NSW regulators have recovered more than $10 million in workers’ compensation premiums from 81 employers suspected of underdeclaring nearly $450 million in wages.

The State Insurance Regulatory Authority says it discovered the underinsurance through employer engagement and data modelling.

It has issued penalty notices to the employers, including a broker, for failing to submit accurate wage declarations on time. The authority says the broker is licensed to conduct a financial services business.

“SIRA identifies potential cases of underinsurance through predictive modelling, which analyses claims and policy data which may warrant further investigation and involve deeper analysis of policy and wage data for the employer,” the authority says. “Employers that fail to submit accurate wage declarations or otherwise unlawfully avoid paying appropriate workers’ compensation premiums place an increased financial burden on the scheme.”

Most employers take out workers’ compensation cover through state insurer icare, which collected about $4.59 billion in such premiums last financial year, according to SIRA’s 2023-24 report.

Total claim payments, excluding expenses, came to $5.96 billion, and the average payment per claim paid was $25,185. Psychological injury claims cost an average of $54,533.

The report says the number of psychological injury claims increased by 64% from 5616 in 2019-20 to 9195 in 2023-24; non-psychological injury claims increased by 12% from 88,173 to 98,695 during the same period.

SIRA CEO Mandy Young says across the workers’ compensation scheme, regulatory activity resulted in an additional $8.79 million in premiums being collected last financial year.

“We worked with insurers to ensure correct entitlements were paid to workers, resulting in approximately 15,377 workers receiving an additional $34.54 million in total payments,” she says in the report, released on Friday.

This financial year, SIRA expects to complete a review of the icare Home Building Compensation Fund’s practices when determining if construction businesses are eligible for cover.

It engaged forensic accountant McGrathNicol to undertake the review, which “had a particular focus on securities accepted by icare against builder risk of insolvency. McGrathNicol examined icare’s eligibility assessments and determinations of 10 selected builders for the financial years 2018-2023.”

See the annual report here.