As a small business owner, you have a responsibility to provide a safe working environment for your employees and this is achieved through robust risk management and occupational health and safety procedures. Of course, even the most diligent workplace can’t plan for everything and you may be faced with an employee injury. For this reason, it’s essential that you have workers compensation insurance in place. This form of insurance cover is designed to protect both employees and employers financially in the event of work related injury or illness.

What is workers compensation insurance?

Workers compensation provides financial protection if an employee suffers an injury or illness in the course of their duties. Should an employee be successful with a workers compensation claim, the employer will be reimbursed for the costs associated with the claim. This could include ongoing wages, medical bills, specialised equipment and rehabilitation costs. Workers compensation insurance means that employers aren’t out of pocket when it comes to a successful workers compensation claim and employees are able to receive an income and receive the medical treatment they require.

The cost of workers compensation insurance will depend on a number of factors such as  the size of your business, the type of work you do, the number of employees that you have and the location of your work. If your business hires contractors rather than keeping employees on staff, it’s important to remember that some contractors are considered to be employees from a legal perspective which means they will need to be covered under the workers compensation insurance of the business. This will depend on factors such as the wording of an individual’s contract and it is best to seek clarification to ensure you provide cover where appropriate.

What is the history of workers compensation insurance?

The concept of workers compensation insurance is not a recent development. In fact, it’s been around for centuries. While the roots of workers compensation insurance date back to ancient Sumeria and continue into the medieval period, Prussian Chancellor Otto von Bismarck is credited with putting the first workers compensation insurance system in place with the Sickness and Accident Laws in 1881. This formed the basis of workers compensation insurance which would spread throughout Europe and the United States.

In Australia, workers compensation was introduced early in its history due to the increased demand for industrial reform with the labour movement in the 1890s. As workers compensation evolved, it overlooked female workers in the early years and women were only included in the terminology in the 1970s. Today, workers compensation insurance is compulsory across Australia.

How does workers compensation insurance work in Australia?

While workers compensation insurance is an essential form of cover for businesses from a financial perspective, it’s also compulsory by law to have this policy in place in every state and territory in Australia. Each state and territory operates their workers compensation scheme differently. In Western Australia, Tasmania, Northern Territory and the ACT, insurers underwrite the scheme privately. In South Australia, NSW and Victoria, insurance underwriters act on behalf of the state government. In Queensland, the scheme is run solely through the state government. To find out more about your workers compensation requirements, speak with your insurance broker for personalised advice.

When it comes to making a workers compensation insurance claim, employees should report the injury or illness to their employer in the first instance. It’s important to note that the injury or illness must be reported during the specified time period and this time frame will differ depending on where you live. Once medical documentation is provided by the employee to back up their claim, a formal claim can be lodged with the relevant paperwork and supporting documentation. The insurer will review the claim and, depending on the success of the claim, payments can commence. If a workers compensation claim isn’t successful, employees can take action depending on the state or territory in which they live. This could include asking for a review, seeking assistance from an independent body or taking the matter to Court.

Protecting your risk exposures

GSK Insurance Brokers understand the risks facing Australian businesses and our brokers have significant experience in working with clients of all sizes, from small businesses to large government organisations. With 40 years of experience, our focus is risk mitigation to ensure ongoing peace of mind. We provide a personalised approach with tailored insurance solutions so your business and associated assets are well protected.

For more information about workers compensation insurance, contact GSK Insurance Brokers today.

February 9, 2021

By Graham Knight

Founder and Managing Director of GSK Insurance (established in 1981). Graham draws upon more than 50 years’ experience in the insurance industry, working in both insurance and broking across various private, public and government sectors in Australia.

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