CGU has confirmed that it will leave the Victorian workers’ compensation scheme after 30 years, with one brokerage warning that the “shock” exit could cause significant disruption to employers and injured workers.

CGU’s current contract with WorkSafe Victoria ends on June 30, and the insurer turned down the offer of an extension, putting about 300 jobs under threat.

The four other agents in the scheme are Allianz, EML, Gallagher Bassett and Xchanging.

“After careful consideration, in line with the strategic direction of our business, CGU decided not to accept the two-year extension offer of our existing contract with WorkSafe Victoria,” a spokesman told insuranceNEWS.com.au.

“For CGU, the agency model doesn’t leverage our core capabilities and align with the direction of our business, which is why we’ve chosen not to continue as a claims agent.

“Our customers – both employers and injured workers, remain our priority and we will work closely with WorkSafe Victoria to help with a smooth transfer to the appropriate scheme agents.”

CGU says the decision doesn’t affect its involvement in other workers’ compensation schemes in WA, Tasmania, the NT and ACT.

Just under 300 employees will be impacted, but the insurer says it will help find affected staff roles within parent company IAG, or with other scheme agents.

Melbourne-based brokerage Insurance House says CGU’s departure will cause disruption to the Victorian scheme “which already has enough challenges”.

The brokerage warns that agents exiting schemes can lead to “uncertainty around jobs, potential movement amongst portfolios, a drop in service standards and a lack of focus”.

“Potentially you will have clients moving to different insurers, and relationships will have to be built again,” Head of Workers’ Compensation Mark Farrugia told insuranceNEWS.com.au.

“There will be a range of disruptions that will affect stakeholders, including injured workers, and this is disruption that, in my view, WorkSafe would not have expected.

“People in the industry were shocked and I don’t think they would have planned for this.

“But as experts we can minimise the disruption for our clients and there has never been a better time for employers to use a consultant.”