Despite recent reforms and premium cuts of 12.5%, NSW should follow WA’s example and hand workers’ compensation functions to private insurers, a state parliamentary inquiry heard last week.

“The managed-fund system has run its course and is no longer appropriate for NSW,” Richard Gilley, director of workers’ compensation consultancy RiskNet, said in a submission to the Standing Committee on Law and Justice.

“The current… arrangements suffer significant disadvantages compared with privately insured systems such as in WA.”

Specialised insurers achieve better results in terms of return to work and cost, Mr Gilley says.

The NSW WorkCover Authority’s (WCA) premium system is “punitive and inequitable” for employers and needs an urgent overhaul. All the scheme’s liabilities are owned by NSW employers, who have no control over their management, Mr Gilley says.

Employers therefore have no way of ensuring premiums are well spent on the operations and funding of the WCA – one of the country’s largest insurance businesses, with net assets of $13.8 billion at June 30 last year.

NSW premiums are high, according to Mr Gilley. One RiskNet client – a small to medium-sized labour hire employer – paid $859,172 in premiums between 2009 and last year, making claims of $246,725.

He says the WCA has not undertaken a full system review since 2005 and it would be timely to revisit the premium system, given the changes made to benefits in 2012.

Suncorp says in another submission that premiums have fallen 12.5% in the current premium cycle – an “excellent result for businesses in NSW” that is due to WorkCover’s improved financial position.

In June 2012 reforms turned a $4.1 billion deficit to a net surplus of $308 million at June 30 last year.

Suncorp says claim numbers have fallen, mainly due to the removal of journey claims and the impact of other changes in 2012.

The Standing Committee on Law and Justice has legislative responsibility for oversight of the WCA, and is required to report to the NSW Parliament every two years.