NSW state insurer icare has pledged to make good legacy underpayment of statutory benefit entitlements and says it won’t attempt to recover overpayments.

Due to an overly complicated calculation system, around a quarter of icare’s payments during 2012-2018 were under and another quarter were over, a review of 3,000 now-closed claims carried out last year found.

The Pre-Injury Average Weekly Earnings (PIAWE) calculation has since been altered under legislative reform due to its complexity.

icare told insuranceNEWS.com.au it “will remediate any underpayments made as each file is fully reviewed”. The insurer is still determining the extent of inconsistencies and is conducting a full review. The majority of issues are pre-2016.

icare first notified the State Insurance Regulatory Authority (SIRA) in late February that errors were detected. Last week, SIRA directed icare to set out a proposed approach and timeframe for repaying the underpaid workers.

“SIRA has instructed icare to take swift action to fully quantify the scale of this issue and is requiring icare to repay any underpaid workers,” the regulator said.

SIRA has directed icare to reveal by Friday this week when the full extent of the problem will be known, as well as its proposal to communicate with those affected and details of its efforts to ensure the problem is not continuing.

It also wants a risk assessment audit for icare’s Treasury Managed Fund, a NSW government agency workers’ compensation and government property insurance scheme which was not included in icare’s earlier review of claim files.

SIRA officers and EY are reviewing icare claims files as part of a new 21-point action plan and are providing icare daily feedback on files where potential problems are identified.

The regulator is undertaking an “urgent” focused audit of icare Nominal Insurer claims to investigate the PIAWE matter, and it has also launched a review of weekly payment calculations across other insurers.