Comparison of Workers’ Compensation Arrangements in Australia and New Zealand (2012)

Table 6.3: Approval process, application and ongoing costs and duration of licence

	Applications process	Application and ongoing costs	Duration of license
New South Wales	1. Acknowledge receipt of application fee. 2. Validate application information and request missing or additional information required for the review. 3. Review application in different areas including financial, injury and claims management (case management), and data management and, conduct OHS management system audit. 4. Prepare Board or CEO Submission to recommend either approving or rejecting application. 5. Prepare letter to notify the applicant of either granting the licence with the date of commencement or rejecting the application.	One-off cost on application of $25 000 for Single Self-Insurer licence, $30 000 for Group Self-Insurer licence. Insurers are required to contribute to the WorkCover Authority Fund under section 39 of the Workplace Injury Management and Workers Compensation Act 1998 and to the Dust Diseases Fund under section 6 of the Workers Compensation (Dust Diseases) Act 1942 an annual basis.	A licence will be granted for a standard period of 3 years and be capable of renewal for further three-year terms. WorkCover has discretion to grant licences for shorter terms if it believes circumstances are warranted.
Victoria	Section 140 of the Accident Compensation Act 1985 (the ACA) Assessment of organisation’s eligibility to apply is undertaken: • The body corporate must be the ultimate holding company in Australia, and • Must satisfy prescribed minimum requirements as to financial strength and viability. If eligible, the organisation may submit an application for approval to WorkSafe Victoria. The assessment of the application may include on-site audits, interviews and inspections. Pre-application eligibility fee must be paid as prescribed in the schedule 4 of the ACA.	Application fee as prescribed in the schedule 5 of the Accident Compensation Act 1985 (the ACA). Application fee applies to all applications and is calculated as the lesser of: • an amount equal to 0.033%of the assessment remuneration of the employer as defined in schedule 5 of the ACA. calculated by reference to the most recent financial year preceding the date on which the application is made, or • $52,090 (as at 1 July 2011 and subject to indexation). A self-insurer must pay contributions into the WorkCover Authority Fund in accordance with section 146 of the ACA. Quarterly contributions payable by a self-insurer are determined by WorkSafe based on the rateable remuneration return submitted by a self-insurer pursuant to the Ministerial Order made under section 142A(3) of the ACA. The amount of contributions payable by a self-insurer pursuant to section 146 of the ACA is determined by the formula given in Regulation 23 of the Accident Compensation Regulations 2001.	Initial approval is for a period of three years and any subsequent approvals are for four years unless WorkSafe in its discretion determines that approval has effect for a period of six years. Sub-sections 144(2)(a) & (b) of the Accident Compensation Act 1985.
Queensland	s70 Workers’ Compensation and Rehabilitation Act 2003 The application must (a) be made to the Authority in the approved form, and (b) for a group employer be made by all the members of the group wanting to be licensed, and (c) be accompanied by the fee prescribed under a regulation. s77 The Authority must decide an application within 6 months of receiving it. s71 the Authority may issue or renew a licence to be a self-insurer to a single employer only if satisfied that certain criteria have been met. see s 75: in deciding whether a single employer or group employer is fit and proper, the Authority may consider any relevant matter and must consider the following matters.	Initial application fee for setting up the licence: •$15 000 application fee for single employers. •$20 000 application fee for group employers. (s70 Workers’ Compensation and Rehabilitation Act 2003, s19 Workers’ Compensation and Rehabilitation Regulation 2003) A self-insurer must also pay a levy to Q-COMP each financial year under s81 of the Workers’ Compensation and Rehabilitation Act 2003. The amount a self insurer must pay is calculated according to the formula in s20 Workers’ Compensation and Rehabilitation Regulation 2003, and is dependent on their estimated claims liability, and the levy rate set by Q-COMP.	(s78 Workers’ Compensation and Rehabilitation Act 2003) Original licence issued for a period of two years, on renewal, licence period can be up to four years
Western Australia	• Employer submits application to Authority. • Authority reviews and considers the application for self-insurer status. • Authority provides recommendation on the application to the Minister. • The Governor, on recommendation of the Minister, may exempt an employer. Refer to WorkCover WA’s Guidelines for the Approval and Review of Self-Insurers for more information. Guidelines for the Approval and Review of Self-Insurers	Self-insurers are required to contribute annually to the Authority’s General Account. The contribution is a percentage (fixed by the Authority) of the total amount of the notional premium of the self-insurer. The minimum contribution is $40 000. Refer to WorkCover WA’s Guidelines for the Approval and Review of Self-Insurers for more information. Guidelines for the Approval and Review of Self-Insurers	No initial duration, however Section 165 of the Workers’ Compensation and Injury Management Act 1981 requires that self-insurance arrangements be reviewed at least once a year or when so required by the Minister. The review of an exemption will be based on adherence to the conditions of approval set out under the Guidelines for the Approval and Review of Self-Insurers. Guidelines for the Approval and Review of Self-Insurers
South Australia	An indicative time line for the process and requirements are outlined in the Code: • Must satisfy prescribed minimum requirements as to financial strength and viability. • Unlikely to be accepted if employs less than 200 employees. • Application, accompanied by a fee, is submitted for evaluation and consideration. • Written confirmation by the employer that they have received a copy of the Code, have understood and are prepared to be bound by the Code as a term and condition of registration as a self-insured employer. • Evaluators meet with the employer to outline and discuss the requirements of the evaluation process. See Chapter 8 of the ‘Code of conduct for self insured employers of the WorkCover Scheme’ http://www.workcover.com/site/employer/selfinsured/publications_and_forms.aspx for details. • The evaluation process proceeds until WorkCover determines whether the employer has met all appropriate Standards and criteria. • The employer and WorkCover agree on a target date for commencement of self-insured employer registration if the application is successful. • An actuarial evaluation is obtained to cover both the value of the existing claims liability and to estimate the likely liability that may be incurred during the first year of self-insured employer registration. • The employer and WorkCover agree the terms and conditions for the management of transitional liabilities (including all the necessary financial calculations and adjustments). • The Board of WorkCover considers the application, and if appropriate, grants self-insured employer registration. • The employer submits the required financial guarantee, and evidence of the existence of the excess of loss insurance policy.	