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Applying for Self Insurance - A beginners guide

Applying for Self Insurance - A beginners guide

Self Insurance, Workers Compensation

Applying for Self Insurance - A beginners guide

Becoming self-insured isn’t for every organisation, but changes to both workers compensation schemes and self-insurance arrangements have made becoming self-insured more attractive.

Large organisations have often seen self-insurance as a potential option to reduce business operating costs like insurance premiums. In spite of this potential, many organisations are discouraged from applying by the high bar set for applicants and the increased risk that successful applicants must take on. If you are just starting to consider self-insurance as an option, its worth reading this article first. 

Even those that meet the financial entry criteria and are prepared for the required financial investment are often deterred by the long lead times and the significant administrative burden and external audit requirements that comes with meeting mandatory health, safety and injury management requirements. 

But confirmed and mooted changes, to both insurance premiums and to health and safety standards, are tipping the balance in favour of more organisations seeking out self-insurance solutions. Workers compensation premiums are increasing across Australia making financial feasibility of self-insurance more likely. At the same time, some workplace safety regulators are shifting from the highly prescriptive National Self-Insurer OHS Management System Audit Tool to the more agreeable and flexible ISO 45001. The differences between these two standards are significant, but a summary of some of the key changes can be found here.  

top view man filling up a work injury claim form with stethoscope  medical and insurance concept

Applying for self-insurance is different in every jurisdiction but does require organisations to meet a range of financial and other criteria. In places like Victoria, South Australia and Tasmania self-insurance is available to organisations of any size provided they meet various criteria, whereas in NSW employers must have at least 500 employees and in QLD 2000 employees. While the specifics differ from State to State, generally self-insurers need to demonstrate:

  • Strong financial performance and ongoing financial viability.
  • The availability of resources to manage and administer claims.
  • Compliance with relevant health, safety and workers compensation law. 
  • Good safety and claims performance.
  • A well-functioning health and safety management system.
  • A strong health and safety culture. 

If you think your organisation has what it takes to become self-insured, consider the following initial steps:

  1. Assess Financial Feasibility: Before applying for self-insurance, organisations should confirm if they meet scheme entry requirements and whether or not there are sound financial reasons for choosing self-insurance. 
  1. Review your health, safety and injury management systems against legal and self-insurance requirements and, if necessary, update them so they can be evaluated during the application process.
  1. Review how injury claims and return to work will be managed and administered. Do you plan to outsource these to specialist providers or manage and administer claims in-house.

If your own organisation doesn’t have the resources or expertise to undertake the above, you can seek out those, like Verus, with strong experience across self-insurance to assist. 

Having completed the above and decided to move forward with self-insurance, organisations should:

  1. Obtain Approval: Submit an application to the relevant workplace regulator for approval to become a self-insured employer. The application should include all relevant documentation, such as financial statements, risk management plans, and evidence of strong workplace safety practices.
  1. Contract Services: Engage professional service providers, such as claims management firms, legal advisors and health and safety auditors to support your self-insurance program. These experts can assist in navigating the complexities of claims administration, compliance, and legal matters.
  1. Implementation and Review: Once approval is granted, implement your self-insurance program. Continuously monitor and review the program's effectiveness, making adjustments as necessary to ensure ongoing compliance, efficient claims management and effective risk mitigation.

Remember, the process of becoming self-insured for workers' compensation can be a long and complex one and requires careful consideration. It is essential to consult with professional advisors who specialise in health, safety and injury management as well as insurance providers that have a deep understanding of the specific requirements in each of the schemes you are applying for.

If you are interested in understanding more about what it takes to become self-insured, contact Verus today for an obligation free chat.