icare overhaul 'a marathon not a sprint'
A program to turn around the performance of icare will be a marathon taking years rather than a sprint, consultants appointed to monitor the process have warned, while the NSW state-owned insurer has faced further criticism at a Parliamentary committee hearing.
The Government-ordered McDougall review earlier this year recommended action to overhaul icare while a Governance, Accountability and Culture review carried out by PricewaterhouseCoopers has also proposed changes.
A wide-ranging program of work planned in response has been launched to embed cultural, governance and risk management reforms.
“It will take time to sustainably implement the reforms as the scope of change means this program is a marathon not a sprint,” consultancy firm Promontory Australia notes in an interim report on the establishment of the icare improvement program.
“The timetable extends over the next two years; and it will likely take at least this amount of time to effectively address the recommendations of the reviews.”
The reforms, which involve an Enterprise Improvement Program and a Nominal Insurer Improvement Program, will require strong leadership, effective accountability and clearly targeted outcomes, it says.
“icare is responding to multiple reviews at the same time, which adds an additional layer of complexity to the management of interdependencies. This will require careful oversight,” the report says.
The Workers’ Compensation Nominal Insurer, which provides cover to more than 326,000 employers and 3.6 million workers, made an underwriting loss of $1.47 billion last financial year, compared to a loss of $2.19 billion in the previous 12 months.
The NSW Legislative Council Standing Committee on Law and Justice held a follow-up hearing yesterday on its review of the workers’ compensation scheme, with top executives appearing from icare and the State Insurance Regulatory Authority (SIRA).
The Sydney Morning Herald reported that businesses are facing a 26% rise in premiums over the next six years as result of problems that continue to affect icare.
SIRA officials told the upper house inquiry the increase was the minimum required if the insurer is to “break even” and address the $1.4 billion underwriting loss, the newspaper reported.
“Reviews by Janet Dore, Robert McDougall and this committee have provided deep insight into the issues that must be addressed,” SIRA CEO Adam Dent said in an opening statement.
“While progress has been made, I’ve not yet seen evidence of a turnaround in the most important indicators of scheme health.”
In June 2016, the funding ratio for the Nominal Insurer was 123%, while in June this year, it was 98.8%, he told the committee.
“If the four-week return to work measures remained at the levels experienced in 2016/17, an additional 33,000 workers across all insurer groups would have remained at or returned to work. The cost impact of this on the scheme over five years is in excess of $780 million,” he said.
