The State Insurance Regulatory Authority (SIRA) has referred conduct at icare, NSW workers’ compensation insurance scheme, to ICAC after warnings about its deteriorating financial position, Sydney Morning Herald (SMH) revealed this morning.

A joint Four Corners investigation with SMH and The Age, to be aired on tonight’s ABC TV, into Australia’s $60bn workers’ compensation system found problems in icare and Vic’s WorkSafe schemes, covering almost half of Aust’s workforce, were leading to delays and denials of medical w/comp treatment.

The joint media research showed in NSW, SIRA in 2018 was becoming increasingly concerned about iCare’s viability. A report from SIRA in August 2018, to NSW finance, services and property minister Victor Dominello on the nominal insurer’s (NI) valuation of insurance liabilities in 2016 and 2017, identified several key risks underlying valuation assumptions, ie time delay in receiving weekly benefits; medical provider cost and inflation rates; and some persisting uncertainties regarding the frequency and cost of disputes associated with icare’s workers assistance program.

The NI is a body created to ensure injured employees are covered. If a claim is made and the employer cannot pay, it is paid by the NI, which is administered by a committee comprising insurers, self-insurers and government members.

SIRA’s latest bulletin shows in FY20, it issued 24 civil penalties, totalling $132,000, against the NI under s238AA of the Workplace Injury Management and Workers Compensation Act 1998, for failure to start weekly payments as required and another five penalties, totalling $55,000 for failure to apply the 30% cap on premium rate increases for employers, as required.

SIRA also issued 204 notices under the act to require insurers to provide claims information; 86 notices to obtain information for suspected breaches of the Act; and formal warnings to 10 self-and-specialised insurers for claims information licence breaches.

A SIRA compliance and performance review of the NI finalised in December 2019, found the deterioration in NI’s performance was mostly attributable to a new claims model implemented by icare in January 2018.

SIRA issued a censure letter to icare after its failure to comply with a direction requiring compliance with the return-to-work scheme provision.

The latest statistics from the Workers Compensation Independent Review Office (WiRO) of w/comp agents’ workload and performance showed w/comp complaints and inquiries in the six months ended December 2019, more than doubled to 5,451, up from 2,239 in 1H19.

Agents with the biggest number of issues were Employers Mutual NSW Ltd (EML)/icare EML 701 (for claims to EML from January 1, 2018, to February 3, 2019)/EML 702 (for claims to EML on or after Feb 4, 2018), at 3,455 – up from 1,017; followed by GIO, 1,589, up from 993; and Allianz Aust W/Compensation (NSW) Ltd, 316, down from 317. Icare in 2018 moved to a new claims model and a single agent, EML, to manage all new claims.

WiRO found delay in determining liability in 1H20 was the biggest issue among scheme agents at 901, up from 544; followed by general case management, 682; and weekly benefits, 667. The second biggest w/comp issue in 1H19 was weekly benefits, 500; followed by denial of liability, 249. Denial of liability in 1H20 was an issue at 493.

Documents uncovered in the media research showed SIRA in May, warned NSW Treasury icare’s “liabilities are now greater than their assets by $459m”. Another Treasury note in March 2020 said “the fund’s solvency is at risk”.

A 2019 internal briefing note from NSW Treasury warned among other things of underpayment of remediation and w/comp while NI funding continued to fall and the fund’s solvency was at risk.

icare CEO John Nagle denies any solvency issues. He told Four Corners, he was unaware of any ICAC investigation and said icare had achieved $2.4bn in savings.

The media research showed a report by Vic ombudsman Deborah Glass into workers/comp, described the Vic WorkSafe scheme as “failing to deliver just outcomes to too many people”.

Correspondence obtained by the ombudsman showed how WorkSafe rewarded insurance agents if they met set targets to move workers off the system and an insurance staffer encouraging workmates to deliberately use a doctor with a record of rejecting claims.