The inquiry into NSW WorkCover has recommended journeys to and from work should no longer be covered, work capacity testing should be tightened and benefits reduced earlier.

The NSW Parliamentary joint select committee’s 28 recommendations include easing restrictions on severely injured workers and stopping dependents of deceased or injured workers from making nervous shock claims under WorkCover.

It recommends an earlier “step down” for benefits in cases of total and partial incapacity, so people receive 95% of their pre-injury average wage for 13 weeks, instead of 26 weeks, and then 80%.

The Insurance Council of Australia (ICA) has welcomed a recommendation to conduct a more extensive review into the functions, behaviours and powers available to insurers who act as the scheme’s agents.

“ICA notes an operational framework review is already under way between WorkCover and scheme agents, and ICA members are providing extensive resources to assist WorkCover in this process,” a spokesman said.

Unions have threatened industrial action over moves to cut WorkCover’s $4 billion deficit and improve its effectiveness.

The committee’s report suggests a five-year time limit on benefits for less seriously injured workers.

The most seriously injured would not have a time cap, but an “intermediate” group should have a cap of around nine years, the committee says.

Allianz is a WorkCover agent, and a spokesman told insuranceNEWS.com.au a time limit based on injury is of concern, because people should be assessed on their capacity to work.

“If there is work capacity then there should be a cap on the length of time on weekly benefits,” he said.

The committee recommends independent and binding work capacity testing at defined intervals and caps on medical expenses.

It suggests easier payouts for people who have no prospect of returning to work, and a tighter definition of injury so a disease is only included if employment is the main contributing factor.

It has also suggested the NSW Government allow more specialised workers’ compensation insurers – a recommendation that has raised concerns of privatisation by stealth and “cherry-picking” of low-risk employers.

NSW has only a few industry-based workers’ compensation schemes, and some industry groups and broker group Steadfast have argued that specialised insurance should be encouraged and expanded.

But the Allianz spokesman says specialised insurers can carve out an entire industry sector and not apply the normal rules of mandatory insurance because they are able to refuse cover, forcing employers regarded as a bad risk into WorkCover.