It has shearing contractor Mark Baldwin (pictured), Tocumwal, wondering why he paid insurance at all.

The shearing industry has lost productivity as contractors split their business into several pieces to avoid the potentially bankrupting laws – known in the insurance game as “claims history adjustments”.

Mr Baldwin has taken his case to WorkCover NSW and his battle has been ongoing since March, 2008.

Numerous shearing contractors have been forced to fragment their enterprises to avoid potentially massive payouts, as businesses with yearly payrolls less than $300,000 were exempt from the adjustment rule.

Even the smallest contractors who employed half a dozen or fewer shearers each year found it difficult to pay less than $300,000.

The Shearing Contractors Association of Australia secretary, Jason Letchford, encouraged his members to split their businesses and avoid large insurance bills.

“It’s very unfair,” he said.

Another way for contractors to protect themselves was to pass the cost onto farmers pre-emptively by increasing the cost of each sheep shorn.

It might mean hiking the per head charge from about $5 to as much as $6 to collect a war chest ready for a possible history adjustment siege.

A WorkCover NSW spokesman said “only 13 per cent of employers” had their claims adjusted this way.

“Only employers with a basic tariff premium exceeding $10,000 and wages greater than $300,000 have their premiums adjusted according to their individual claims experience,” the spokesman said.

“Of these, those with a good claims record benefit from a reduction in their basic tariff premium, while those with a below average claims record are required to pay additional premiums to contribute to the costs of the claims incurred.”

The spokesman said the intention of the new laws was to encourage employers to take action to avoid workplace injuries, to reduce the cost of claims, and to promote return to work.