Reconsidering truisms: The case of experience rating

Alan Clayton

Alan Clayton, a lawyer and research and policy analyst working primarily in the field of accident compensation and injury prevention. Alan has had a long involvement in the investigation of accident compensation schemes and has undertaken work for a wide range of bodies including the International Labour Office, most Australian accident compensation regulators and the Accident Compensation Corporation in New Zealand. He has published widely in the field of accident compensation with his work appearing in books and journals in Australia, the United States and Europe. He recently co-authored the book, Work Health and Safety Law and Policy, published by Thomson Reuters. Clayton's presentation, 'Reconsidering truisms: the case of experience rating' examines the origins of experience rating and whether the belief in the efficacy of this system is supported by empirical evidence.


In Australia, and it would appear in some other countries, faith in the efficacy of experience-rated premium systems as a means of achieving safer workplaces has almost achieved the status of religious dogma. Experience rating as a form of workers' compensation insurance pricing emerged in the second decade of the twentieth century, primarily as a tool in the battle among insurance underwriters to secure the business of large employers. The evidence base for claims that experience rating has a beneficial impact upon injury prevention and workplace safety is highly questionable. As well, there is significant evidence that such pricing can lead to “gaming” behaviour and deleterious consequences for scheme dynamics.

Reference: Clayton A. Economic incentives in the prevention and compensation of work injury and illness. Policy and Practice in Health and Safety, 2012; 10(1):27-43.