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Workers' comp crisis worsens

WA EMPLOYERS will have to pay an extra $767.53 million in compulsory workers’ compensation premiums this year.

The Premium Rates Committee has announced compulsory workers’ compensation insurance premiums will rise by an average 35.3 per cent on June 30. This is effectively a premium of $3.44 on top of every $100 paid in wages.

Premium Rates Committee chairman Des Pearson said the rates increase assumed future increases in workers’ compensation costs, particularly in the area of common law.

But WA Chamber of Commerce and Industry chief executive Lyndon Rowe said rises sought by insurers for workers’ compensation cover in the coming year might prove higher than the rates committee recommendation.

“The committee’s recommended rates are only a guide to insurance companies – an approved benchmark. Premium rises as high as 200 per cent could be in store for some companies,” Mr Rowe said.

WA’s slowly rebuilding manufacturing industry is likely to be hit hard as it is often considered a high workers’ compensation insurance risk.

The bulk of workers’ compensation costs come from workers with claims lasting 60 days or more. Only 15.6 per cent of all claims are in this category, yet they make up 76.2 per cent of the costs.

Many long-term claims come through people trying to access the second gateway to common law.

Employees with less than 30 per cent impairment can access the second gateway and sue their employers for negligence if they stand to lose future earnings of $106,000.

But only 1.5 per cent of these cases ever get to trial. Employers usually settle out of court to avoid legal bills and time costs.

Both the WA Government and the Chamber of Commerce and Industry blames the Labor-led opposition for the premium blowout.

In 1998 the government moved to limit the effect of the second gateway by removing the interim step and making the employee prove negligence on behalf of the employer.

However, the amendments were blocked by Labor’s numbers in the Legislative Council.

Both the chamber and the Trades and Labor Council had backed the government’s approach.

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