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Blurred lines 'raise NSW workers' comp risks'

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NSW workers’ compensation scheme failings risk being repeated, despite inquiries to improve performance, if unclear lines of accountability are not addressed, the National Insurance Brokers Association (NIBA) warns.

Retired Supreme Court Judge Robert McDougall recently completed an independent review into the workers’ compensation arrangements, while a NSW Parliamentary committee has also delivered recommendations after inquiring into poor performance and inadequate governance practices.

NIBA CEO Dallas Booth says NSW state-owned icare is not the workers’ compensation insurer, but the manager of the scheme. The legal entity for the scheme is the Nominal Insurer, and its assets and liabilities are not on the balance sheets of icare or the state.

“We have a situation where the workers’ compensation liabilities for most private sector employers in NSW are carried by a legal entity that is not owned by the state, or by the organisation that manages its affairs,” Mr Booth says in NIBA's Insurance Adviser publication.

The McDougall review notes the Nominal Insurer operates within the public sector, but the report doesn’t assess the full lines of accountability and responsibility in relation to the business and its operations, Mr Booth says.

NSW last year appointed a new icare chairman, while the former head of New Zealand insurer Tower, Richard Harding, took over as CEO of the organisation in January. Mr Harding has restructured the executive and is in the process of making changes to improve accountability and simplify the organisation.

Mr Booth says while the operational issues and challenges are being addressed by icare and the State Insurance Regulatory Authority (SIRA), more detailed consideration should be given to the overall accountability mechanisms that need to be in place.

Consideration should be given to roles and responsibilities of the minister responsible for the scheme, Treasury, the icare board and SIRA.

“I hope I am wrong, but I do fear if clear accountability and responsibility is not implemented in relation to the NSW Nominal Insurer, the mistakes of the past may well be repeated,” Mr Booth says.