Here’s something else for insurers to ponder: A NSW parliamentary committee report has recommended that the Government consider privatising WorkCover, even if the MPs aren’t convinced about the industry’s own performance.

The report was produced for a NSW Government inquiry into the scheme. When we last checked the deficit was somewhere around $2.3 billion, and Government initiatives – including cutting the insurers out of the options last year – have apparently done little to stop the rot.

WorkCover is unable to properly fulfil its role, according to the report, because it “lacks sufficient regulatory and enforcement powers”. The report said WorkCover relies on insurers to monitor their own performance, but past experience has shown problems with their performance.

“The current powers given to WorkCover in terms of licensing and remuneration provide WorkCover with limited options for penalising insurers where and when a problem is identified.”

The report also raises concerns that WorkCover may not know enough about the performance of specialised insurers and self-insurers which carry their own underwriting risk.

Other key issues highlighted were limited transparency and accountability of the scheme, inadequacies in its financial structure, inadequate injury management and instability brought about by ongoing management and legislative changes. 

With HIH in mind, the report said privatisation should only occur if the insurance industry has been “good and stable” for a number of years. It said the industry should be “financially capable of underwriting the scheme without exposing the Government and employers to financial risk.”