The NSW State Insurance Regulatory Authority (SIRA) has proposed spreading COVID-19 workers’ compensation costs across the state scheme amid uncertainty about the potential volume and size of possible claims.

“If claims volumes are high, costs to the scheme may be significant,” it says. “The uncertain long-term health impacts of COVID-19, an understanding of which is still emerging, also make it difficult to estimate the ultimate cost of COVID-19 claims.”

The proposed cost-sharing mechanism developed by SIRA spreads COVID-19 claims across the widest possible base, rather than individual employers and insurers bearing a variable and uncertain amount of risk.

The redistribution would be done in a way that reflects the scale and nature of each insurers’ NSW workers' compensation business.

“It is anticipated that these costs will largely be passed on through employer premiums,” it says. “In this way, all employers will contribute to supporting workers who contract COVID-19 at work.”

A similar approach is already used for workers who contract a dust disease, and while it’s never been used, the law also provides for the claims arising from terrorism to be managed at a scheme level.

Changes to the Workers' Compensation Act in May included a “rebuttable presumption” that people in “prescribed employment” who contracted COVID-19 were infected by the virus in the course of their work.

SIRA says it is difficult to predict which employers and insurers will be the most impacted by work-related infections.

“This is exacerbated by the highly contagious nature of COVID-19 and the possibility of asymptomatic individuals unknowingly spreading the virus,” it says.

“In this sense, all NSW workers are exposed to some risks of contracting COVID-19 in the course of their employment, and all workers and employers will benefit from these risks being managed at a whole-of-scheme level.”

SIRA is seeking feedback on a consultation paper on the proposal by 5pm on December 18.

More details are available here.