The NSW Government has directed workers’ compensation insurer icare to limit average premium increases to 8% in each of the next three financial years after businesses protested about a potential 20% jump.

Work Health and Safety Minister Sophie Cotsis says it will take years to fix a decade of decline in the workers’ compensation system, with incoming briefs received by the new Labor government showing that previous rate increases put through between 2014 and 2021 were inadequate.

“Since taking office I have been advised of the parlous financial state of the workplace injury system. It is entirely unacceptable,” Ms Cotsis said today.

“Small businesses have been through so much hardship over the last few years. We are putting in place an immediate process of reform, with the needs of both business and workers paramount.”

Currently the average premium rate is 1.48% of wages, well below both the break-even point of 1.91% and the national average of 1.7%, the government says.

Business NSW said last week that a proposal from icare to raise compulsory workers’ compensation premiums by 22% would send shockwaves through an already stressed business community, causing job losses and closures.

“We are confident the NSW Government will make good on their promise to reform this system so employers are not forced to shut their doors,” CEO Daniel Hunter said.

“The obvious priority is for icare to get the fundamentals of the scheme under control – which means fixing the broken claims management process.”

The insurer today confirmed it had received a direction for the next three financial years’ nominal insurer premium filing from Ms Cotsis.

“icare acknowledges moderating an increase in premiums balances the cost impacts on NSW businesses with the long-term sustainability of the insurance scheme and the needs of injured workers,” a spokesman said.

“As icare has not yet lodged its premium filing for the 2023-24 financial year with the State Insurance Regulatory Authority, it is not appropriate to make any further comment.”