Icare was created by Perrottet in 2015 when he was Finance Minister to replace the troubled WorkCover scheme. Thousands of people had their payments cut off, erasing the deficit.

The executive director of workers’ compensation regulator State Insurance Regulatory Authority, Adam Dent, said he wrote to Treasury in August to bring to its attention concerns raised with icare regarding the continued decline in its financial performance and the adequacy of its strategy. investment.

“System costs are rising without a corresponding improvement in recovery outcomes, and the financial performance of the scheme is deteriorating,” he said.

The scheme was created by Dominic Perrottet when he was state finance minister.Credit:Sydney Morning Herald

The letter to Treasury Secretary Paul Grimes, obtained under this heading, said that SIRA would be conducting an audit review on the case management of injured workers.

Icare manages the NSW workers’ compensation scheme, known as Nominal Insurer, which covers more than 3 million employees for weekly payments and any medical treatment they require if they are injured on the job.. Employers are legally required to have a workers’ compensation policy as a safety net for workers. In NSW most businesses use icare.

The Treasury briefing note said that raising premium levels would mitigate the need to “reform” benefits for injured workers, which is what happened in 2012.

“In 2023 the forecast increase in premiums 2021-2025 is 33 percent.”

Part of the informative note of the Treasury on Icare

“The government stated that the 2012 benefit changes were necessary to prevent premiums from rising unmanageably,” the note said. “Premium increases were forecast to be 28 percent. In 2023, the projected increase in premiums 2021-2025 is 33 percent.”

But he cautioned that a forecast financial improvement hinged on premium increases “that may not be achievable.” Earlier this year, Tudehope scuttled a proposal to increase premiums by 15 percent, capping the increase at 2.9 percent.

“This was done to ensure the affordability of premiums for businesses, in the context of current economic challenges,” the Treasury said in the note.

In response to questions about the note, Tudehope said premium decisions were made annually based on icare’s advice and the economic conditions prevailing at the time.

He declined to comment on any benefit reform, saying “the government’s priority was to help injured workers and get them back to work.”

“I am confident that John Robertson, icare’s president, and his management team are making the necessary reforms to improve performance through better return-to-work rates, internal cost savings and investment management,” he said.

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In a statement, icare said there were multiple work streams underway to “strengthen” its culture, governance and accountability and focus more on customer outcomes.

Charging

“The major workers’ compensation schemes are fully funded and able to meet their obligations in the long term,” the statement said. “We continue to operate in an uncertain economic environment, and icare’s financial performance has been significantly affected by recent volatility in global investment markets.”

He said the Treasury note referring to a 33 percent increase in premiums was an effective 23 percent increase. “33 percent is the total premium collected, which includes wage growth and employment growth,” the statement said.

The latest revelations come more than two years after a joint investigation by this header and ABC TV. Four corners uncovered mismanagement of the scheme, including the underpayment of wages to thousands of injured workers in one of the largest underpayment scandals involving a government agency.

Since then, the insurer has announced that it would reimburse $38 million to 53,000 low-paid injured workers.

The scandal triggered two separate investigations, one by retired NSW Supreme Court Justice Robert McDougall QCand the other by the New South Wales upper house committee on law and justice and changes to the board and senior executives, including the chief executive.

The Treasury note was prepared in response to a “business intent statement” prepared by icare on its business prospects for the upcoming fiscal year. It recommended that Kean and Tudehope support icare’s plan, which includes a focus on “fostering an open, constructive and accountable culture” and “delivering better results for clients.”

The memo cites a variety of factors negatively impacting icare’s financial position, including deteriorating return-to-work performance, medical inflation and premiums priced below breakeven since 2016.

Icare also manages the Treasury Managed Fund (TMF), which oversees a workers’ compensation insurance fund for police officers, nurses, prison guards and teachers.

The note says that the TMF will need to increase contributions by 27 percent due to the continued deterioration of claims. In June of this year the government injected $1.9 billion into the fund. The latest cash injection comes two years after the New South Wales Treasury warned the insurer would need billions in additional funding to avoid running into a deficit, bringing the total bailout payments it has received to nearly 4 billion dollars.

Icare’s problems date back to 2018, when it switched to a new computer-controlled claims model that was supposed to make claims management more efficient through automation. It cost hundreds of millions of dollars to implement and caused many headaches, including for workers struggling to receive treatment due to a lack of human contact in the first days of an injury.

This led to a significant decline in return-to-work rates, a crucial indicator of how workers’ compensation schemes are performing.

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