NSW workers’ compensation premiums may rise 2.9% for the next two financial years under annual increases sought by state-owned insurer icare in response to increasing costs.

CEO Richard Harding says premiums were kept on hold last year to assist businesses during the COVID-19 pandemic, but the scheme continues to experience longer-term inflationary pressures.

icare, which has sought State Insurance Regulatory Authority approval to raise premiums to 1.44% of wages next financial year, up from 1.4%, says average premiums have not increased since 2014.

“The NSW workers’ compensation scheme holds almost $18 billion worth of assets. However, there have been significant cost pressures over the past eight years which have been absorbed by the scheme as premiums were kept on hold,” Mr Harding said.

“In making this recommendation we have considered the future risk to scheme performance including volatile investment markets; the delivery of operational improvements; and the ongoing impact of COVID-19.”

Mr Harding says the increase will be accompanied by a commitment to lifting icare’s performance and a reduction in internal costs, while icare will continue with incentives and discounts to businesses that demonstrate a strong safety record and commitment to helping injured people return to work.