Working from home: Risks, rewards and insurance

At a glance:

  • As the corporate workplace setting moves beyond the walls of the traditional office space towards a more fluid environment, organisation’s need to modify their WH&S strategies in order to stay relevant and attract talent.
  • By providing a similar standard of safety to an employee’s home workspace, the risk of injury can be mitigated, preventing claims and ultimately keeping premiums down.
  • Every injury is different, and claim outcomes can vary significantly depending on your type of insurance, workers compensation scheme, the applicable legislation and the circumstances surrounding the injury. 

COVID-19 has necessitated a “reinvention” of working models. As organisations across Australia return to the workplace, companies have an opportunity to consider a range of new norms and the associated risks, particularly in relation to flexible and remote working arrangements.

Many organisations have reported their workforces are enjoying a better work life balance and overall sense of wellbeing since the transition to remote work. Equally as prominent, the reverse may be true as organisations experience new and evolving challenges. 

Remote working challenges

Some examples of new challenges evolved from the widespread adoption of remote working arrangements over the last 18 months include:

  • KPI pressures – Expectations for employees to continue to deliver office-based KPIs at home.
  • Personal and career development challenges – New or entry-level employees are missing out on mentorship and guidance from senior managers and other team members, which may be critical in their onboarding experience and/or for their career development needs. Such human-to-human learning opportunities that would typically be available to all employees – and often naturally without extensive effort – in an office environment has become a challenge in a remote working environment.
  • Mental health issues are less visible – It may be difficult for managers and people leaders to pick up on mental health issues related to their staff due to the “invisible like” workforce, and therefore creates a barrier to provide support.

As organisations navigate the pandemic recovery phase, it is important to review and adjust their working models to balance the needs of the company with the individual needs of their people. In doing so, organisations should look at ways to keep their people safe, reduce the company’s risk exposures, and minimise productivity loss. 

From a risk and insurance perspective, we outline below a number of key considerations related to remote working that organisations should be aware of.

1. Impact on insurance premiums

Marsh data shows that the average workers compensation insurance claim to premium impact ratio under the conventional NSW scheme is approximately 1:5 per annum for large employers. This means that for every $1 of claim, future insurance premium will be adversely impacted by roughly $5. By providing a similar standard of safety to an employee’s workspace at home as a company would to its workspace in the office, the risk of injury can be mitigated, thereby preventing claims and ultimately keeping premiums down. 

Identifying notable employee absences early and intervening before claims occur is critical. For example, any changes to a company’s working model may affect the cost of salary continuance insurance (also known as income protection insurance), which can often be a significant insurance premium spend for some organisations. Marsh has observed a notable increase in mental health salary continuance claims in recent months.

We would recommend working with your broker or engaging a third-party return to work specialist to help implement early intervention strategies and better understand the cause of atypical work absences.

2. Prevention of injuries and long term benefits of working from home 

Employers are potentially liable for injuries and incidents sustained by workers in their homes. This risk was heightened during the pandemic when workforces rapidly shifted to working from home arrangements. In many cases, people were working extended periods in makeshift work spaces at home, often without the employer having much control or influence over their staff’s home environment or ergonomic set up, leading to injuries over time. 

Employers should start a communication channel with employees about having appropriate equipment to set up a home office. Employers should assist with making such equipment available to employees. Eg. Consider facilitating or providing financial assistance for staff to borrow equipment from the office or purchase new equipment. 

In the long run, it can actually be cheaper for an organisation to support a work from home set up than to resist it. From an injury management perspective, it can also help employees successfully return to work after injury. In situations where an employee is approved to work from home on a more permanent basis, businesses might consider providing them with professional grade equipment. While it may seem like a large initial cost outlay, leaving this responsibility to the worker can result in the purchase of inexpensive basic level equipment. This could cause problems and injuries that ultimately cost more to the company. 

Employers can also conduct remote home office ergonomic assessments and reviews via video calls.

These measures should be seen as investments in the long term risk management and cost reduction for companies, which help to reduce the risk of home-related work injuries, reduce potential insurance claims, help workers return to work faster, and ultimately improve productivity. 

3. Organisational restructuring and redundancies

Challenging economic conditions drive organisations to make difficult decisions. Looking after the staff affected by redundancy is just as important as looking after those retained in a firm.

As part of a holistic risk management program, organisations should have a strategy and process in place to identify individuals who may be at risk of making a claim against the company following redundancy. This helps to mitigate people risk before, during, and after an organisational restructure  are announced internally and publically which can impact insurance premiums and brand reputation. 

4. Ongoing assessment and improvement 

To ensure the safety of employees on an ongoing basis, organisations need to do more than simply establish a working from home policy or WH&S guidelines. In order to ensure WH&S standards are being adhered to by employees working from home, formal safety assessments should be conducted either via engaging an independent professional assessor (best practice) or self-assessment (a less costly option). 

Ergonomic design of the workspace, fire hazards, emergency evacuation points and any special location-based risk factors such as bushfire risks in some parts of Australia are key considerations in safety assessments. While an overarching corporate WH&S policy will serve as the backbone, it should be complemented by individual home assessments to ensure each employee’s unique work environment has been properly assessed for WH&S risks, and appropriate safety measures put in place.

If you have any questions about this article or would like to discuss your business’ remote working needs, please reach out to your Marsh representative, or contact us here.

Disclaimer: The information contained in this publication provides only a general overview of subjects covered, is not intended to be taken as advice regarding any individual situation, and should not be relied upon as such. The information contained herein is based on sources we believe reliable, but we make no representation or warranty as to its accuracy. Marsh shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. LCPA No. 21/151.

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Marsh Pty Ltd (ABN 86 004 651 512, AFSL 238983) (“Marsh”) arrange this insurance and is not the insurer. The Discretionary Trust Arrangement is issued by the Trustee, JLT Group Services Pty Ltd (ABN 26 004 485 214, AFSL 417964) (“JGS”). JGS is part of the Marsh group of companies. Any advice in relation to the Discretionary Trust Arrangement is provided by JLT Risk Solutions Pty Ltd (ABN 69 009 098 864, AFSL 226827) which is a related entity of Marsh. The cover provided by the Discretionary Trust Arrangement is subject to the Trustee’s discretion and/or the relevant policy terms, conditions and exclusions. This website contains general information, does not take into account your individual objectives, financial situation or needs and may not suit your personal circumstances. For full details of the terms, conditions and limitations of the covers and before making any decision about whether to acquire a product, refer to the specific policy wordings and/or Product Disclosure Statements available from JLT Risk Solutions on request. Full information can be found in the JLT Risk Solutions Financial Services Guide.”