The underlying objective of the Coal Mines Insurance (CMI) Scheme’s premium system is to ensure premiums remain stable, affordable and fair for employers while providing a sustainable Scheme for the NSW coal industry workers of today and the future.
Policyholders are invited to renew their workers compensation insurance policy/ies with CMI in June of each year. The renewal invitation pack includes details of individual policy premium rates, as well the Mine and Petroleum Site Safety Fund (MPSSF) contribution rate and any scheme changes for the upcoming renewal period.
Frequently asked questions
Premium collected by CMI is the key source of funding, together with investment earnings, to provide for the following expenses each year:
- The cost of claims
- Provision of statutory services (Orders 34, 40, 42, 43)
- Reinsurance
- All CMI operational expenses
- Certain Mines Rescue functions, Standing Dust Committee
- NSW District Court contribution
When comparing CMI to other insurers it should be noted that premium collected by CMI also helps provide relevant statutory services under the various Orders as well as dust disease coverage.
In recent years the CMI Scheme has experienced a variety of pressures – the main one being increasing claims costs.
The Scheme is seeing a higher severity and complexity of injuries, increasing psychological claims and the impact of developing claims costs from older accident years. This is resulting in increasing claims costs in weekly benefits, common law and legal claims, as well as the associated legal costs.
Other cost pressures include:
- Increased costs to ensure the full provision of statutory health surveillance to the NSW coal mining industry under Order 43
- Additional regulatory and governance requirements, which Coal Services is meeting by modernising its infrastructure, including IT platforms
- Implementation of the new CMI IT system to improve efficiencies in claims and policy management
CMI has responded to the increasing pressures on the Scheme in numerous ways, including instigating several independent reviews of the Scheme between 2014 and as recently as this year. These reviews have provided valuable insights into areas that were working well for the CMI Scheme and areas requiring improvement. Many review findings have been implemented while others are intended to be the subject of stakeholder consultation.
Of particular note:
- The implementation of the Injury Management and Injury Prevention (IPIM) program which was initiated in 2016. The program consists of four stages implemented over six years: a new case management model and account management model (stages 1-3) and a new CMI IT system (stage 4).
- The findings of other Scheme reviews The findings of the independent review of the CMI Operating Model in 2021 confirmed that the new CMI operating model is working with some areas requiring further refinement.
Each year, the CMI Scheme category rates are set based on independent actuarial advice regarding the Scheme’s outstanding claims liabilities, the expenses of managing claims and policies, as well as providing the statutory services delivered to industry by Coal Services.
| Premium Risk Category | 2024-25 | 2023-24 | 2022-23 |
|---|---|---|---|
| Open Cut Mine | 5.94% | 5.94% | 5.43% |
| Underground Mine | 7.01% | 6.79% | 6.48% |
| Operational Mining Services – Onsite | 1.70% | 1.91% | 2.09% |
| Operational Mining Services – Offsite | 1.70% | 1.91% | 2.09% |
| Administration – Onsite | 1.06% | 1.06% | 1.01% |
| Administration – Offsite | 1.06% | 1.06% | 1.01% |
Note: Administration categories are set at the minimum premium rate (see below).
The increase in each category rate will increase the Base Tariff Premium (BTP) calculation for policyholders. How this impacts your individual premium depends on whether you are deemed to be a small or large employer for premium calculation purposes.
Small policyholders (wages less than or equal to $2.5m)
- Premiums will be set equal to the BTP.
BTP = annual wages x category rate (or weighted category rate if wages are declared in more than one premium risk category)
- Premium rates for small employers will change in accordance with the size of their wages and the risk category or categories wages are declared in.
Large policyholders (employers with wages greater than $2.5m)
- The impact on premium will differ for each large employer depending on their mix of wages, claims costs and risk categories.
Small employers
- Premiums for small employers will be set equal to the BTP.
Large employers
- Premium capping will be applied based on a policy’s BTP. See below:
- BTP less than or equal to $500,000 a cap of 1.5 times the BTP
- BTP greater than $500,000 and up to $1.5M a cap of 2.0 times the BTP
- BTP greater than $1.5M and up to $3.0M a cap of 2.5 times the BTP
- BTP greater than $3.0M a cap of 3.0 times the BTP
The minimum premium rate for the 2024-25 policy year is set at 1.06%.
The minimum premium rate ensures all policyholders pay their fair share of the Scheme’s administration costs. This includes the fixed costs of underwriting each policy and other non-claim related expenses.
Should you have any queries or require additional information on this matter, please contact the CMI Employer Services Team on (02) 8270 3257 or at [email protected]
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