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What is covered under Workmen Compensation Insurance

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As an employer, you are often required to purchase Work Injury Compensation Insurance (a.k.a. Workmen Compensation Insurance). Do you know what benefits are covered under this insurance policy?

Most workmen compensation insurance will pay claim according to the Work Injury Compensation Act.

The Work Injury Compensation Act lets employees claim for 3 things:

  1. Medical leave wages
  2. Medical expenses
  3. Lump sum compensation for permanent incapacity or death.

But there are limits to each type of compensation.

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Work Injury Compensation Insurance

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You need to get work injury compensation insurance for all employees doing manual work, as well as all employees earning less than $1,600 a month.

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Who needs to be insured under work injury compensation

If you are an employer, you are required to buy work injury compensation insurance for:

  1. All employees doing manual work, regardless of salary level.
  2. All employees doing non-manual work, earning less than $1,600 a month.

You must have insurance for both local and foreign employees. Failure to provide adequate insurance is an offence carrying a fine of up to $10,000 or jail of up to 12 months, or both.

For other employees, you have the flexibility to decide whether to buy insurance for them. However, if those employees make a valid claim, you will have to compensate them regardless of whether they are insured.

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No more undertaking on project and annual Work Injury Compensation Insurance

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With effect from 1 January 2017, the Market Agreement for WIC in relation to Project Insurance (“the Undertaking”) will be canceled with respect to all accidents that occur on or after 1 January 2017.

Background

In 2012, GIA organized the Undertaking, signed by 39 GIA members, to direct project site WIC and Common Law claims to be covered under the project’s WIC policy.

Cancellation Of Undertaking On Project And Annual Policies

Signatories to the Undertaking have been encountering difficulties adhering to its requirements including identifying project insurers. Statistically, only an average of 6.6% of WIC claims could identify project insurers over the period 2014 – 2016.

Notwithstanding GIA’s efforts to enforce the Undertaking amongst projects, MOM’s position is that Section 23 WICA makes clear the liability of the employer’s insurer to pay WIC to an injured worker and this rule prevails even where there are multiple WIC insurance policies in force.

The failure of the Undertaking to achieve its aim has led the GIA to cancel the Undertaking with effect from 1 January 2017.

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Work Injury Compensation Insurance Claim for Project and Annual Policies

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Since the amendments of  Work Injury Compensation Act, insurers in Singapore have reached an agreement to adopt the following protocol in cases where there are multiple insurance policies such as project insurance and annual policy

#1. Contribution Clause:

(a) All Work Injury Compensation (WIC) project policies shall not contain any “Non-Contribution Clause” whatsoever.

(b) Only WIC annual policies shall be permitted to have any “non-contribution” clause.

#2. Project policy responses first

In all cases where a worker is injured in the course of his employment at a project site, the project policy shall respond unreservedly for all WICA and common law claims.

#3. Annual policy claim

In all other cases where the worker is injured due to an accident not occurring at the project site, the annual WIC policy of the direct employer shall respond. This shall apply even if the project policies purportedly extend the coverage to “anywhere in Singapore”.

#4. Coverage for Sub-contractors

Project policies are deemed to extend to cover all tiers of sub-contractors involved in the project i.e. other parties may only be named as additional insured names.

These agreements are ironic because the 2012 June change was primarily due to disputes of the “non-contribution clause”.

This has caused Ministry of Manpower (MOM) to decide that the employer’s annual policy (and not the project policy) must be the primary policy to respond to any claim irrespective of where it occurs.

What the insurers have agreed among themselves is just the opposite.

If you find this is too confusing and want to understand more about Work Injury Compensation Insurance or you simply want to get a better premium

Click here to for a non-obligatory quotation

Changes to Work Injury Compensation Act (WICA) in 2016

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From 1 January 2016, the maximum and minimum compensation limits for death and total permanent incapacity under WICA will be increased. The cap on medical expenses will also be increased.

Click here for the full list of benefits under Work Injury Compensation Act.

Higher compensation limits

The maximum and minimum compensation limits for death and total permanent incapacity under WICA, as well as the cap on medical expenses, will be increased.

Compensation type Accidents before 1 Jan 2016 Accidents from 1 Jan 2016
Death Min: $57,000
Max: $170,000		 Min: $69,000
Max: $204,000
Total permanent incapacity (PI) Min: $73,000
Max: $218,000		 Min: $88,000
Max: $262,000
Medical expenses Up to $30,000 or 1 year from date of accident, whichever first Up to $36,000 or 1 year from date of accident, whichever first

Treatments that help injured workers recover faster

Treatments that help injured workers to return to work early will be claimable as part of WICA medical expenses.

The following activities that help an injured worker recover faster are:

  • Case management
  • Functional capacity evaluation
  • Worksite assessment for purposes of rehabilitating injured workers

Work Injury Compensation (WIC) Insurance Revision 2012

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With effect from 1 June 2012, there will be a revision on the Work Injury Compensation (WIC)  for all work related deaths/injuries.

The revised WIC / Employee Liability (EL) affect the following areas:

#1. Higher awards limits

The revised limits are summarized in the table below. The limits for Death rises to 21% while Permanent Incapacity and Medical rise to 20%. However, this translates to an increase of claims cost by up to 20%.

Limits

Current Limit

(Accidents happened before 1 June 2012)

Adjusted Limit

(Accidents happened on and after 1 June 2012)
Death

Minimum

$47,000

$57,000

Maximum

$140,000

$170,000
Total Permanent Incapacity

Minimum

$60,000 x % loss of earning capacity

$73,000 x % loss of earning capacity

Maximum

$180,000 x % loss of earning capacity

$218,000 x % loss of earning capacity
Medical Expenses

Up to $25,000 or 1 year from date of accident, whichever is reached first

Up to $30,000 or 1 year from date of accident, whichever is reached first

#2.  Direct Employers’ WIC policy will respond first

Currently the market has a general consensus that it will cover all tiers of sub-contractors for project insurance policy. Project policies will have to respond first when there are work-related accidents.

However, there have been disputes due to the “non-contribution clause” which causes Ministry of Manpower (MOM) to decide that the employer’s annual policy (and not the project policy) must be the primary policy to respond to any claim irrespective of where it occurs.

If the employer’s insurers wants the project policy to respond, the project policy insurer must commit his intention to pay in writing to MOM before the notice of assessment is issued.

If you want to understand more about Work Injury Compensation Insurance or to simply get a better premium

Click here to for a non-obligatory quotation