Table 7.2: Criteria for becoming a self-insurer | Safe Work Australia

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	Number of employees	Financial/prudential requirements
New South Wales	500 employees in NSW, employees means permanent staff whether full-time or part-time SIRA may use its discretion to grant a licence to an employer which does not meet this requirement if such an employer can demonstrate its ability to meet the application requirements.	Workers Compensation Act 1987, Part 7, Div 5 Self-insurers must demonstrate ongoing financial viability and strength to undertake their obligations to comply with requirements of the workers compensation legislation. Self-insurers need to demonstrate that they have sufficient financial resources to cover their financial obligations, and be of sufficient size to provide the necessary security to mitigate the risk of insolvency.
Victoria	N/A	s379(4)(a) — Workplace Injury Rehabilitation and Compensation Act 2013 (WIRC Act). Consideration given to both primary and secondary financial indicators and associated benchmarks dependent on industry sector, i.e. Manufacturing, Finance, Retail, Transport and Other (Public/Non-Public). Primary financial indicators and benchmarks: Balance Sheet Test (1.0–1.5), Current Liquidity (0.8–1.2), Claims Liability (4.0%), Interest Coverage (2.0–3.0), Gearing Ratio (55–60%), Cash Flow Margin (3.0–6.7%), Bad Debt Ratio (2.0%), Excess Capital (10.0%). Secondary financial indicators and benchmarks: Return on Investment (5.0-10.0%), Profit Margin (pre-tax) (1.4–4.9%), Quick Liquidity (0.5–0.8%), Stock Turnover (5.0–6.0), Debtor Turnover (46–50 days), Labour Costs (33%), Customer Loan Ratio (50), Net Interest Margin (1.5) and Operating Costs to Revenue (65%).
Queensland	2,000 full time Queensland workers (s71 — Workers’ Compensation and Rehabilitation Act 2003)	Workers’ Compensation and Rehabilitation Act 2003 s71, s72, s75, s84, s86 s71 — Employers must be considered fit and proper to be self-insurers. (s75) This includes a consideration of the long-term financial viability of the employer, evidenced by its level of capitalisation, profitability and liquidity. Self-insurers are required to: s84 — Lodge a security (unconditional bank guarantee, cash deposit, or financial guarantee given by an insurance company that is an approved security provider), for an amount equivalent to 150% of the self-insurer’s estimated claims liability, and s86 — have reinsurance cover, where the self-insurer’s liability is an amount chosen by the self-insurer that is not less than $300,000 or more than the set limit without approval. NB. The Workers’ Compensation Regulator has the discretion to issue or renew a self-insurance licence in circumstances where an employer does not meet one or more of the strict criteria for self-insurance, if satisfied that special circumstances exist that warrant the employer or group employer being issued a licence or having a licence renewed. The circumstances where an employer does not meet the criteria for self-insurance include, but are not limited to, instances where an employer or self-insurer does not have 2,000 full time workers.
Western Australia	N/A	s164 and s165 — Self-insurers are to maintain adequate financial resources to comply with the requirements of the Workers’ Compensation and Injury Management Act 1981. Self-insurers are required to provide audited financial statements, which include: Balance Sheet Test (i.e. total tangible assets/total liabilities) quick liquidity (i.e. current assets less stock/current liabilities) current liquidity (i.e. current assets/current liabilities) interest coverage (net profit before tax/net interest expense) return on investment (net profit before tax/total equity) claims liability as a percentage of net assets (outstanding claims/net assets), and gearing ratio (loan capital/total capital employed). WorkCover WA, at its discretion, may apply further secondary financial indicators if there are doubts concerning the organisation’s financial viability.
South Australia	There is no number specified in the legislation, but the Code of Conduct states a minimum of 200 employees	ReturnToWorkSA will consider each of the following 4 primary indicators in all cases and the secondary indicator, where considered appropriate: Primary indicators Balance sheet test, being total tangible assets divided by total liabilities Gearing ratio, being loan capital divided by total capital employers Liquidity ratio, being current assets divided by current liabilities Cash flow margin, being operating cash flow divided by net sales Secondary indicator Profitability ratio, being net profit before tax divided by total equity.
