The Premium Allocation System module allows the distribution of Work Cover/Comcare Premium costs to individual cost centres. This best practice approach will reward successful safety management and therefore encourages improvement. Organisations are required to have set-up SafetySuite Accounts Payable Integration (API) to use this functionality.
What is the WorkCover/Comcare Premium and What Affects It?
WorkCover/Comcare premiums are determined through a complex set of calculations that use the total remuneration for an entity, the industry that entity is in, and the historical workers compensation costs, to determine the amount. Each year the Work Cover/Comcare authority tweaks the industry rates and the factors affecting relevant years of claims history, to ensure that they have the necessary funds to support the projected claim costs in the New Year.
At the commencement of the financial year organisations are asked to estimate their remuneration for the coming year. A premium is determined and paid. At the conclusion of the financial year actuals are reported and the premium is adjusted requiring additional payment or a credit on the subsequent year’s premium.
Establishing a Planned Baseline Premium
At commencement of the financial year organisations provide the Insurer with details of planned remuneration to determine the initial premium. For customers using SAP this figure should easily be extracted from the budget stored in SAP FI/CO. Remuneration (wages) will be a specific GL Account against a cost centre or a node in a cost centre hierarchy.
This figure is recorded against cost centres either, through a manual exercise or using the personnel cost planning tool. In either case the outcome records planned remuneration (wages) against cost centres in SAP Finance. The baseline premium, or premium without any claims history, is simply these figures multiplied by the industry rate. A simple rule then establishes the budgeted oncost for the baseline WorkCover/Comcare premium determines this amount.
Establishing the Planned Premium History
SafetySuite records each claim against the relevant policy and policy year. Through configuration, all the complexity of the WorkCover/Comcare Authorities “tweaks” are recorded in policy year specific configuration tables. As each claim captures the Gross Incurred Cost and the projected final cost of a claim, the running of the Premium Allocation function can update cost centres with a baseline premium history amount, with the additional amount incorporated into the premium based on open WorkCover/Comcare claims. This figure is typically spread over the course of the year. A simple report in FI will combine the two components to determine the allocation of the premium to a cost centre.
Updating Actual Baseline Premium
A rule in the payroll creates an oncost related to the baseline premium amount, simply by multiplying the remuneration (wages) figure by the industry rate. These flow through from payroll each period to the relevant cost centre. These actual amounts ensure that adequate funds are in place to account for staffing changes over the year.
Updating Actual Premium History
Each month, usually in line with the periodic uploads from the insurer, each claims payments, estimates, and gross incurred figures are updated. The Premium Allocation function reviews the new position of each claim against the previously determined figures and updates the cost centres with the fluctuations in the capped factored amounts. This insures that any changes to the premium based incurring or reducing the contribution of a claim are reflected in the cost centre.
Monitoring the Claims Premium
Cost Centre Manager’s simply review their cost centres planned and actual figures to see how their WorkCover/Comcare Premium is tracking. If their cost centre’s remuneration grows or resides so does their premium. If a person is quickly returned to work their premium reduces, if a new person raises a claim the premium increases. The system holds Managers accountable and teaches them that only by preventing injuries and facilitating effective return to work plans can they reduce the financial exposure of their cost centre.
