CGU decided to withdraw from the NSW workers’ compensation scheme because reforms to the scheme mean the risks and returns will “fall short of the company’s requirements”.

As reported by insuranceNEWS.com.au in a Breaking News bulletin last week, CGU will end its 30-year involvement in the scheme when its contract expires at the end of this year.

Under the reforms approved by the NSW Government, Insurance & Care NSW (icare) will take over the insurers’ role in handling policy and billing requirements. The government insurer will also offer a new broker channel, a self-service portal and a customer support centre.

IAG CEO Australian Business Division Ben Bessell says changes to the design and distribution of the new model make it “commercially unviable” to continue as an agent.

He says each state scheme is different and CGU will maintain its workers’ compensation presence in other states and territories.

An spokesman for parent company IAG told insuranceNEWS.com.au that “based on the information available, the reformed scheme’s risks and returns will fall short of the company’s requirements”.

CGU is one of five scheme agents providing policy and claims management services on behalf of icare, and under current contract arrangements it has about 16% of the market.

“It is still too early to know what the impact of the decision [to quit the NSW scheme] will be, but we are working with icare to ensure a smooth transition,” the IAG spokesman said.

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