Can you choose your workers compensation insurer?
In short
- In several states and territories the employer has no choice: cover comes from a single government scheme or insurer.
- In the others, employers place cover with a licensed or approved insurer of their choosing.
- Some schemes let an employer pick a claims agent, which is not the same as choosing an insurer.
A business employing people in more than one state quickly discovers that workers compensation does not work the same way twice. In some jurisdictions there is a market and a choice of insurer. In others there is one scheme, and shopping around is not a thing that exists.
This page is about that structural question only — who the employer buys from — because getting it wrong wastes time comparing options that are not options.
Central schemes: no choice of insurer
Several jurisdictions run a central fund. The scheme itself is the insurer, employers register with it, and the only alternative is a self-insurance licence for employers large enough to qualify and willing to carry their own claims liability.
Where a central scheme operates, a search for the cheapest workers compensation insurer has no answer, because there is only one seller. What does vary is the employer’s own premium calculation, which turns on industry classification, wages declared and claims history.
Choosing an agent is not choosing an insurer
One central scheme asks employers to select an agent when taking out or renewing cover. Those agents are appointed by the scheme to manage policies and claims — they are not competing insurers, and the cover is the scheme’s either way.
Another jurisdiction operates a nominal insurer that engages several well-known insurance companies as claims service providers. Their names appear on correspondence and are widely mistaken for a choice of insurer. They are performing claims management under contract to the scheme.
The practical consequence is the same in both: an employer choosing between those names is choosing an administrator, not a policy.
Underwritten markets: a real choice, from a published list
The remaining jurisdictions run privately underwritten schemes. Employers must hold a policy, and they place it with an insurer that the regulator has licensed or approved for that scheme. The regulator publishes the list, and it is short.
Even here the choice is narrower than it looks. Approved lists frequently include the same corporate group more than once under different trading names, so a list of licence entries is not the same as a list of independent companies.
What people get wrong about it
The most common assumption is that workers compensation works like public liability — get quotes, compare, choose. In much of the country it does not, and time spent looking for a better deal is time wasted.
The second is assuming a national employer can hold one policy. Cover generally follows where the worker is based, so an employer with people in several states is usually dealing with several schemes at once, each with its own rules and its own renewal.
The third is treating the names on claims correspondence as the insurer. In a central scheme they are agents, and complaints and disputes follow the scheme’s process, not that company’s.
Questions
- If there is only one scheme, can I still reduce the premium?
- The premium is calculated rather than quoted, so the levers are the inputs: the industry classification applied to the business, the wages declared, and claims experience. Those are worth checking for accuracy, and a misclassified industry is a common and correctable error.
- I employ people in two states. Do I need two policies?
- Generally yes, because obligations arise in each jurisdiction where workers are based, and the schemes are separate. The specifics of which state a particular worker belongs to are set by each scheme, so it is a question for the relevant authority rather than a general rule.
- Does a sole trader need workers compensation?
- Schemes generally cover workers rather than the proprietor of the business, which is why a sole trader with no employees is often unable to buy a policy at all — and why a client asking one for a workers compensation certificate is asking for something that may not exist.
Sources
- WorkSafe Victoria — The Victorian workers compensation authority, which is itself the insurer in that state and publishes the current list of its agents.
- icare (Insurance and Care NSW) — Administers the New South Wales Nominal Insurer and publishes which companies act as its claims service providers.
- Moneysmart (ASIC) — The regulator’s consumer site. A starting point on insurance documents generally, not a definition of any particular policy.