External Guideline #15 Definitions of business rules for incidence of injury and cost of claims analysis Version 10 1 July 2015 Victorian WorkCover Authority
Contents 1. Preface... 3 2. Overview... 3 2.1 Incidence of injury and cost of claims analysis... 3 2.2 Standard indicators... 4 2.3 Data sources... 4 3. Definitions and business rules... 5 3.1 General... 5 3.2 WIC profile... 6 3.3 Basic data... 7 3.4 Standard indicators... 12 3.4.1 Incidence of injury... 12 3.4.2 Cost of claims... 12 Page 2 of 14
1. Preface The purpose of this guide is to support consistency and transparency in the calculation of incidence of injury and cost of claim indicators that form part of the performance assessment of self-insurers by 1 (WorkSafe). 2. Overview 2.1 Incidence of injury and cost of claims analysis A standard is based on industry level, remuneration and claims data. Standard indicators are used in WorkSafe s annual Self-insurance Performance System (SIPS) reporting to self-insurers and to support the following: the assessment of an employer s application for initial or renewal of approval as a self-insurer the review of a self-insurer s approval under section 384 of the Workplace Injury Rehabilitation and Compensation Act 2013 (WIRC Act) which may or will be triggered by certain events or circumstances 2 (e.g., changes to corporate structure); and the performance assessment of a WorkCover insured employer or self-insurer who is or is likely to become a non-workcover employer 3. The indicators generally allow for comparison against a performance standard. The assessment of performance comparative to other employers (WorkCover insured and self-insured, as appropriate) and the employer s own performance over time may be undertaken by WorkSafe. The indicators are interpreted in the context of the employer s particular situation, the purpose of analysis and other available performance-related information. Some other assessment indicators are predominantly quantitative while others require a more qualitative analysis. Claims analyses over-and-above the standard performance indicators may also be undertaken (e.g., to understand patterns of injury type and severity or the impact of claims management practices). Claims data also inform WorkSafe s inspectorate and Occupational Health & Safety Management Systems (OHSMS) audit activities. 1 is a trading name of the Victorian WorkCover Authority. 2 For further information of the type of events that may or will trigger a review of a self-insurer s approval, refer to External Guideline #19 Review of a self-insurer s approval. 3 Non-WorkCover employer means an employer who is licensed under Part VIII of the Safety, Rehabilitation and Compensation Act 1988 of the Commonwealth. Page 3 of 14
2.2 Standard indicators The current standard indicators for incidence of injury and cost of claims are claim frequency rates and claims payment rates which are used as a proxy for injury and remuneration and as a proxy for worker exposure. Claim frequency rates are calculated as the average number of claims per million dollars of remuneration. Claim payment rates are the average payments-to-date per claim (in nominal dollars) and the average payments-to-date per million dollars of remuneration. The indicator values for a company of interest 4 (COI) is calculated for each industry in which the employer participates, using the Workplace Industry Classification 5 (WIC). Within each WIC, the indicators are calculated for each of up to eight financial years and for a composite period of up to four years 6. Remuneration is expressed in constant (indexed) dollars using the WorkCover inflation table. The same indicator calculations are undertaken for a composite comparator group comprising for any year and all companies (excluding the employers being analysed) that have more than $0.5m in remuneration in the same WIC. Indicators are calculated for financial years and at least three months-development time is desirable. Indicators are subject to change. 2.3 Data sources Claims and workplace data are sourced from WorkSafe s databases, including WorkSafe DataWarehouse, that store claims and remuneration data for self-insured and registered 7 employers. Claims data is extracted from the self-insurer systems quarterly, (e.g., claim status as at 31 March or 30 June) and submitted to WorkSafe. Remuneration data is provided to WorkSafe by the self-insurer annually. Analysis is usually undertaken by using the most recent self-insurer data and WorkSafe dataset as at the same date. For non-standard analyses and adaptations of these indicators, the basic definitions in this document apply; deviations may be used where specific circumstances warrant. 4 Company of interest is defined in paragraph 3.1 of this document. 5 Workplace Industry Classification is defined in paragraph 3.2 of this document. 6 Note that for any WIC, the year(s) in which the employer of interest s WIC remuneration is less than $0.5m are excluded from the analysis. 7 Registered employer means an employer that is registered under section 434 of the WIRC Act. Page 4 of 14
