Case Studies
Cross-border Coverage/Wage Audit/Uninsured Penalty Review
The insurer audited a small sheep shearing operation, and KPMG was hired to investigate the Wage Audit. Cross-border Coverage problems, Wage Declaration, and Uninsured Penalties were all examined in this study. After extensive consultation with the client, bookkeeper, accountant, and KPMG, we identified that the business is based in both NSW and VIC. The client, on the other hand, had only registered the insurance in New South Wales. The following concerns arose as a result of the company’s location on the NSW-VIC border and shared staff travelling between the two states. The issues identified were:
- There were workers in VIC and NSW and shared workers travelling from one state to another.
- There should have been a VIC policy registered.
- As there was no VIC policy, all the wages were declared to NSW.
- The policy period in NSW was based on the calendar year and not the financial year ending 30 June
- The declared wages in NSW were based on the financial year whereas it should have been based on the calendar year. A 2-year Tax Return was required to lodge the correct wages in NSW.
As a result, we set up a new policy in Victoria, submitted a claim with WorkSafe Victoria to avoid an “Uninsured Penalty,” and paid all of the premiums in Victoria for the previous five years. We were able to recoup more than $27,000 in premium refunds in NSW, the majority of which was used to pay the VIC premium, with the client returning the remainder as profit. See the Penalty Review page here
Succession Review
A medium-sized client purchased a new business and registered a WorkCover policy with WorkSafe approved insurer/Agent. Because of the relationship between the previous and current investor, the insurer applied succession, resulting in a $500K excess premium payment. Following a lengthy conversation with the client and the gathering of legal documents and information. We filed a claim with WorkSafe Victoria for review. As a result, WorkSafe was able to cancel the succession, saving the client an extra $500K in premium.
See the Succession Review page here.
Single WIC Review
In 2011, the client was chosen at random for a Premium Audit, resulting in a change to their WorkCover Industry Classification (WIC). The client has been paying the premium since, but never questioned the decision until we were appointed to review the client’s business activity. We concluded that the WIC was erroneously categorised as WorkSafe. The business supplied a wide range of services, but due to the client’s poor website and business description at the time of the audit, which resulted in a classification change, the client was forced to pay a high premium rate. We presented WorkSafe with a compelling argument backed up by analytical data and supporting papers. As a result, WorkSafe agreed to amend the WIC and we were able to recoup $467K in a premium refund for the client.
See the WIC Review page here.
Labour-Hire WIC Review
A client is a medium-size labour-hire company, providing on-hire labour services and have been paying years of premiums, not realising what they had been paying was incorrect. We obtained the client’s payroll, client listings (host employers) and data-based, reviewed all information and re-submit to WorkSafe for premium re-calculation. As we achieved an outcome of $1M in premium refunds for the client.
See the WIC Review page here.
Labour Hire Succession Review
A medium-sized labour-hire client restructured its business and sold 90 per cent of its equity to three new investors. As a result, a new company was founded and a new WorkCover policy was required. The insurer applied succession to the new policy linking it to the predecessor policy due to the share arrangements. This means the new policy will inherit the previous policy’s history and will have to pay the same premium rate. The insurer assumed that the new entity was the same business as the previous entity. The insurer’s argument was that the new entity not only purchased the assets but the entire workforce.
We filed an argument with the insurer quoting the legislation, unfortunately, the insurer turned down our request to have succession removed.
We reviewed the relationship and shareholders in detail again, requesting the client to provide further information relating to the shareholders and its directorship arrangement and sales contract, crossed reference it to the legislation and the Premiums Order. We filed a claim with WorkSafe Victoria directly, requesting a review of the succession provision. After months of waiting and exchanging emails between WorkSafe, finally, WorkSafe agreed to overwrite the insurer’s decision and withdraw the succession saving the client over $160K.
See the Succession Review page here.
Policy Management – Labour Hire
A large size labour-hire client that has multiple policies in each state and with over 300 clienteles (host employers) per state. By proactively managing their policies by reviewing their payroll data, their labour-hire business activity, and host employers’ details we were able to save more than $2M in premium at renewal each year in each state.
See the Policy Management page here.
Claim Costs Penalty Review
Due to a decline in claim expenses of more than 30%, the insurer penalised two clients with the amount of over $370K in premium. We were able to reduce the ceiling capping penalty after identifying the insurer’s substantial faults.
See the Penalty Review page here.
Underestimation Penalty Review
Case 1: A penalty was imposed on a small business client for failing to update expected wages during the year. The client stated the actual salaries at the policy’s expiration, which were 20% more than the expected wages declared upon renewal.
As a result, the client was fined over $1,200 by the insurer. We investigated the penalty; we were able to identify ground reasons why the client did not revise the wages during the year to reflect the increase in the workforce. As a result, we presented the case and made a plea to the insurer, and the penalty was waived.
Case 2: Another client had an Underestimation Penalty applied after declaring the actual wages. The client fails to review and update the wages during the year. We realised that the insurer would not waive the penalty because the client had provided the remuneration once during the year, but it wasn’t enough to avoid the penalty. The client also had a prior history of incurring the penalty. Therefore, our best solution is to put a case and plea for a premium reduction/discount. As a result, the insurer agreed and offered a discount on the penalty, saving the client 37% in premium reduction.
See the Underestimation Review page here
Wage Audit Review
A transportation company is a medium-sized client. We conducted a health check on 4 policies that were registered in different states. We found that the business had been paying the incorrect premium for many years. Due to the account’s internal errors, some of the wages got mixed up and incorrectly declared for each policy state. Some of the wage components that form part of the “remuneration” were over-declared in some states as each legislative scheme has a different ruling and exemption. We were able to recoup more than $200K in premium refunds as a result of this.
See Wage Auditing & Premium Review here.
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