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16 December 2019
NSW state insurer icare has contested some aspects of a critical report that identifies the scheme’s new workers’ compensation claims model as the “primary driver” behind its deteriorating performance.
The State Insurance Regulatory Authority (SIRA) commissioned the review of the nominal insurer scheme, partly in response to growing concern about its operation, with independent reviewer Janet Dore publishing her findings on Friday.
The report makes 13 recommendations for improvement. They include a review of the claims management model.
icare has welcomed the report and accepted the recommendations that are within its control. But CEO and MD John Nagle says the report doesn’t present “a true reflection” of the scheme’s overall performance and has also “omitted some key facts”.
He also says while the report provides “extensive coverage” of employer feedback, “the voice of injured workers was largely absent”.
“Our focus has always been to balance the needs of employers and injured workers to create a fairer system,” he said.
Mr Nagle says the scheme is moving into a more stable period and is “well on the way to addressing the concerns raised in the report”.
“It’s the biggest change to the workers’ compensation scheme in 30 years,” he said. “We accept that we underestimated some of the challenges of implementation, which have resulted in a poor experience for some customers, which is regrettable.”
Ms Dore says icare pursued “an ambitious model based on principles of triage, injured worker empowerment and straight-through processing”, with one insurance agent – EML – for all new claims. A single IT platform was also introduced for operating the new claims model.
“The ambition of the model was matched by the ambition of the timeframe for implementation,” Ms Dore said.
“The new claims model led to a significant deterioration in the performance of the [nominal insurer] through poorer return to work rates, underwriting losses, no competition and therefore, concentration of risk.
“While investment returns for icare have bridged the gap in underwriting losses, the current economic environment of low returns does not bode well.”
Ms Dore notes that icare suggests deteriorating performance is the result of factors “beyond its control”.
But she says “while there have been some external factors…the primary driver for the decline is the implementation and operation of the new claims model implemented by icare”.
icare has already implemented improvements but Ms Dore says “they have not yet abated the ongoing deterioration”.
The report’s recommendations include a suggestion that icare consider “allocating files to other agents with expertise to reduce the load on EML and provide time for skills and experience to improve”.
icare should also “address the staff turnover at EML as a matter of priority” to ensure case management services are improved, and the legislative powers available to SIRA should be “reviewed and strengthened to enable proper oversight”.
SIRA has backed many of the recommendations and issued its own 21-point plan.
Through its new authorised provider model icare has already offered a choice of agents to larger businesses, but SIRA wants greater choice to be offered to smaller employers as well.
SIRA also recommends icare commission an independent review into “the culture, governance and accountability in the icare team and agents”.