The Workers Compensation Nominal Insurer, NSW Self Insurance Corporation (SiCorp) and the Lifetime Care and Support Authority of NSW did not have enough assets to meet the estimated value of all future claims, the report said.
It also highlighted that SiCorp had for the first time added $828 million to its liability to account for claims for unreported historic incidents of abuse within NSW government institutions.
Treasurer Dominic Perrottet, who is responsible for icare, said he had not received any advice that the organisation may have breached legislative requirements, defending the solvency of the workers compensation scheme.
“The scheme today is at around 101 per cent solvency ratio. Under the Labor Party it was 78 per cent,” he said.
“Let’s get some perspective. When you’ve gone through a major transformation there will always be challenges.”
In the 2019-2020 financial year the scheme’s outstanding claims liability increased by $1.5 billion to $18 billion. A $212 million allowance was also made for the impact of COVID-19.
Deteriorating return to work rates for injured workers was the biggest contributor to this, costing $823 million.
Ms Crawford said lower return rates were partly due to disruptions following the implementation of a billing and claims management platform for workers compensation by US software company Guidewire last year.
The project cost about $360 million and involved technology firm Capgemini and Guidewire, which was awarded contracts worth $98 million.
Opposition finance spokesman Daniel Mookhey said: “however you cut it, under icare billions of dollars of employers’ money has disappeared. And according to the Auditor-General, it’s in deficit.”
An icare spokeswoman said the insurer was working to address concerns and recommendations made by the Auditor-General, describing icare as “well-positioned to meet all liabilities” in the long-term.
“The estimated cost of the COVID-19 pandemic across all our schemes is around $2.7 billion. This includes outstanding claims liabilities … as well as the significant drop in investment values and reduced premium income,” she said.
The spokeswoman acknowledged the recommendation for greater transparency in the way icare allocates fees to the nominal insurer, which was “the sole beneficiary” of the billing and claims operating systems overhaul.
“As a result the nominal insurer has been charged the difference between the budget allocation of icare costs to each scheme and the actual costs incurred by icare.” She added that weaknesses in procurement practices and compliance were known issues and subject to ongoing remediation.
Mr Perrottet said there was no doubt financial budgets, “whether it’s workers’ compensation schemes or state budgets,” are under pressure.
“There are always things we can do to make it better. [Workers’ compensation] is a $32 billion insurance business and we want to make sure that the support is there for injured workers.”
He said the government would adopt all recommendations from the ongoing statutory review, which has been brought forward and will hand down its findings early next year.
Upper house Greens MP David Shoebridge said it was galling that money set aside by employers for injured workers was “instead being diverted to pay icare’s operating costs.”
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Lucy Cormack is a state political reporter with The
Sydney Morning Herald.