3. Definitions and business rules 3.1 General COI Company of interest Self-insurer WorkCover-insured employer Comparator group The company or group of companies whose performance is being assessed. Examples: a self-insurer including the employers it covers a divested or acquired employer of the self-insurer the companies involved in a merger of a self-insurer with a registered employer or another self-insurer; and a registered employer or a self-insurer who is or is likely to become a non- WorkCover employer. Refers to a body corporate approved as a self-insurer under Part 8 of the WIRC Act. Unless otherwise stated, in the context of analyses, a self-insurer refers to the group of employers covered under the body corporate s approval. An employer that is registered under section 434 of the WIRC Act, including the WorkCover scheme history of body corporates that are currently or were at one time self-insured. For each WIC of the COI, the comparator group for each year is all the companies (excluding the COI) that have more than $0.5m in remuneration in the same WIC. The members of the comparator group may be registered employers and/or selfinsurers. The claims and the remuneration for all companies in the comparator group are aggregated for the purposes of indicator calculation. Period of analysis Extract date (also referred to as snapshot or as at date) For standard analyses, incidence of injury and cost of claim aggregates and indicator values are calculated for each of up to eight completed financial years and for an aggregate period of four years or since self-insurance approval became effective, whichever is the lesser period. The date at which the dataset being used was extracted from the source claims management system. For any analyses, where a self-insurer s data is required either as a COI or as a member of a comparator group, the extract date will be at the end of a quarter (e.g., 31 March). Extracts from self-insurer systems are only available quarterly. Run date The date on which the SAS program to calculate basic data (e.g., claim counts, remuneration, payments, etc) and standard indicators are run. Self-insurers can submit revised data for any quarterly return (e.g., 31 Mar extract). The data and indicator results for what is notionally the same extract date may therefore be different on different run dates as a result of the self-insurer submitting revised data. Page 5 of 14
3.2 WIC profile WIC Workplace Industry Classification Industry rate The WIC is the industry to which a workplace is classified. The classification is determined according to the predominant activity at the workplace, which is used to determine the most closely corresponding industry classification using the process defined in the WorkCover Insurance Premiums Order (Premiums Order). The average rate of premium that needs to be collected to cover the costs of all workplace injury insurance claims in a given industry (WIC). The calculation is based on the claims experience of registered employers over five years. The effective industry rates in Victoria range widely and can change from year to year; as an indication a range between <0.5% to over 10% is not unusual. In most cases, when starting to employ, the employer pays premium at the industry rate. After this initial period, the actual claims experience of the employer is included in the calculation of premium rates. The industry rate does not reflect the premium rate a self-insurer would have paid over the period of years it has been self-insured had it instead been a registered employer. Page 6 of 14
3.3 Basic data [ Source data of the Self-insurance Performance System (SIPS) reports] Basic annual data Four-year aggregate result Remuneration in a WIC Payments Standardised claim (Std) The basic annual measures used to calculate incidence of injury and cost of claims indicators for each WIC of the COI are: 1. remuneration 2. count of standardised claims 3. count of >10 day claims 4. count of >15 week claims (or >13 weeks over excess claims) 5. total standardised payments on standardised claims 6. total standardised payments on >10 day claims; and 7. number of companies in the comparator group. Values are only calculated where the COI s remuneration for that WIC is greater than $0.5m in any given year. Calculated for data items 1-6 above as the sum of the annual values for the four most recent completed financial years; some years may have no results as