A principal actuarial adviser at the State Insurance Regulatory Authority (SIRA) claims that the NSW workers compensation Nominal Insurer could be in significant trouble. The support system currently insures 4.5 million employees across the state (as of SIRA’s recent discussion paper). It’s a vital asset to workers in the state who need access to affordable and effective cover if they sustain a work-related injury. So is there any truth to the recent claim?
The NSW workers compensation system is the largest benefit scheme nationwide, with approximately 90,000 active claims from injured workers being managed each year (SIRA). The Nominal Insurer, managed by Insurance and Care NSW, is the largest insurer in this system. Alongside its insurance agents EML, Allianz and GIO, the Nominal Insurer manages 65% of total active damages claims from NSW employees, according to SIRA research.
The actuarial advisor, and former partner at professional services firm EY, claims spiralling costs, poor handling of compensation claims and deteriorating worker outcomes are signs of a coming crisis. The advisor went on to claim that, having worked in personal injury insurance for three decades, he has watched scheme deteriorate rapidly and without cease since its inception in 2015. Lastly, he suggested that if the scheme went into deficit, employer premiums would have to increase by roughly 55% to cover the losses.
A significant increase in employer premiums could hugely compromise the ability of many businesses to operate, but it would hit small enterprises or those with cashflow issues the hardest. This in turn could lead to spending cuts and even future employee redundancies.
Any failure could also lead to a significant rethink of how the state’s workers compensation scheme needs to be managed, with the effects of any such change as yet unknown.
Representatives from SIRA and the Nominal Insurer have come forward to dispute these claims, saying that the past financial performance of the scheme is not representative of its current strength. This has gone some way to dissuading fears over a compromised damages scheme for employees in NSW injured while working.
All workers are afforded the same right to compensation, regardless of their industry background or type of employer. As such, if you think you may be entitled to compensation after a worksite injury, contact Gerard Malouf & Partners today. We can help you determine how to progress with your case and maximise your chances of a successful outcome.