A very disturbing report from the NSW Auditor General has revealed that the NSW workers compensation scheme, known officially as the Nominal Insurer, lost $1,894 million in the 12 months to June 2020. The 2019 result was a loss of $876 million, so there has been a deterioration of over $1 billion in the 2019-2020 financial year.
At the same time, the scheme’s balance sheet is now negative, with assets at 30 June 2020 being negative $316 million. The position a year earlier was a surplus of $1,578 million.
While not of direct interest to insurance brokers, the results for the NSW Government’s own Self Insurance Corporation were equally worrying, with a reported loss of $744 million (against a surplus of $406 million the prior year). The net assets of the Self Insurance Corporation were also negative as at 30 June 2020.
These insurance schemes are administered by Insurance and Care NSW – icare.
Commentary from the Auditor General outlined a significant number of issues and concerns with the management and operation of the Nominal Insurer scheme, with most scheme indicators deteriorating. As has been reported in the media, there are real problems with return to work rates, calculation of pre-injury earnings and a very significant loss of investment income available to the scheme.
In August 2020 the NSW Government announced a major review of workers compensation, and of icare’s management of the scheme. That review is ongoing. In view of the recent data released by the NSW Auditor General, NIBA has asked for a meeting with Justice McDougall, who is leading the review project.
NIBA CEO Dallas Booth said the data now available shows a very worrying position, “The scheme appears to be out of control from a financial perspective. We also know that there continue to be major issues in the scheme operations, including premiums, claims, injury management and return to work.”
Booth added: “We are concerned for the employers of NSW, who ultimately carry the cost of these failures, and for injured workers who are not receiving the support and compensation they are entitled to. It is extremely disappointing that the NSW Treasurer continued to express full confidence in the Board and management of icare, when the numbers now reveal the scheme was failing in a dramatic manner.
“We look forward to the report and recommendations of the McDougall inquiry, and we call on the NSW Government to give this scheme urgent attention and provide real relief for the employers and injured workers of New South Wales.”