The NSW Minister for Finance, Services and Property, Dominic Perrottet, announced a $1 billion insurance reform package on 4 August 2015, following previous indications that the Government would be making further changes to the workers' compensation scheme.
The reform package aims to increase worker benefits (particularly for those with the highest needs), reward and encourage employers that have good safety records and systems, and introduce a simpler, more transparent structure for the Scheme's operation and regulation. The changes will involve an agency overhaul. From a work health and safety (WHS) perspective, the current regulator (WorkCover NSW) looks set to become "SafeWork NSW". The Government has not yet announced any changes to the agency's roles and responsibilities.
Here is a summary of changes to occur under the Scheme that will be adopted through the Workers Compensation Amendment Bill 2015 and the State Insurance and Care Governance Bill 2015, which will be brought to Parliament.
The Bills have now been read a second time and we will keep you posted on future developments as they occur.
Enhanced benefits for injured workers
The medical benefits cap will be extended to two years for injured workers with up to 10% whole person impairment (WPI) and five years for those with 11-20% WPI. Injured workers with more than 20% WPI will receive life-long medical benefits, which were previously only available to those with more than 30% WPI.
There will also be an increase in the minimum weekly payment for workers with over 30% WPI, which will be indexed twice a year. Workers with over 20% WPI and work capacity will no longer be required to work a minimum of 15 hours to receive payments after 130 weeks. Once injured workers (who were injured before retiring) reach retirement age, they will be eligible for weekly benefits payable for up to 12 months.
Other changes include:
- a one-off payment of up to $1,000 for injured workers who secure work with a new employer, to assist with return to work expenses, such as tools and uniforms
- up to $8,000 to assist with retraining and education, where workers with more than 20% WPI have been receiving benefits for more than 18 months
- life-long access to artificial aids, home and vehicle modifications will be available for all approved claims
- a significant increase in lump sum benefits for those with more than 10% WPI, or 15% for psychological injuries
- an increase in the lump sum death benefit from $524,000 to $750,000, to be indexed twice a year, and maximum funeral expenses will be increased from $9,000 to $15,000
- costs of a secondary surgical procedure will now be met as long as the procedure relates to the body part previously operated on and is approved within two years of the first surgical approval, and no action can be taken by an insurer (such as reducing or ceasing payments) while a worker's request for a review of a work capacity decision is being dealt with.
Premium reductions for employers
Employers with good safety and return to work records will be rewarded with the following premium reductions:
- A discount of between 5% and 20% on premiums for employers with low claim costs, which have been achieved through good safety systems and return to work support.
- A further 5% discount for employers that are claim free for four years.
- A discount of up to 15% for employers whose injured workers
return to work as follows:
- 15% discount if returns to work before 13 weeks
- 10% discount if returns to work from 13 weeks onwards but less than 26 weeks
- 5% discount if returns to work from 26 weeks onwards but less than 52 weeks
- An immediate 10% discount for medium and large employers to encourage investment in safety and support systems.
- The introduction of minimum and maximum premiums for financial stability and certainty.
Insurance and care services
Under the changes, three discrete organisations—Insurance and Care NSW, State Insurance Regulatory Authority (SIRA) and SafeWork NSW—will provide insurance and care services, as well as regulate the State's insurance schemes and WHS.
Insurance and Care NSW is an insurance and care service provider that covers all bodies concerned with the operation of the Scheme, including SICorp and the Nominal Insurer. Their main focus is on customer service, ensuring the needs of injured workers are met.
SIRA is an independent insurance regulator under the Department of Finance, Services and Innovation and will assume WorkCover's regulatory functions. The Authority's focus is on public policy outcomes, such as the Scheme's service delivery, management and sustainability.
As the independent Workplace Safety Regulator, "SafeWork NSW" will sit under the Department of Finance, Services and Innovation and will be focused on harm prevention and improving the safety culture in NSW workplaces.
Further information on the reforms can be found at www.insurancereforms.nsw.gov.au
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.