Soaring workers compensation premiums are the sleeper cost issue of 2023-24, the National Road Transport Association (NatRoad) declared today.
Significant rises in premium costs in the two most populous states, Victoria and NSW, have operators bracing for major financial hits.
In March, the Victorian Government announced its average scheme rate is increasing from 1.272 per cent to 1.8 per cent, a rise of almost 42 per cent.
And in NSW, where premium rates for the Nominal Insurer workers compensation scheme are increasing by an average of 8 per cent for the 2023-24 financial year, the news is much worse for the transport sector, believes NatRoad.
“The state’s workers compensation insurer, icare, has identified transport as an industry that needs to lift its safety record,” said NatRoad CEO Warren Clark.
“Therefore, the average rate increase across our sector in NSW will be 14 per cent.”
In South Australia, the average premium rate for 2023-2024 will be 1.85 per cent, an increase of 2.8 per cent over the 2022-2023 rate of 1.8 per cent.
And in Queensland, the average net premium rate will increase to 1.29 per cent of wages in 2023-2024, which is an increase of 4.9 per cent compared to the 2022-2023 rate of 1.23 per cent.
Clark said operators already struggling with profit margins of about two per cent can ill-afford workers compensation premium hikes.
“These costs are not negotiable and there’s simply no way to avoid them,” Clark said.
“Many businesses are already wrestling with passing on high fuel costs, tolls, labour costs, the Road User Charge.”
Clark said NSW’s decision to scrap the Employer Safety Incentive (ESI), which was a flat rate rebate of premium based on wages multiplied by industry rate and meant to be spent on safety initiatives.
Since 2013, icare estimates the rebate has paid out $1.5bn in premium revenue. It is being replaced by the Safe Employer Reward (SER), which uses a sliding scale based on employer performance.
“The Victorian Government has declared its workers compensation scheme is ‘not fit for purpose’ and has foreshadowed law changes to limit access and benefits for mental health claims and stop long-running compensation cases,” Clark said.
“That’s not going to make a dent in most transport operator premiums.”