NSW state insurer icare has been ordered to produce a “review and remediation plan” by next Friday in relation to workers who have been underpaid statutory benefit entitlements.

The State Insurance Regulatory Authority (SIRA) has directed that icare sets out a proposed approach and timeframe for repaying the underpaid workers, as well as any employers that subsequently paid a higher premium than was appropriate.

icare told insuranceNEWS.com.au it “will remediate any underpayments made as each file is fully reviewed”. The insurer is still determining the extent of inconsistencies and is conducting a full review.

“The majority of issues are pre-2016 and we do not anticipate any employer premium impact,” icare said.

icare first notified SIRA at the end of last month that errors were detected in weekly payment calculations in its sample of now-closed workers’ compensation claims. The errors were found during an icare review last year designed to test the accuracy of the Pre-Injury Average Weekly Earnings (PIAWE) calculation from 2012-2018.

“SIRA has instructed icare to take swift action to fully quantify the scale of this issue and is requiring icare to repay any underpaid workers,” the regulator said.

icare bears responsibility for repaying any injured workers impacted by an error in calculating weekly benefits, and associated remediation costs, SIRA says.

Of around 3000 claim files reviewed during icare’s 2019 investigation, roughly a quarter were potentially underpaid and a quarter potentially overpaid. Where weekly payments were incorrect, premium calculations for businesses may also have been incorrect. icare says it will not recover overpayments made.

SIRA has directed icare to reveal by March 13 when the full extent of the problem will be known, as well as its proposal to communicate with those affected and details of its efforts to ensure the problem is not continuing.

It also wants a risk assessment audit for icare’s Treasury Managed Fund, a NSW government agency workers’ compensation and government property insurance scheme which was not included in icare’s earlier review of claim files.

SIRA officers and EY are reviewing icare claims files as part of a new 21-point action plan and are providing icare daily feedback on files where potential problems are identified.

The regulator is undertaking an “urgent” focused audit of icare Nominal Insurer claims to investigate the PIAWE matter, and it has also launched a review of weekly payment calculations across other insurers.

In response to concern about the complexity of PIAWE, legislative reforms were implemented in 2019 which simplified its calculation.