The Victorian Government will review the outsourcing of workers’ compensation complex claims to agents that include insurers after an Ombudsman report said the current system is delivering some results that are unjust and “downright immoral”.

The Ombudsman report calls for the review to consider alternative options such as complex claims being handled by the Government agency responsible for the scheme.

“Although most other Australian state and territory workers’ compensation schemes outsource claims management to agents, many other international schemes do not,” it says. “In these jurisdictions claims are managed in-house by the relevant government authority.”

The Victorian Government has accepted a recommendation for an independent review to consider “how and by whom complex claims should be managed”, taking into account other national and international schemes, including that run by Victoria’s Transport Accident Commission.

Workplace Safety Minister Jill Hennessy says the Ombudsman’s report shows a systemic problem with the current model, and insufficient oversight and review mechanisms.

The Victorian scheme is administered by WorkSafe with claims management outsourced to Allianz, CGU, EML, Gallagher Bassett and Xchanging under contracts ending on June 30 2021.

The agents were critical of parts of the draft version of the report and defended their performance in comments included in the final version.

Gallagher Bassett notes that using a significant number of disputed decisions or those arising from complaints skews the conclusions, and failures in single cases have been extrapolated where there’s no evidence of scheme-wide systemic failure.

CGU in its draft report response notes the Ombudsman criticises actions taken to break a reliance on compensation and to assist injured workers.

“In some cases, those actions are highlighted in the report as provocative, unreasonable or inappropriate,” it said. “However, the purpose of these actions is genuinely aimed to disrupt the compensation cycle and activate return to work opportunities.”

Allianz says the Ombudsman investigation reviewed 102 complex claims made since a 2016 review, of which 13 were managed by the company. Over the same period, Allianz managed 8442 claims and facilitated the return to work of 4951 Victorian workers and saw a rise in positive customer sentiment.

“Since the 2016 report, Allianz has worked with WorkSafe to implement a number of improvements across our service program, people practices and internal processes for both complex and non-complex claims,” Senior Manager Regulatory and Corporate Affairs Sunila Prasad told insuranceNEWS.com.au.

See ANALYSIS.