Tasmania	N/A	Part IX, Div 2, s105 of Workers Rehabilitation and Compensation Act 1988. s105(2) — In granting a self-insurer permit, the Board is to take into consideration: the employer’s financial history; and the employer’s ability to provide the statistical and other information required or likely to be required under the Act; and the employer’s ability to satisfy such prudential standards as the Board determines; and the employer’s capacity to comply with Part XI and any regulations or guidelines for the purposes of that Part; and the employer’s commitment to occupational health and safety. WorkCover must be provided with: a completed Permit to Self-Insure Application form. a completed Financial Indicators form. a desktop review of financial information by an independent expert. printed or electronic copies of the last three annual reports evidence of a high standard of proven work health and safety management practices. evidence of a high standard of injury management practices. evidence of a high standard of claims management practices. evidence of ability to meet WorkCover’s data reporting requirements. For new entity employers (that is, a legal entity with no history of operating in Tasmania), you must satisfy additional financial criteria. See How to apply for a permit to insure (self insurer) for more information.
Northern Territory	N/A	Return to Work Act 1986 s119 and s120. Financial viability of the employer — s119(3)(d), which is to be demonstrated through: the provision of the company’s three latest detailed annual balance sheets, including profit and loss statements, together with notes and their auditor’s report following this an actuarial report on the company, which details its current NT workers’ compensation liabilities and ability to meet both its current and expected liabilities under the Act reinsurance cover of an unlimited amount in excess of the company’s liability of $1 million (indexed) for any one event, and a three year history of the company’s NT workers’ compensation claims. financial security by way of a bank guarantee
Australian Capital Territory	N/A	Workers Compensation Regulation 2002, Part 10. Copy of employer’s annual report and balance sheet for the previous 3 years. Actuarial report containing: estimate of current outstanding liability in relation to compensable injuries; estimate of the total of the employer’s expected liability for each year in relation to which the employer is applying to be a self-insurer, and estimate of the total of the expected payments in satisfaction of the employer’s liability for compensable injuries that will be made for each year in relation to which the employer is applying to be a self-insurer. A written statement is required from the employer that the employer will be able to meet present and future claims under the Act for which the employer is, or is expected to be liable.
C’wealth Comcare	N/A	Safety, Rehabilitation and Compensation Act 1988, Part VIII Financial: provide previous 5 years’ audited statements financial viability assessment conducted by independent financial consultant, and provide certification from the principal officer that they are not aware of any likely events which may materially impact on the suitability of the applicant for approval. Prudential: must have the actuary prepare a liability report to the Safety, Rehabilitation and Compensation Commission’s (the Commission) requirements the liability report must: – include an estimate of the applicant’s outstanding liability at the end of the first 12 and 24 months of the licence – advise the level of guarantee required (calculated by the actuary at the 95th percentile of projected outstanding claims liabilities in 24 months’ time from the licence commencement date, and – the addition of one reinsurance policy retention amount must recommend appropriate reinsurance arrangements and comment on the suitability of arrangements, and assess the applicant’s capacity to pay amounts up to the recommended reinsurance excess amount, and the applicant is required to obtain the bank or other guarantee in the form required by the Commission and appropriate reinsurance cover, before the commencement of the licence.
New Zealand	No specific minimum employee number In practice, the pricing mechanism makes entry to the program not financially viable to employer whose standard levy is less than NZ$250,000.	Accident Compensation Act 2001 s185 — Employers must provide evidence to prove their solvency and their ability to meet their obligations under the programme prior to acceptance in to the programme. ACC is required to satisfy itself in respect of an employer's net worth, that the employer’s contingent liabilities are not excessive, that it has satisfactory solvency, liquidity and profitability ratios over a period of time (usually three years). The measures are: it has substantial net worth that its contingent liabilities are not excessive (details to be provided including an evaluation as to likely crystallisation of those liabilities) it has an appropriate working capital ratio based on current assets divided by current liabilities it has an appropriate equity to debt ratio, and it has an appropriate return on equity. These figures should, where possible, be provided for the 3 financial periods preceding the application and include best estimates for at least the then current financial period and the next financial period (‘period’ normally meaning a year).