Open scrollable table of contents

Print entire document

Deemed Premium Calculation Methodology

Introduction

Under subsection 39(1) of the Workplace Injury Management and Workers Compensation Act 1998 (1998) Act, each insurer, deemed insurer and self-insurer must pay the contributions prescribed by section 39 to the State Insurance Regulatory Authority (SIRA) for payment into the Workers Compensation Operational Fund.

Subsection 39(3) provides that the contribution to be paid by a self-insurer, in respect of each financial year (being a financial year during the whole or part of which the person was a self-insurer) is an amount equal to the percentage (determined by SIRA) of the deemed premium income of the self-insurer during the relevant period when the person was a self-insurer.

Similarly, subsection 39A(1) provides that each Comcare employer must pay the contributions prescribed by section 39A to SIRA for payment into the Workers Compensation Operational Fund. Subsection 39A(2) mandates that the contribution to be paid by a Comcare employer, in respect of each financial year (being a financial year during the whole or part of which the person was a Comcare employer), is an amount equal to the percentage (determined by SIRA) of the deemed premium income of the Comcare employer during the relevant period when the person was a Comcare employer.

Section 37 of the 1998 Act defines deemed premium income as follows:

  • deemed premium income, in relation to the contribution payable by a self-insurer or Comcare employer under this Division for any period during a financial year, means the amount that the self-insurer or Comcare employer would have been liable to pay (in such circumstances as may be prescribed by the regulations) to a licensed insurer as premiums on policies of insurance that would otherwise be required under the 1987 Act during that period if the person were not a self-insurer or Comcare employer, and:
    • includes any amount prescribed by the regulations for the purposes of this paragraph in relation to that financial year, and
    • does not include any amount prescribed by the regulations for the purposes of this paragraph in relation to that financial year

Clause 64 of the Workers Compensation Regulation 2016 (Regulation) provides the following for the purposes of that definition of deemed premium income:

  • “For the 2017–2018 financial year and each subsequent financial year, the prescribed circumstances referred to in the definition of deemed premium income in section 37 of the 1998 Act are the circumstances in which the amount payable as premiums referred to in that definition is calculated in the manner fixed by the Deemed Premium Income Calculation Methodology, published by the Authority in July 2017.”

This is the Deemed Premium Income Calculation Methodology published under clause 64 of the Regulation.

Key dates for information

DateAction
30 June SIRA will issue the interim Deemed Premium Income calculation for the forthcoming financial year based on the prior year's confirmed wages (or any estimated wages submitted for the forthcoming year).
30 SeptemberSelf-insured employers are required to submit their actual wages to SIRA for the immediately proceeding financial year.
31 OctoberSIRA will calculate the adjusted Deemed Premium income amounts based on the confirmed wages as proved by self-insurers.

Determining the deemed premium income

The Deemed Premium Income calculation for each self-insurer and relevant Comcare employer is: Deemed Premium Income = (Wa*Ra) + (Wb*Rb) + (Wn*Rn)

where:

Formula componentsDescription
Wa, Wb,...Wn"

are each a part of the total wages payable to workers by the employer in respect of the period of insurance for which the premium is to be calculated, being a part of the total wages attributable to a class applicable to the employee

"Ra, Rb,...Rn"

are each the same percentage rate as that specified in Column 3 of Table A in Schedule 14 of the Insurance Premiums Order 2015-2016, that corresponds with a class applicable to the employer, being a class from the NSW Workers Compensation Industry Classification System in Annexure A to the Market Practice and Premiums Guidelines (28 February 2017) –of that also appears in Column 1 of Table A in Schedule 14 of the Insurance Premiums Order 2015-2016 opposite the percentage rate. A copy of Schedule 14 of the Insurance Premiums Order 2015-2016 is at Appendix A to this publication.

Source data

The data used to determine the Deemed Premium Income includes;

  • Salary and wage information provided by each self-insurer and Comcare employer to SIRA
  • Workers Compensation Industry Classifications (WIC) set out in Annexure A of the Market Practice and Premiums Guidelines
  • The percentage rate specified for a particular WIC in Table A in Schedule 14 to the Insurance Premiums Order 2015-2016 as gazetted in the Government Gazette No 47 of 5 June 2015 (copy of Schedule 14 at Appendix A).

Calculation validation process

Source data and Deemed Premium Income calculations will be validated by actuaries engaged by SIRA.

Further information

Requests for further information relating to the Workers Compensation Operational Fund and this Deemed Premium Income Calculation Methodology can be addressed to:

Manager, Premium Practice and Prudential
State Insurance Regulatory Authority
Level 6, McKell Building
2-24 Rawson Place
Haymarket NSW 2000

Appendix A

Insurance Premiums Order 2015-2016