As a NSW labour hire company found itself expanding from a small to medium-sized business, a dramatic increase in premiums brought home the complexities of workers' compensation. CGU worked with the company to improve their knowledge of the drivers of workers' compensation, enabling them to transform their approach to claims management and bring their premiums under control.
Established in Sydney in 1999, the labour hire company provides mainly outsourced recruitment services across a range of core areas such as engineering, landscaping, construction, warehousing and office support. By 2004 the company had over 200 employees across its own office and client premises. Three years later this had grown to more than 1,100 and had expanded into a number of new industries.
This rapid expansion and the safety challenges inherent in trade and manual industries combined to make workers' compensation a significant business cost. Between 2004 and 2007, premiums rose from under $60,000 to more than $600,000, growing at three times the rate of total wages. From just one open claim in 2004, there were now seven and the Managing Director knew something needed to change.
“What began as just another part of the insurance mix was now having a major impact on our cost structure. We needed to better understand how we could control our premiums and CGU worked with us to achieve this”.
CGU provided information and advice on how workers' compensation premiums are calculated, best practice claims management and worked with the company to identify the controllable factors within its business that were impacting on premiums.
The CGU account manager had seen workers' compensation sneak up on rapidly growing businesses before, but says companies often don’t understand that there are things they can do to bring the cost of workers' compensation down.
“The first critical step was to identify the impact that unresolved claims were having on their premiums. We then worked with them to develop strategies for managing individual claims, including exploring alternative healthcare providers and suitable duties to accelerate return to work outcomes”.
Achieving positive results
Transformations don’t happen overnight, but this rigorous approach and the partnership between CGU and the employer are now delivering positive results.
After premiums spiked a further 66% in 2008 due to continued growth in wages and a high number of open claims, the following year claims were down 50% and premiums up just 11% - around half the increase in total wages.
“All signs now point to a drop in premiums and that’s just the way we both want to see it”, said the CGU account manager. “The changes we’ve implemented together have also laid the platform for a sustainable relationship, and that’s good for both companies”.
The company is also delighted with how quickly the business has turned a corner and with how CGU has been able to assist in the process.
“I’ve gone from thinking about CGU as simply an insurance provider to a strategic partner with the knowledge I need to make the right decisions and a range of value-add initiatives to suit the needs of my business. That type of support is invaluable”.