the company may have had no remuneration or less than $0.5m remuneration in the WIC. Remuneration is as defined in the Premiums Order for the relevant period. WIC remuneration for a financial year is the sum of the remuneration reported for that year for each workplace allocated to that WIC. Remuneration is expressed in constant dollars using WorkSafe s current inflation file as at the run date. Total of amounts paid on a claim as recorded at the extract date and expressed in nominal dollars. The total amount paid does not include estimated incurred costs or invoices not yet paid. For self-insurers, a standardised claim is a claim that at extract date: exceeds the threshold set for non-compensation payments or has lump-sum compensation payments greater than zero or exceeds the threshold set for weekly compensation payments ( days-lost ) or is a death claim Page 7 of 14
Standardised claim (Std) (Contin ) Claim values are standardised to over threshold amounts for analysis so as to be as consistent as possible with standardised WorkCover scheme claim values. Further details of over-threshold adjustments are provided in standardised dayslost and standardised payments definitions below. threshold Table 1 Table 2 Non-compensation payment threshold for standardising self-insurer claims Year in which claim is received* (claim report year) Threshold value Days-lost threshold for standardising self-insurer claims Year in which the affliction (injury) occurred** Threshold value of days-lost Prior to 1/7/1986 $250 Prior to 1/7/1986 5 1986 87 $269 1986 87 5 1987 88 $286 1987 88 5 1988 89 $301 1988 89 5 1989 90 $317 1989 90 5 1990 91 $344 1990 91 5 1991 92 $360 1991 92 5 1992 93 $378 1992 93 5 1993 94 $378 1993 94 10 1994 95 $389 1994 95 10 1995 96 $407 1995 96 10 1996 97 $416 1996 97 10 1997 98 $426 1997 98 10 1998 99 $426 1998 99 10 1999 2000 $430 1999 2000 10 2000 01 $440 2000 01 10 2001 02 $466 2001 02 10 2002 03 $480 2002 03 10 2003 04 $495 2003 04 10 2004 05 $506 2004 05 10 2005 06 $517 2005 06 10 2006 07 $531 2006 07 10 2007 08 $546 2007 08 10 2008 09 $564 2008 09 10 Page 8 of 14
threshold (contin ) 2009 10 $582 2009 10 10 2010 11 $592 2010 11 10 2011 12 $610 2011 12 10 2012 13 $629 2012 13 10 2013 14 $642 2013 14 10 2014 15 $660 2014 15 10 2015 16 $667 2015 16 10 *The financial year in which the claim is recorded as being received by the selfinsurer **For self-insurers, the financial year of the recorded injury date. Relevant Self-insurer Claims Data Submission field Rule Relevant Self-insurer Claims Data Submission field Rule Financial year claim was received in Financial year of DteRec Affliction (injury) year Financial year of DTEINJ non-compensation payments For self-insurers, this is the sum of payments other than weekly compensation and lump-sum compensation payments. Non-compensation payments may be divided into medical and other non-compensation amounts. Definitions using fields from self-insurer Claims Data Submission Non-compensation payments Sum of (Non-compensation payments medical and like, non-compensation payments other) Non-compensation payments medical & like Non-compensation payments - other Sum of (AidApl, Amblce, BuCrCos, Chemst, ChirOp, Dental, FunSur, HosCst, MedDoc, NurSer, Physio, RehInt, RehExtl) Sum of (ComDgs, ClmLaw, SiLaw, ConCse, CrtCse, ImpAss, WMLCst, SMLCst, IntSer, IPoWkP, FaCInv, MedRpt, MisMed, ComOth, TtaAcc) lump-sum compensation payments For self-insurers, this is the sum of payments made under the section 115 of the ACA or for death or maiming. Definition using fields from self-insurer Claims Data Submission Lump-sum compensation payments Sum of (LuSuDe, LumSum, LsRpt1, LsRpt2, LsRpt3) Page 9 of 14
weekly compensation payments For self-insurers, payments made under section 160 of the WIRC Act and sections 93, 94(1) and 94(2) of the ACA. Definition using fields from self-insurer claims data submission Weekly compensation payments Sum of (WCs93, WCs941, WCs942) days-lost For self-insurers, the number of days of days reported in the self-insurer Claims Return. Definition using fields from self-insurer Claims Data Submission Days-lost DayLst death claim For self-insurers, a claim where the severity is rated as death. Definition using fields from self-insurer claims data submission Death severity indicator SevInd = 1 Standardised days-lost The value is the count of days-lost recorded in the claim record in excess of the relevant threshold limit. Definition using fields from self-insurer claims data submission Standardised days-lost = maximum of (DayLst minus threshold days (10 or 5, refer Table 2 above), 0) Where the recorded days are less than the threshold, the standardised count is set to zero, i.e., it cannot be a negative value. >10 day claim (>10D) For self-insurers, this is