icare needs to develop more detailed “procedures and principles” to enable better oversight of external agents that are appointed to handle claims on behalf of the workers’ compensation Nominal Insurer (NI) scheme, according to a review commissioned by the board of the NSW state insurer.

The Independent Review of icare Governance, Accountability and Culture final report released its findings yesterday, devoting an entire chapter to third party specialists and the provision of services to the NI.

PwC, which was appointed last October to carry out the review, says the NI scheme is the focus of its examination since it is the largest of more than 12 insurance and care programs managed by the state insurer.

The review made a total of 76 recommendations for the icare board to consider, including several that PwC says are aimed at producing “outcomes-focused” partnerships with scheme agents based on commerciality, transparency and accountability.

icare has announced plans for a tender in the middle of the year after extending the claims services contract of current provider EML for 12 months to December 31. EML was appointed the sole agent for new claims in January 2018, with the change to move from five agents to one sparking controversy at that time.

The model was subsequently changed last year to allow employers paying annual premiums in excess of $500,000 the option of choosing other claims managers, known formally as “authorised providers”, in contracts signed with icare. They are GIO, QBE and Allianz.

PwC says its review of the agreements with scheme agents, including the one-year extension of EML’s contract, highlights a need for further clarity in relation to key services being outsourced and the level to which they are to be delivered.

The review also says icare should notify the scheme agent in writing of internal icare policies that the scheme agent must comply with.

“We did not observe evidence of how icare notifies scheme agents of these policies, or ensures scheme agents are performing to those icare policy standards,” the review says.

The review proposes icare should examine existing key material outsourcing contracts against the revised outsourcing policy requirements and update accordingly. It is one of eight recommendations that the review has made for scheme agents that are providing services to the NI.

In its overall findings, the review says icare has made some progress in the ongoing development of governance, accountability and culture, most notably over the past six months following a number of internal changes such as engagement with the State Insurance Regulatory Authority (SIRA).

The engagement has “enhanced the relationship” with SIRA, the review says.

However, the review says “significant changes” are still required in the NI and broader organisation.

The review’s key findings include:

• icare’s relationship with external stakeholders, in particular SIRA and EML, has not been as constructive as it should be. Deliberate shifts in behaviour over the past six months have started to rebuild these relationships. However, this will require a continued focus on formalising the approach, roles, responsibilities and accountabilities for managing the relationship, communication, supervision and monitoring.

• Accountabilities for decisions, outcomes and performance have not been well-defined or embedded. They will also need to be supported by an appropriate performance and consequence management framework.

• A customer vision continues to be at the core of what drives and energises icare; however, the discipline for delivering timely and quality outcomes to customers and listening to the voice of customers has not been appropriately represented in governance processes, and employees have not been fully held to account.

icare Chairman John Robertson and CEO Richard Harding have welcomed the review’s final report. They say further action will be taken immediately to refocus the organisation on core priorities – caring for injured workers and road users and supporting NSW businesses, homeowners and the NSW Government.

“We welcome the report and have already taken action on many of the issues highlighted [such as] new employee policies, tighter rules and guidelines, more stringent reporting, new avenues to speak up when there is an issue,” Mr Harding said.

“We have already commenced a program of change to address the core outcomes of the report. Key to changes currently underway is a new more accountable leadership team to bring in new thinking, reduce complexity, and evolve the organisation.”

The report has already been provided to retired Supreme Court judge Robert McDougall, who is leading a “root and branch” examination of the insurer.

Click here for the report.