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 will soon receive invitations to renew their workers compensation insurance policies. The renewals pack includes details of category rates and new capping arrangements, as well as the Mine and Petroleum Site Safety Fund (MPSSF) contribution rate.
Information on premium pricing for the 2021-22 policy year is available in the CMI Scheme Update.
Premium collected by CMI is the key source of funding, together with investment earnings, to provide for the following expenses each year:
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:
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:
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||2021-22|
|Open Cut Mine||4.86%||4.29%|
|Operational Mining Services - Onsite||2.14%||2.05%|
|Operational Mining Services - Offsite||2.14%||2.05%|
|Administration - Onsite||0.94%||0.85%|
|Administration - Offsite||0.94%||0.85%|
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)
BTP = annual wages x category rate
(or weighted category rate if wages are declared in more than one premium risk category)
Large policyholders (employers with wages greater than $2.5m)
New premium capping arrangements have been introduced that are effective from the 2021-22 policy year.
For more information about capping arrangements please refer to New capping arrangements for 2021-22.
The minimum premium rate for the 2021-22 policy year is set at 0.94%.
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.
The minimum premium rate was last increased following a review of the CMI premium system undertaken over 2013-2015. Following the review, the rate moved from 0.74% over two policy periods – 2016-17 (0.80%) and 2016-17 (0.85%). This is the first increase to the minimum premium rate since that time.
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]