The Association of Risk and Insurance Managers of Australasia (ARIMA) has told a Federal Government inquiry into workers’ compensation that risk managers prefer to self-insure because it reduces their costs.

Giving evidence at the Employment & Workplace Relations Committee Inquiry into Workers’ Compensation in Perth last week, ARIMA President Bruce Ferguson said the ability to self-insure is important for major organisations as they gain greater control over their premiums and claims management.

“Greater efficiencies are evidenced in self-insured organisations because they have ownership of workers’ compensation issues,” he said.

Mr Ferguson supported the insurance industry’s long-held criticism of the administrative complexities of dealing with different state schemes. “This is a significant administrative cost for those organisations,” he said. “Many ARIMA members have indicated they favour a national scheme.”

Risk managers believe that under current state-based workers’ compensation schemes, there are not enough prosecutions of fraudulent claimants, “including exaggerated claims”.

“The systems have insufficient incentives for recovery,” he said. “There needs to be better methods of giving injured employees the motivation to return to work quickly.”

Mr Ferguson said the problem could be overcome with self-insurance because self-insurers deal with their own funds, and therefore there is “an incentive” to stamp out fraud.