheme’s objectives is “to ensure contributions by employers are commensurate with the risks faced, taking into account strategies and performance in injury prevention, injury management, and return to work.” [1]
Based on the collective experience of our members, coupled with our own observations, the scheme is clearly failing to achieve this objective.
Ever since the 2015 reforms were implemented, Business NSW has been actively advocating for a change to the premium formula.
This was because, apart from nobody knowing what it was (because they stopped publishing it), it was producing increasing volatile and unaffordable premiums, especially for those larger employers known as ‘experience-rated employers’.
Well, it’s been 11 years in the making but the NSW Government is finally listening!
As of 1 July 2026, the NSW enacted [2] a freeze on any increases in the ‘insurance premium target collection rate’ [3] until 30 June 2028.
On 31 August 2026, the NSW Government announced its NSW workers’ compensation premium model review, seeking feedback on how Nominal Insurer premiums are calculated.
Following that announcement, Business NSW asked members to provide us with their direct feedback, which we have received (thank you!) and taken into consideration.
We also convened a sub-committee of subject-matter experts from our Workers’ Compensation, WHS and Regulation Policy Committee to help develop recommendations for the government’s consideration.
Looking ahead
On the NSW Government’s ‘Have your say’ website, the NSW Government says that “all feedback will be considered and help inform further analysis of alternate premium model options or improvements”.
Submissions close at midnight 25 October 2026.
BUSINESS NSW’S SUBMISSION
The recommendations contained in Business NSW’s submission were made without the benefit of detailed information on the scheme.
Consequently, we may decide to revise our recommendations should further, more detailed information become available.
However, for now, Business NSW has provided very high-level recommendations explained by reference to the relevant premium principles as outlined in the Market Practice and Premium Guidelines (‘the MPPGs’).
Those recommendations are:
Recommendation 1 - A better explanation of the formula
Provide a better explanation to experience-rated employers relating to:
- how the scheme’s performance is measured, and
- based on those metrics, how the employer’s own performance compares (using the same or similar metrics), and
- how that comparison has affected the way the Claims Performance Adjustment has been calculated.
Providing a better explanation as to the fairness of the premium formula will have the added benefit of improving the overall level of confidence in the system as a whole.
Recommendation 2 - A better formula for determining employer size
Re-consider the current methodology for determining an employer’s size in terms of its ability to better control risk and return-to-work outcomes (for example, taking into account an employer’s national payroll).
Recommendation 3 - Introduce a carve-out mechanism
To accommodate situations (such as abnormal and/or catastrophic events), consider introducing a carve-out mechanism that the employer can utilise proactively (instead of waiting for the premium review and appeals process to occur).
Recommendation 4 - Improve equity between employer cohorts
Apart from lowering the threshold for experience-rated employers (possibly using a different formula from the one that is currently being used to calculate the Claims Performance Adjustment), consider introducing:
- a separate formula for small employers (for example, small employers could be assigned a higher WIC rate), and/or
- a co-contribution scheme (for claims costs) for those small employers whose poor safety profile (when compared with their peers) translates into an unacceptably high volume of claims being made and supported by the scheme.
Recommendation 5 - Aligned dates
Especially for experience-rated employers, consider introducing static dates for significant developments to align with an employer’s financial year activities, for example:
- 1 April - for the release of claims costs data (to enable forward planning),
- 30 June - for the policy renewal date, and
- 31 August - for the submission of actual wages figures.
This recommendation alone could significantly reduce an experience-rated employer’s red-tape burden. However, their cashflow challenges can only be addressed by ensuring that the information supplied is acted upon promptly and efficiently. One suggested mechanism to ensure this happens could be in the form of only issuing an interim Certificate of Currency until wage declarations have been completed.
Recommendation 6 - A revised incentive system
Replace the current RTW incentive with a suite of incentives that better reflect the employer’s “strategies and performance in injury prevention, injury management, and return to work.”
Recommendation 7
Consider methodologies adopted by other Australian jurisdictions to help inform this review.
This consultation is going to take some time, as it will need to pass through various phases. It looks like the next step will be to “further analyse alternate premium model options or improvements”.
We will keep you posted.
However, as always, if you wish to provide any feedback, suggestions or simply wish to share your experiences, please email us on policy@businessnsw.com
[1] Paragraph 3(f), Workplace Injury Management and Workers Compensation Act 1998 No 86
[2] 168A Freeze on insurance premium rate increases by Nominal Insurer until 30 June 2028, of the 1987 Act.
[3] insurance premium target collection rate means the total premium expected to be collected, including loadings, discounts and adjustments but excluding the Dust Diseases Contribution and the Mine Safety Fund Premium Adjustment, divided by total portfolio wages for the premium renewal year.
