For New South Wales (NSW) businesses, the 2025-26 financial year marks the final year of icare's three‑year workers' compensation (WC) premium increase program, which has driven a cumulative 24% rise in average rates.
The average 8% annual increases in WC insurance premiums affected some sectors — such as care, community services, transport — more seriously than others due to having higher risk, more labour-intensive environments more likely to generate frequent severe claims.
Looking ahead to 2026-27, further increases of up to 17% in a single policy year were flagged by icare as necessary due to the continued deterioration of the NSW workers' compensation scheme, pressured by the ongoing growth in physical injuries (e.g., manual labour) and psychosocial claims (workplace violence/mental stress).
Just before the end of December 2025, a temporary freeze on WC premium rates was unexpectedly announced1 and this freeze provides relief from the impact of workers' compensation premium increases imposed and implied for future periods.
- 2026-27 (30 June 2026 to 30 June 2027)
- 2027-28 (30 June 2027 to 30 June 2028)
With premium rates frozen and a clear runway to 30 June 2028, now is an opportune time for NSW businesses to strategically review their workers' compensation programs and identify savings opportunities for risk and insurance improvements.
How businesses can explore Workers' Compensation insurance premium savings
The Gallagher workplace risk experts have identified the following key focus areas where organisations can explore workers' compensation premium improvements.
Industry classifications
- If the business encompasses diverse activities, check that the assigned industry classification(s) for workers' compensation categories appropriately represents the business activity.
- Does the business operate on a national scale and also have a NSW head office where executive wages are subject to a separate white-collar WC rating?
Alternative premium structures
- Consider whether the loss prevention recovery model (LPR)3 may be feasible for your business. icare refers to LPR as suitable for large businesses that can achieve savings on premiums.
- If the business is already a loss prevention recovery participant, you may be eligible to step up to the $500K individual cap or even the LPR+ model, which may unlock further premium savings.
- For hospitality organisations, if your business is a hotel, motel, pub, club, café, takeaway bar or a faith-based organisations, Hospitality Industry Insurance (HII) is a specialised NSW insurer for these sectors, which consistently delivers stronger claims and premium outcomes than the icare scheme.
Claims mismanagement by the claims service provider
- Business owners who believe they have had a complex workers compensation claim mismanaged by the claims service provider4, resulting in unnecessary claims costs that have increased their WC insurance premium, may have recourse to a premium appeal.
- Claims service providers are companies that manage claims on behalf of icare. Some possess specialist capabilities, such as expertise in psychosocial injuries.
- Employers with an average performance premium, or group average performance premium of $100,000 or more are eligible to choose the claims service provider that best suits their needs. For employers with premiums below this benchmark, icare assigns them a claims service provider.
- Gallagher Workplace Risk has supported many clients in successfully navigating premium appeals.
How Gallagher can help
The Workplace Risk specialists at Gallagher are experts in workers' compensation insurance, claims and strategies to optimise workplace risk programs for organisations in all areas of Australia.
Get in touch to access expertise for your workers compensation insurance challenges and opportunities to improve workplace risk and insurance solutions.
Expert contributor:
Geoff SawersHead of Workplace Risk