The NSW Government has announced a $1 billion package to wind back previous cuts to its workers’ compensation scheme.

WorkCover NSW will be split into three agencies to separate its safety and insurance functions and help injured workers with claims. This addresses a conflict of interest in its dual role as safety regulator and insurer.

Finance, Services and Property Minister Dominic Perrottet says the separation of insurance and regulatory functions will make the scheme more transparent and accountable and lead to better outcomes for injured workers.

He says the reforms offer 5-20% premium discounts for employers maintaining safe workplaces and helping injured staff return to work.

Enhanced benefits for injured workers include payment of medical expenses, certain prostheses and aids for life, increased lump sum and minimum weekly payments, and new financial assistance for return to work, education and retraining.

“We are creating a fairer system… that is a financially sustainable now and into the future,” Mr Perrottet said.

Suncorp has welcomed the reforms, with Commercial Insurance GM Statutory Portfolio Executive Chris McHugh saying the new structure “will remove potential conflicts of interest, ingrain accountability and improve scheme efficiency”.

He says the NSW Government can now expand the benefits available to injured workers, as well as provide premium relief for employers that “will also have positive impacts for the economy and employment in NSW”.

Mr Perrottet says the Government can proceed with this next stage of reform now the scheme is financially stable after clearing a $4.1 billion deficit.

In 2012 the Government cut medical benefits to injured workers, including those who had lost limbs or their hearing in workplace accidents.

The three new agencies are Insurance & Care NSW, which will improve service delivery to injured workers, including tracking of claims; the State Insurance Regulatory Authority, which will oversee all state insurance schemes, including WorkCover and compulsory third party; and SafeWork NSW, responsible for work health and safety regulation, including site inspections and establishment of a centre of excellence for work, health and safety.

The threshold for entitlement to lifelong medical expenses will be lowered from 30% to 20% impairment to the whole body.

All people who need prostheses and hearing aids, who are currently denied benefits, will receive them for life.

Medical benefits will be extended from a year to two years for people with less serious injuries (up to 10% impairment).

For more serious injuries (11-20%), medical benefits will be provided for five years.

The lump sum death benefit will increase from $524,000 to up to $750,000, and funeral expenses for families of killed workers will increase from $9000 to $15,000.

“We have simplified the system for all who engage with it, enhanced benefits to better support injured workers and provided substantial discounts on premiums to drive safer workplaces,” Mr Perrottet said.