• Section 62 of the Workers Rehabilitation and Compensation Act 1986 (SA). • A one off application fee applies of $10 000 (plus GST) plus $15 (plus GST) per worker employed by the applicant in the state. • Yearly special levy payable by self-insurer is a percentage of the levy that would have been payable if they were not a self-insurer and may be differentiated between different self-insured employers by reference to: 1. the application of the natural consequences model 2. application of remedial levy paid to reflect additional cost to WorkCover of administering the Act where self-insured employers do not comply with their obligations as a self-insured employer.	Licence (registration) granted for an initial period of two years. A self-insurer may apply to WorkCover to renew its registration for further periods. (s60(4)(d) Maximum period of registration for each renewal is three years of WRC Act and WorkCover Policy on self-insured employer status within the Code of conduct for self insurers under the WorkCover Scheme (May 2011).
Tasmania	An employer must make application to the WorkCover Tasmania Board on the approved form (section 104) accompanied by: • Completed financial indicators form. • Desktop review of financial information by an independent expert. • Copies of the organisation’s last three annual reports. • Evidence of high level safety management practices • Evidence of high level injury management practices. • Evidence of high level claims management practices. • Evidence of the organisation’s capacity to meet the necessary data reporting requirements. Applying for a self-insurer permit (Guideline S1-020)	No application fee. However, the applicant is responsible for paying all expenses associated with applying for a self-insurer permit, including expenses associated with: • providing a desktop review of financial information by an independent expert • providing a National Audit Tool report by a certified auditor or evidence of JAZ-ANZ certification against AS/NZ 4801:2001 or the National Audit Tool • seeking approval of an Injury Management Program Once a permit is granted, there are ongoing expenses. These are set out in detail in the Guideline. Requirement to make annual contributions to the WorkCover Tasmania Board and the Nominal Insurer Fund.	Initially one year and then depending on outcome of audit, it can range from one year to three years.
Northern Territory	s120 Employer to write to Authority for approval to self-insure.	There is no cost to employers to lodge a self-insurer application. The only fee for employers is for an actuarial assessment to be provided to NT WorkSafe’s actuary. Once approved a self-insurer will be required to pay the Territory an amount determined by the Authority as a contribution towards: • administration costs of the Work Health Court • administration costs of the Supreme Court associated with proceedings under the Act • costs incurred by the Authority in providing a mediation service, and • cost of printing scheme documents. They are also subject to contribution to the Nominal Insurer based on nominal market share.	One year.
Australian Capital Territory	• Submit application to WorkSafe ACT. • WorkSafe ACT will coordinate the review process. • Once applications have been reviewed recommendations will be made to the appropriate delegate. • Once the Delegate has made their decision, the applicant will be notified. • Should the application be successful, the applicant must complete and return an Acceptance Form within 14 days of the date of notification.	Application fee to be a self-insurer - $ 6,434.00 (updated each year) and approval fee - $ 6,434.00. The insurer must agree to participate in, and pay the costs of, an audit to establish that the insurer has adequate resources to meet the insurer’s current and expected liabilities.. The insurer must agree to participate in, and pay the costs of, an audit to establish that the insurer has complied with its obligations under the Regulatory Framework. (from Dec 2011) Appropriate audit costs and application fee on renewal of licence.	Up to three years.
C’wealth Comcare	Process for applying for eligibility By Ministerial declaration and provided that the Minister is satisfied that it would be desirable for the Act to apply to employees of a corporation that: • is, but is about to cease to be, a Commonwealth authority, or • was previously a Commonwealth authority, or • is carrying on business in competition with a Commonwealth authority or with another corporation that was previously a Commonwealth authority. If the corporation is so declared by the Minister, the corporation is then eligible to apply to the Safety, Rehabilitation and Compensation Commission (the Commission) for a licence. Note: Since December 2007 there has been a moratorium on the Minister considering eligibility. Process for applying to become a self-insurer • 102 of the SRC Act: Once a corporation is declared an eligible corporation by the Minister, it may then apply to the Commission for a licence under section. • The Commission will consider the application and may grant a licence under ss103 and 104 of the SRC Act.	• One off application fee based on size, complexity, need for external financial assessment etc. • Annual licence fee payable. The fee varies based on contributions to regulatory management of the SRC Act scheme with special emphasis on issues relevant to licensees, plus costs specifically applicable to oversighting the licence compliance evaluation program for each licence, and the size of the licensee. There is an OHS contribution to meet regulatory activities in workplace safety.	Initially for a period for two years and then four years.
New Zealand	• Employer completes an application form providing supporting financial, business and health and safety information. • Notifies all staff in writing about their intention to join. • Consult with employee representatives about intention to join. • Co-ordinate staff and documentation for the health and safety audit (completed by an ACC approved independent auditor) using the approved audit tool. Submit application to ACC (the Manager): • ACC will undertake the approval process. • Once approval process has been undertaken, ACC makes decision. • The applicant will be notified.	Pay a portion of the pre-entry audit costs. Cost of the independent audit of Health and Safety.	Approval may be for one to three years at the employer’s option. Annual reviews are undertaken in order to ensure entry (including prudential) requirements are being maintained.

