State and territory governments should reject a proposal to hand control of workers’ compensation schemes to commercial insurers, the Australian Lawyers Alliance (ALA) says.

ALA Queensland director Rod Hodgson says the Insurance Council of Australia’s (ICA) proposal would cut injured workers’ rights to compensation in every jurisdiction, because it “promotes profitable opportunities for insurers at the expense of the injured”.

Any cap on the compensation injured workers can receive would disadvantage those in the most dangerous sectors such as mining, construction, agriculture, transport and manufacturing, he says.

“There is no evidence that workers’ compensation schemes function best when run by private insurers.”

Mr Hodgson says state schemes – except for the no-fault SA program – are sustainable and well run, while the best-run schemes in Queensland and Victoria have a long history of delivering low premiums for employers, high solvency and fair benefits.

He says state schemes give injured workers crucial access to common law, ensuring they have finality, dignity and a say on how they manage their recovery. Common law also acts as a deterrent for unsafe workplace practices.

The ALA’s call follows a report commissioned by ICA and written by Finity Consulting that urges greater harmony between state and territory workers’ compensation schemes.

“This report suggests state-based workers’ compensation schemes are unsustainable, and that the only way to achieve best practice and efficiency is to privatise these schemes,” Mr Hodgson said.

He labels these claims “nonsense”.

ICA CEO Rob Whelan says the current fragmented system should be replaced with a co-ordinated national approach based on competitive underwriting by insurers regulated by the Australian Prudential Regulation Authority.

Currently, national employers may need to comply with up to eight state and territory schemes and a federal scheme, and a person injured at work may receive different levels of benefits depending on the state or territory in which their injury occurred, Mr Whelan says.

The NSW-based Injured Workers Support Network has written an open letter to ICA criticising the proposal.

Network co-ordinator Rowan Kernebone says his group agrees national reforms are needed.

It has drawn up a 12-point plan for NSW reform, backed by Unions NSW and politicians. The plan calls for a no-fault program, for the system of scheme agents and self-insurers to be abolished and for journey claims to be covered for travel to and from work.

ICA should consider this plan in any bid for national reform, Mr Kernebone says.

ICA spokesman Campbell Fuller told insuranceNEWS.com.au the council is pleased the Finity report is engaging a range of stakeholders in considering the issues.

“The aim of the report was to initiate discussions about improving workers’ compensation schemes nationally so they’re sustainable and fair.”