As 2025 draws to a close, Australian workers’ compensation schemes continue to operate under sustained cost pressure, alongside an increasing regulatory and policy focus on psychological injury and the management of psychosocial hazards under workplace health and safety laws. These dynamics have influenced premium outcomes for the 2025/26 year, resulting in a combination of deliberate pricing restraint and targeted increases across jurisdictions.
The second half of 2025 was particularly significant in New South Wales following the passing of major psychological injury compensation reforms, alongside the continued rollout of mandatory psychosocial hazard management frameworks in Victoria and Queensland.
State and Territory Overview
New South Wales remains under significant financial pressure, with psychological injury continuing to be a key focus of scheme sustainability and reform activity. Average premiums increased by 8 per cent for the 2025/26 financial year, marking the third consecutive increase under the ministerial direction issued in 2023. With that direction concluding after the 2025/26 financial year, future formal constraints on premium movement will no longer apply.
In November 2025, the Workers Compensation Legislation Amendment Act 2025 received Royal Assent. The reforms introduce tighter definitions for compensable psychological injuries, changes to dispute handling arrangements, and new caps and time-based limits on certain entitlements. The Act has not yet commenced and is expected to be implemented progressively during 2026. Its practical impact on claim volumes, claim duration and overall scheme costs will become clearer over time as the new eligibility thresholds and benefit settings begin to operate in practice.
Victoria maintained its average WorkCover premium rate at 1.8 per cent for the 2025/26 year, extending the deliberate premium freeze applied in 2024/25 following a significant increase in 2023/24. This period of pricing stability reflects a scheme level decision to balance affordability for employers while monitoring claims experience and broader cost pressures.
Victoria also commenced the Occupational Health and Safety Psychological Health Regulations on 1 December 2025, imposing enforceable duties on employers to identify, assess and control psychosocial hazards. A key issue will be whether the combined effect of compensation reform and preventative regulation within and outside the compensation system allows pricing stability to be maintained once the current freeze is revisited.
Queensland continued to deliver one of the most stable outcomes nationally, maintaining its target average net premium rate at $1.34 per $100 of wages for 2025/26. The focus throughout 2025 was on operational refinement rather than pricing change, including the transition to the Medical and Allied Health Advisory Services framework from July 2025. Based on current guidance, there has been no indication of a material premium change for 2026/27.
Western Australia experienced upward pressure for the 2025/26 year, with the recommended average premium rate increasing to 1.823 per cent of wages. Actuarial assessments indicate underlying claim cost growth continues to place pressure on scheme funding, with mental injury remaining an area of ongoing regulatory and actuarial attention.
Tasmania also recorded a notable increase, with average premiums rising by 9 per cent to 2.06 per cent, representing the most significant premium movement in recent years. While Tasmania has typically experienced relatively low volatility compared to other jurisdictions, this increase highlights growing sensitivity to emerging cost pressures even in smaller schemes.
South Australia maintained pricing stability at 1.85 per cent for the 2025/26 year. The scheme has continued to emphasise consistency and predictability for employers, supported by relatively stable claims experience and ongoing monitoring of emerging cost pressures.
The ACT increased its suggested average premium rate to 2.04 per cent for 2025/26 following modest actuarial adjustment. The change is reflective of routine scheme reassessment rather than as a result of a material shift in claims performance, with no broader structural reforms announced during 2025/2026.
Outlook for 2026/27
Psychological injury and psychosocial risk management are expected to remain central areas of regulatory, policy and scheme focus across Australian workers’ compensation systems. While recent compensation reforms and preventative measures are intended to improve scheme sustainability over time, their effectiveness will vary by jurisdiction and may take several years to fully emerge. In this context, employers should expect greater scrutiny of both claims management practices and preventative risk controls.
Heading into the 2026/27 renewal cycle, premium outcomes will continue to reflect a combination of scheme level settings and individual employer performance. Claims experience, return to work outcomes and compliance with expanding psychosocial hazard obligations will increasingly intersect, reinforcing the need for employers to take a more integrated approach to cost management and workplace health and safety governance.
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