Ongoing Requirements

The majority of jurisdictions require an applicant for a self insurance licence to meet a minimum standard for work health and safety, rehabilitation and/or workers’ compensation. In determining the minimum standard required for work health and safety most agencies require the employer to have in place an work health and safety management system or arrangements (i.e. NSW, Victoria, NT, ACT and Commonwealth), which is then audited against a work health and safety audit tool (see Table 6.4). The work health and safety audit tool varies significantly across the jurisdictions. NSW, Victoria, Tasmania and the Commonwealth measure the self-insurer’s performance against the National Self-Insurers OHS Audit Tool.

Queensland requires a satisfactory work health and safety performance. Although no audit tool is stipulated, the administrative guidelines indicate that use of the national OHS Audit Tool is required. In South Australia compliance is required with the Self Insurer Standards which can be found at Annexure A to the Code.

In addition to the prudential requirements, employers are required to take out bank guarantees, or similar guarantees, to cover outstanding claims liabilities. Self-insurers are also required to carry excess of loss insurance to cover catastrophic events. Table 6.5 shows the guarantee requirements for self-insurance eligibility requirements across Australia.

Jurisdictions vary in the extent of self-insurance licence coverage from single companies or also including fully owned subsidiaries. Table 6.6 details restraints on company structure.

Normally self-insurers case-manage their own employees, however some jurisdictions allow them to outsource this function. Table 6.7 shows the outsourcing of case management arrangements Australia.

Self-insurer companies are obliged to comply with workers’ compensation legislation to at least the same extent as premium-paying companies to maintain their self-insurer status. Licensees may have extra conditions imposed on them which also require compliance measures. Table 6.8 details other ongoing licence requirements.

Reporting requirements

Self-insurance lends itself to self-regulation, providing that adequate control measures are put in place from the outset, and a continuous reporting programme is followed. Periodic reporting can be used to monitor performance, with the degree of auditing linked to a self-insurer’s performance. The better the performance, the lesser the need for intervention. Table 6.9 shows the reporting requirements across Australia.

Requirements for surrendering license and penalties for exiting

Self-insurance is not without risk, the predominant one being that if self-insurers fail, then governments may have to meet the costs of workers’ compensation liabilities. Employers may, for a range of reasons, wish to cease being a self-insurer. Some jurisdictions impose penalties on employers who choose to leave their scheme or surrender their self insurance licence and move to the Comcare scheme. See Table 6.9 for a comparison of these requirements and penalities.