The push for a national workers compensation has been given extra momentum, after the Insurance Council of Australia released a blueprint for a harmonised scheme.
The ICA commissioned Finity Consulting to examine each of Australia’s nine workers compensation schemes to identify the best elements in each, in order to develop a plan for how an optimised national scheme could operate.
ICA CEO Rob Whelan says there is no doubt of the need for an overhaul.
“The current situation is incredibly inefficient and archaic – it’s somewhat like the days when each state had a different rail gauge, forcing cargo and passengers to change trains at each border,” he says.
“At present, employers may need to comply with up to eight state and territory schemes, and each scheme is different. A person injured at work may receive different levels of benefits, depending on the state or territory in which the injury occurred.
“The differences between the schemes and the compliance burden on businesses are detrimental to efficiency and costs, and are a drag on employment and the economy.”
Whelan says a critical step is the privatisation of the remaining state-run workers compensation schemes.
“A coordinated national approach should be based on competitive underwriting by APRA-regulated general insurers,” he says.
“Competitive underwriting helps avoid financial risk to governments, taxpayers and future policyholders, noting that some schemes have generated significant deficits in recent years.
“Competitive underwriting of monopoly schemes would reduce scheme volatility and remove political interference with the pricing of risk. It would also remove government reliance on premiums as a source of general revenue.”
Although the report does not specifically mention what role brokers could play in a new system, NIBA CEO Dallas Booth has been a long time proponent of the broker-driven Western Australian workers comp system, in which the presence of brokers has led to low premiums and high satisfaction.
Read our report about previous efforts to harmonise Australia’s workers compensations schemes here.
The ICA’s full report is available here.