Self Insurance under the South Australian Workers Compensation Scheme

Self insurance in the context of the South Australian workers compensation scheme means that an employer is granted the ability to fund and manage compensation claims made by its own workforce.

Self insurance is only possible for organisations employing 200 or more employees and meeting a series of financial criteria.

In order to be able to determine and manage claims for compensation, the self insurer has certain powers delegated to it under the legislation. The self insurer is in effect an insurer in its own right, because it must fund all claims made upon it by its employees. It is also subject to the same review and appeals mechanisms as WorkCover.

A self insurer is still subject to regulatory control by WorkCover because under the legislation, WorkCover remains the ‘insurer of last resort’. All self insurers must, among other things:

• Provide a financial guarantee from an approved financial institution to WorkCover and pay a levy into the Exempt Employer Reserve Account for a specified period to protect the scheme in the event that a self insurer is unable to meet its liabilities.
• Pay an administrative levy to WorkCover (calculated as a percentage of the levy it would have paid had it not been self insured).
• Carry excess of loss insurance.

Grants of self insurance are made by the Board of the WorkCover Corporation and can not exceed three years. There are various conditions an employer must meet before self insurance can be granted. After three years, the self insurance grant can be renewed provided the self insurer continues to meet the various conditions and performance standards.

WorkCover has the power to reduce or revoke grants of self insurance where there is a clear failure or refusal to meet the conditions. These events are extremely rare.

For more detail, consult the Code of Conduct for Self Insured Employers on the WorkCover website.