![]() He said the funding ratio changes were the result of external economic factors and regulatory change, the scheme remained in a stronger financial position compared to its historical performance. However he said the report didn’t present a true reflection of the Nominal Insurer’s overall performance and had left out some key facts. Mr Nagle said icare was moving into a more stable period now and was “well on the way” to addressing the concerns raised by SIRA. “We accept that we underestimated some of the challenges of implementation, which have resulted in a poor experience for some customers, which is regrettable,” he said. Icare CEO and Managing Director John Nagle said the review had coincided with the biggest change to the scheme in three decades and there had been “challenges” implementing the new model. The regulator says while icare has implemented a number of improvements these have not been unable to turn around the ongoing decline in performance. There was also an “alarming” staff turnover at EML of 22.7 per cent a month and confusion over who was managing what. It also found delays in processing, absence of case management skills, poor file management and a lack of investigation and co-ordination throughout the scheme. SIRA suggests that both the model and the timeframe for its implementation were overly ambitious and led to “substantial confusion” and complaints in the market. GIO and Alliance were retained for managing run-off claims and a pilot authorised provider model. SIRA says the outsourced model, implemented in January 2018, used one insurance agent for all claims (EML) and a single IT platform to implement it. “While there have been some external factors that affected the deteriorating performance of the NI, the primary driver for the decline is the implementation and operation of the new claims model implemented by icare.” “While investment returns for icare have bridged the gap in underwriting losses, the current economic environment of low returns does not bode well. “The new claims model led to a significant deterioration in the performance of the Nominal Insurer through poorer return to work rates, underwriting losses, no competition and therefore, concentration of risk,” the report says. In 2018 icare established a funding target of 120 per cent to 140 per cent. It warns icare’s poor underwriting position is “a real risk” to the NI’s sustainability and says the funding ratio between assets and liabilities has slipped from 115.1 per cent to 107.5 per cent, with liabilities increasing by $1.3 billion. In a report released last week SIRA says icare’s net loss in FY2019 was $874.3 million, almost double what was forecast, and blames the new claims model introduced in 2018 as the “main driver” for the deterioration. ![]() It also protects more than $193 billion of NSW Government assets including the Opera house and Harbour Bridge. The NI is managed by icare, which insures more than 284,000 NSW employers and their 3.4 million employees and holds more than $32 billion in assets. ![]() The State Insurance Regulatory Authority (SIRA) in February this year ordered an independent review of the Nominial Insurer (NI) to investigate a deterioration in performance. The NSW workers compensation scheme lost almost $1 billion in the last financial year largely because of the bungled introduction of a new outsourced claims management model, according to an independent report. ![]()
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