NSW state-owned insurer icare is proposing an increase in workers’ compensation premiums due to cost increases after changes last year were placed on hold due to the need to support businesses during the pandemic.

CEO Richard Harding says average premiums have not increased since 2014 and changes are now being sought to balance ongoing support for businesses with the longer-term inflationary pressures on the scheme.

“The NSW workers’ compensation scheme holds almost $18 billion worth of assets. However, there have been significant cost pressures over the past eight years which have been absorbed by the scheme as premiums were kept on hold,” Mr Harding said.

“In making this recommendation we have considered the future risk to scheme performance including volatile investment markets; the delivery of operational improvements; and the ongoing impact of COVID-19.”

icare has sought State Insurance Regulatory Authority (SIRA) approval to raise premiums to 1.44% of wages in the next financial year, up from 1.4%.

“We are seeking modest increases to premiums over the medium term of 2.9% each year over the next two years, within the parameters of other normal business expenses such as utilities to ensure there is no knee-jerk reactions or rate shock for businesses,” Mr Harding said.

“Premiums will remain below the national average.”

Mr Harding says the increase will be accompanied by a commitment to lifting icare’s performance and a reduction in internal costs by finding $100 million, while icare will continue with incentives and discounts to businesses that demonstrate a strong safety record and commitment to helping injured people return to work.

“Getting injured workers back to work sooner is always the best thing for workers and employers, and also reduces costs to the scheme,” he said. “This is why it is one of my top three priorities as the new CEO and a key focus of the new Group Executive of the Nominal Insurer.”

Mr Harding took over as icare CEO in January.