New South Wales government agency icare has taken a significant financial hit this year, the state-owned agency has reported. Icare said their workers compensation scheme will report an $876 million net loss over the course of 12 months dating from June 2018 to June 2019.
The details of the losses were recently released by icare, and also showed an underwriting loss totaling $2.391 billion with a net investment revenue of $1.67 billion during the same period.
Icare, which was launched in 2015, has faced significant challenges in establishing a more fair and equitable workers compensation programme. Chairman Michael Carapiet acknowledged the difficulties in the annual revenue report.
“We recognise that implementing some of these challenges have caused disruption and we have had operational challenges achieving the right scale,” he said in the report.
The report further stated gross written premiums increased 11 per cent over the 12-month period, rising to $2.586 billion. Costs and claim expenses rose from $2.24 billion to $4.064 billion over the previous year.
Icare was started to fix problems within the workers compensation system, in which many injured workers found themselves at odds with agencies, long wait times and bureaucratic complications. The state-run system has experienced growing pains since its inception, including establishing autonomy over the workers compensation programme.
The agency does have some influence over the process, icare said, but remain tied to the State Insurance Regulatory Authority (SIRA), which is responsible for establishing fee scales.
“While icare can influence, and has some limited control over medical costs, we need to work with the State Insurance Regulatory Authority (SIRA) to address the issue including their fee scales,” the report said.
Average medical costs per claim have increased by approximately 40 per cent since 2015. The scheme is also tied to fluctuations in the bond market, a necessary component of the programme that can create further financial complications.
“Some of these factors are likely to continue to put pressure on results into the next financial year, requiring ongoing monitoring and proactive financial risk management,” the report said.
Amid financial uncertainty and while the agency is still in its formative years, employees are dedicated to achieving their purpose of providing injured workers with proper compensation and care, Carapiet said.
“The year ahead will test us again, but we approach it with a sense of optimism and clarity, driven by our vision and purpose.”