WorkCover mismanagement bodes ill for proposed insurance schemes

5th Jun 2012

The Australian Lawyers Alliance is concerned that the mismanagement, which has eroded NSW WorkCover making it financially unsustainable, may be replicated in other insurance models such as the proposed National Disability Insurance Scheme and National Injury Insurance Scheme, unless greater transparency is adopted in government processes.

“Scheme problems appear to have developed as a result of WorkCover and its scheme agents’ bureaucracy and mismanagement,” Australian Lawyers Alliance NSW Director, Andrew Stone, said.

“Payments made to scheme agents and insurers to manage claims has increased every year since 2001, despite the number of major injuries (those claims which require management) reducing by almost half over that same period!” Mr Stone said.

“The cost of managing the scheme appears to be completely disproportionate to the benefits provided for injured workers. Which begs the question why?” he queried.

Mr Stone said the maximum amount payable for pain and suffering for impairment of 10% was $50,000 – about the annual wage of a university graduate, to compensate for what might be a lifetime of suffering; and the government needed to be mindful not to erode the rights of the injured in a bid to put WorkCover in a better financial position.

“This figure hasn’t been adjusted since 1996, when it was reduced from a previous figure of approximately $65,000. The $50,000 is only payable in the most extreme cases of pain and suffering,” he said.

Mr Stone said a truly independent actuarial report on the existing NSW WorkCover scheme was needed before a comprehensive and principled review was possible.

And the same independent analysis was needed for the National Disability Insurance and the National Injury Insurance Schemes proposed by federal government to ensure they got off on the right financial footing and so that the disaster of WorkCover mismanagement wasn’t replicated with those insurance models.

“The ALA agrees that the NSW Workers Compensation Scheme requires a careful and thorough review, but such a review must not come at the expense of injured workers through a quick financial fix that slashes their rights.

"The last major review occurred in November 2001 and the same major issues raised then are being raised now. No more time should be wasted and, above all, the process must be transparent and comprehensive,” Mr Stone said.

Tags: NSW NDIS NIIS WorkCover