NSW Treasury has made more than a dozen findings after a review of icare that it says will improve transparency around expenditure, hold the state insurer accountable and improve how the workers’ compensation system is overseen.

Work Health and Safety Minister Sophie Cotsis commissioned the Operational Expenditure Review, which aims to reduce icare’s net cost of service by 5% from this financial year.

“It’s a necessary step to restore confidence in icare,” she said.

“This review provides a road map to drive greater transparency, accountability and focus on operational efficiency across icare and the state’s insurance system.”

Treasury says its 14 findings are part of plans to “put the state’s insurance and care system on a more financially sustainable footing, ensuring workers’ compensation remains affordable”.  

NSW also says it is “taking swift action to right icare’s foundations” by amending the State Insurance and Care Governance Act 2015 to “lift accountability and transparency” of icare’s business performance.  

Under the bill, icare’s CEO will no longer sit on the board, and the secretary of the Treasury Department will join the board. Board appointments of CEOs will require ministerial approval. 

icare is searching for a new CEO after the departure of Richard Harding in July.  

A spokesperson for the state insurer told insuranceNEWS.com.au today that proposed structural changes are expected to start on October 8, and noted the treasury review “acknowledges icare’s work over the past three years to improve efficiency and governance”. 

The review states icare “appears to operate at a level of efficiency and cost-effectiveness that is broadly comparable to similar commercial and public sector insurers across Australia”, and its “operational expenditure has been managed responsibly over the recent past”.

The icare spokesperson said: “We welcome the opportunity to build on our track record of transformation, working closely with government to address the recommendations. icare will continue to work to realise cost savings and efficiencies ... internal work has identified initiatives that will deliver a more than 5% reduction in ongoing core operating expenses.”

The Treasury review found a need for greater clarity and continuity in measuring icare’s contribution and says it is “addressing a difficult legacy of accountability, governance and culture”. Transformation "will require proactive management”.

It says NSW Treasury, icare and the State Insurance Regulatory Authority need to work together on a reporting framework that promotes greater accountability.

icare serves about 4 million workers with more than 80,000 claims each year. It is talking with union representatives and staff over plans to save about $23 million a year, and insuranceNEWS.com.au understands about 130 jobs could be affected. icare has about 1800 employees.

Ms Cotsis has written to icare chair John Robertson seeking advice on how the review findings will be addressed. 

See the report here.