SIRA audit highlights issues in government workers' comp claims management

The State Insurance Regulatory Authority (SIRA) has published the results from its detailed compliance audit and performance assessment of the Treasury Managed Fund (TMF).

The assessment, which was focused on government employers’ management of workers’ compensation claims, forms part of SIRA’s broader efforts to monitor the performance of systems in place.

Review of TMF government employers’ workers’ compensation claims

The review scrutinised the adherence of TMF agencies to workers’ compensation legislation and established best practices, as well as their interaction with claims managers and the NSW Self Insurance Corporation/icare in the management of workers’ compensation claims.

The review involved the examination of 951 claim files and interviews with a range of stakeholders including unions, government employers, claims service providers, and icare.

SIRA’s interim chief executive, Dr Petrina Casey, reported that what began as a routine review in 2022 quickly evolved into a more extensive and focused regulatory investigation aimed at thoroughly assessing TMF’s handling of workers’ compensation claims.

“Through the course of the review, SIRA has used its powers to take regulatory action where a lack of compliance has been identified. This resulted in liability decisions being made, ongoing monitoring, employer improvement notices, and penalty notices,” she said.

Key areas of concern regarding TMF workers’ compensation claims

The audit identified five key areas of concern:

• structural complexity;
• financial performance;
• compliance by government employers;
• challenges in returning to work; and
• practices in claims management.

The degree to which these concerns affect government agencies varies, reflecting the challenges faced by each.

In response, SIRA outlined a series of actions to enhance the performance of government employers and ensure that claims service providers comply with the relevant legislation and meet overall system goals. Some of the recommendations included the following:

• NSW Treasury should refine its stakeholder engagement to clarify roles and responsibilities within TMF.
• SICorp should overhaul its performance and compliance programs for claims service providers to align with compensation system objectives. It should also enhance it feedback and reporting mechanisms to NSW Treasury and SIRA.
• NSW Treasury needs to revisit engagement processes with government employers.
• NSW Treasury should review TMF’s compensation contributions, levies, and funding arrangements.
• Government employers with concurrent entitlement schemes are recommended to examine their impacts on injured workers and system objectives.
• Agencies like Stronger Communities, Health, and Education should identify ways to decrease psychological injuries in the workplace.
• Government employers should update systems and policies to boost compliance with obligations, focusing on injury notification, return-to-work programs, and internal audit enhancements.
• An exploration of causes behind poor return to work outcomes, especially for psychological injury claims, is advised for government employers.
• Chief people officers in government should regularly review under-utilised or inactive injured workers for inclusion in work participation programs.
• NSW Treasury is called on to continue supporting the Whole of Government Recovery through Work Strategy.
• NSW Treasury should collaborate with relevant stakeholders to adjust performance indicators and targets for better return-to-work outcomes.
• SICorp is urged to refine claims management tactics to enhance customer experiences and outcomes, particularly in the early stages and management of psychological injury claims.
• The development of a digital roadmap for claims management by SICorp to utilise technological advancements for better efficiency and results is recommended.

“In preparing the report, SIRA has consulted with key stakeholders who are broadly supportive of the suggestions we are making. As a result, we have confidence that the government agencies appreciate their importance and will work to implement them,” Casey said.

SIRA, which recently outlined its regulatory framework to enhance industry oversight, will continue to collaborate with all relevant stakeholders and monitor the progress of these initiatives.