Employers need relative certainty in their tariff premium, but equally resent cross-subsidising other employers and industries.
Workers’ compensation premiums need to be set in a way that balances the employer’s desire for certainty in premiums with an equal desire for accountability in attritional claim costs. Employers need relative certainty in their tariff premium, but equally resent cross-subsidising other employers and industries. Equally, statutory authorities and insurers need to incentivise management of health and safety in the workplace. One of the means to do this lies in the tariff premium structure.
PricewaterhouseCoopers Actuarial has been advising schemes and insurers on workers’ compensation pricing structures since its foundation in 1989. We project the overall cost of the risk using current generation actuarial projection techniques. We calculate raw weighted average rates (generally based on grossed-up case estimates), partial credibility rates (calculated from the weighted averages) and full-credibility premium rates (for those rating classes with exposure below the adopted self-rating point).
This technique provides an objective method for blending the premium charged to risk classifications, with an employer’s underlying experience. This has proven to be useful in advising regulatory authorities responsible for accident compensation schemes, managed funds within the public sector, self-insurance pools and private sector insurance portfolios.
Key specialist: Peter Lurie
Relevant experience:
General Insurance specialist
Actuary to the Premium Rates Committee of Western Australia
Actuary advising several private and public insurers on pricing and outstanding claims provisions in WA and interstate
Actuarial advice to the 1999 Pearson Review of the options for changing the WA workers’ compensation system, to bring the rapidly escalating claim costs under control
Actuarial advice to the 2000 medical and associated costs and insurance arrangements reviews into workers’ compensation in WA
Approved Actuary for general insurers and Approved Actuary for health insurers.
