Driving better outcomes for Australian workers’ compensation market

Women in classroom

The workers’ compensation market in Australia is an extremely vital operation to society. The industry contributes to the well-being, safety and livelihood of its most important asset: People.

Of the 24 million people in the Australia, the insurance industry specifically protects almost 52 percent of the population. People daily rush off to more than 2 million employers to go to work and contribute to society. But every day, they also run the risk of a work-related injury.

By 2020, it is estimated that close to a million more people will join the workforce in Australia, adding the probability that there will be a 5 percent increase in worker compensation claim activity. The big question is … are state workers’ compensation fund organisations prepared to handle that kind of increase?

Safe at work: Good for people and business

As the world changes and becomes even more complex, as jobs evolve and change, so do the hazards and exposures that increase the risk and likelihood of work-related injury. In Australia, there are more than 531,000 on-the-job accidents annually, many resulting in extended absences from work, according to Safe Work Australia.

In fact, the expense of accident and workplace injury and death affects more than just worker health, as its economic cost exceeds $61.8 billion AUD per year in Australia, representing 4.1 percent of the country’s overall GDP.

Workers’ compensation claims have significant impacts on all parties in the ecosystem. A few examples include:

  • GDP

The expense of accident and workplace injury and death continues to climb, having a significant impact on the country’s GDP.

  • Employers

When a company experiences a workers’ compensation claim, it affects more than just the injured employee. From an employer’s perspective, there is lost production and continuity, increased costs and resource strains. It’s pretty simple, people who are injured and are not working are also not producing goods and services, creating a negative impact on the economy.

  • Government

There can be a significant financial impact on government insurers for delayed reporting of a work cover claim, including higher costs and missed opportunity to mitigate medical spending. It can also increase employee anxiety, confusion and ultimately lead to unnecessary litigation.

A quick history of workers’ comp

With populations such as Australia, and the growing need to protect individuals for the benefit of society, the importance of workers’ compensation has long been well-established. The history is interesting. Let’s take a look.

  • The groundwork for today’s workers’ compensation insurance was laid in Germany (then Prussia) during the late 1800’s under then Chancellor, Otto von Bismarck. He needed to gain the loyalty of the common Prussians after suppressing his socialist opposition, and did so by adopting features of their agenda such as social protection for workers.
  • Von Bismarck’s first foray into the workers’ compensation field was through the Employers’ Liability Law of 1871, providing limited social protection to workers in certain factories, quarries, railroads and mines.
  • In 1880, Britain enacted the Employment Liability Act, which was subsequently adopted by the Australian colonies in 1882.
  • Bismarck later established the Workers’ Accident Insurance in 1884, creating the first modern system of workers’ compensation.

Fast forward to 2017, well into the technology era, where the widespread adoption of new consumer technologies in all industries has created new business requirements of insurance software solutions and interaction channels. Even though the industrial and technology revolutions introduced major improvements in how people work and how they communicate, the worker compensation industry has made minimal advancements to improve, as some processes remain antiquated and complex.

Now is the time for change

In today’s digital world, there are new expectations from injured workers, employers and medical practitioners for new modern ways to manage injured worker claims.

The insurance industry needs to take a more innovative approach in the way it addresses the following issues:

  • How to control the astronomical costs and improve business outcomes of workers’ compensation through more timely and efficient processing of claims.
  • Increased claimant responsibility through self-determination programs.
  • Enhanced information and analytics for treatment plans and rehabilitation.
  • More preventative and increased loss control.

Modernisation of workers’ compensation platforms is a requirement for global insurance if it is to ensure the future of this market segment, provide the ability to reduce and manage costs and – most importantly – improve life outcomes. This is the ultimate goal of the combined effort of industry leaders like Hyland and Guidewire, which are bringing to market the most comprehensive integrated and most innovative solutions the industry has seen in decades.

To find out more, visit our session at 2:15pm on Monday, 27 February at the 18th National Workers’ Compensation Summit in Melbourne, Australia. Or come visit us at table 10.

Ruth Fisk

Ruth Fisk has more than 25 years of experience working within the insurance industry and is a foremost expert on the practical application of EDMS technology. In her role as Global Director for Insurance at Hyland, she has travelled to more than 90 countries helping insurance organizations to successfully reduce operating expenses, increase efficiency, and positively impact their bottom lines.

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