a standardised claim where the value of the days-lost field is greater than 10 (from 1993-94 onwards) or the standardised days-lost value is greater than zero; this is similar to the time-lost claims of WorkCover scheme calculations. >15 week claim (>15W) OR >13 weeks over excess claim Claim count in a specified WIC For self-insurers, this is a standardised claim where the standardised days-lost is greater than 65. The number of claims of the defined type (e.g., all, standardised, >10D, >13W claims) lodged for workplaces within the WIC, where the claim received date falls within the defined period. For self-insurers, this is counted using the WIC on the claim record. Standardised payments on standardised claims For self-insurers, the sum of all standardised payments made as at the date of extract for standardised claims received during a defined period. Standardised payments are essentially over-excess values. Standardised payments = standardised non-compensation payments plus lump-sum compensation payments plus standardised weekly compensation payments Page 10 of 14
standardised noncompensation payments The standardised non-compensation payments are those payments in excess of the applicable threshold limit (refer to Table 1 above). Standardised non-compensation payments = maximum of (for each claim, the sum of (non-compensation payments minus the relevant non-compensation threshold amount (refer to Table 1 above for the threshold amount) ), 0) Where payments are less than the threshold limit, the adjusted amount is $0 and so cannot be a negative value. lump-sum compensation payments standardised weekly compensation payments There is no adjustment of lump-sum compensation payments in standardised payments on standardised claims (refer above for definition of lump-sum compensation payments). Given that the days lost values are adjusted, weekly compensation payment values also need to be adjusted. This adjustment to the weekly compensation payments is undertaken on a pro rata basis. Standardised weekly compensation payments = standardised days-lost * average weekly compensation per day. Average weekly compensation per day = weekly compensation payments / days-lost. Weekly compensation is sum of the values reported for section 160 of the WIRC Act and sections 93, 94(1) and 94(2) of the ACA. Standardised payments on >10 day claims The sum of all standardised payments as at the date of extract for greater than 10 day claims received during a defined period. Page 11 of 14
3.4 Standard indicators 3.4.1 Incidence of injury Standardised claim frequency rate (SCFR) Standardised claims per million dollars remuneration (i.e., the number of standardised claims received during a period divided by the remuneration for that period, expressed as a rate per $m remuneration). SCFR = (count standardised claims / remuneration) * 1,000,000 >10 days claim frequency rate (>10DCFR) >10 day claims per million dollars remuneration (i.e., the number of greater than 10 day claims received during a period divided by the remuneration for that period, expressed as a rate per $m remuneration). >10DCFR = (count >10 day claims / remuneration) * 1,000,000 13 weeks-over-excess claim frequency rate (>13WOECFR/>15WCFR) >13 weeks-over-excess claims per million dollars remuneration (i.e., the number of greater than 13 weeks-over-excess (or greater than 15 weeks) claims received during a period divided by the remuneration for that period, expressed as a rate per $m remuneration). >13WOECFR/>15WCFR = count >13 weeks-over-excess claims / remuneration) * 1,000,000 3.4.2 Cost of claims Average standardised claim payments (ASCP) Average standardised payments to date per standardised claim (i.e., for a period, using the count of standardised claims received in the period and the total of all standardised payments made on those claims up to the extract date). ASCP = standardised payments on standardised claims / count standardised claims Average >10 days claim payments (A>10DCP) Average standardised payments to date per >10 days claims (i.e., for a period, using the count of greater than 10 day claims received in the period and the total of all standardised payments made on those claims up to the extract date). A>10DCP = standardised payments on >10 day claims / count >10 day claims Page 12 of 14
Standardised claim payment rate (SCPR) Standardised payments to date on standardised claims per million dollars remuneration (i.e., for a period, the total standardised payments made on standardised claims received during that period divided by the remuneration for that period, expressed as a rate per million dollars). SCPR = (standardised payments on standardised claims / remuneration) * 1,000,000 Page 13 of 14
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