For I have eaten ashes like bread and mingled my drink with weeping – Psalms 102.9

I stand before you silently weeping.  My tears are borne of despair, disappointment and frustration.  I despair that my faithful mistress, WorkCover Authority (WCA), who has nurtured me for nigh on 30 years is on her deathbed.  Vale WCA.  I’m disappointed that the NSW Liberal Government has renounced its belief that government should not compete with an efficient private sector and has not privatised workers compensation.  I’m frustrated that the Federal Liberal Government has not enforced the COAG Competition Principles Agreement (in NSW a public monopoly administers workers compensation).  But more of this later.

WCA’s three offspring, icare, SIRA and WorkSafe are already carping with joy at the prospect of their impending inheritances, but since WCA is shuffling off intestate, bickering amongst the children is rife with each seeking to maximise their pickings from her mortal remains.

Perhaps now would be as good a time as any to eulogise WCA as a creature borne of convenience.  WCA was created by Barry Unsworth’s Labor Government in 1987 following the calling of that Government’s bluff by private insurers who previously underwrote workers compensation.  The scheme, by 1985 had been subject to such political interference that it had become financially unsustainable and insurers put the Government on notice that either significant change was made or they would withdraw from private underwriting.  The Government did not make the changes and most of the insurers withdrew.

This caused a crisis and forced the Government’s hand, resulting in a managed fund scheme which was to be managed by those insurers who wished to participate and more than a dozen chose to do so.  The scheme was called the WorkCover Authority.  Throughout the preceding 30 years, the scheme has been again and again subject to major political interference with surpluses and blowouts common features.  The scheme’s financial uncertainty mattered not to the Government nor the insurers since neither has any responsibility for the financial performance of the scheme, this lies with employers (even though employers have no input into the scheme’s management).

30 years on and WCA has outlived her usefulness and it is time to make a change; let it never be forgotten, that the grand old dame has served her purpose faithfully and well.

Whilst WCA’s progeny jockey for position it might be timely to consider what the alternatives to a managed fund scheme might be.  From what is beginning to emerge, it is highly likely that icare will subtly move to create a centrally managed fund whereby all of the functions of workers compensation are managed by her alone.  There will no longer be any competition on service by insurers wishing to maintain or increase market share.  There will be a central agency, icare, who will manage everything workers compensation related.

Each of the insurers who have diligently worked so hard to develop the competencies and systems needed to discharge their contractual obligations to WCA are also in disarray.  They have each been told that one of their primary functions (underwriting) is to be no longer; icare has already staked her claim.

Is a centrally managed fund the better alternative?  Well it works well in Queensland, or so they say.  It can also be a law unto itself with no transparency or accountability.  Icare loves this concept and has already taken some telling steps to minimise any scrutiny from external, interested parties.  No longer is the NSW actuarial scheme valuation published as was the case under Labor, meaning that we can’t know whether the scheme is charging employers more premium than what is required.  Insurance premium rates are now regarded by icare as “commercial in confidence” and no longer published.

A centrally managed fund established and managed by a government body would appear to confound many Liberal principles of competition and government business but the Baird Government appears to be complacent about this.  “Keeping NSW Working” the catch cry of the Baird Government, seems to be an ephemeral concept since well over 150 insurance jobs are to be lost as a result of icare taking over workers compensation underwriting.

Perhaps I misjudge icare and my earlier frustrations may be unfounded.  What if icare is deliberately setting up an insurance company to underwrite and manage workers compensation?  It has already taken over underwriting, it is building a claims management system and is rumored to be about to take on all of the high needs claimants currently managed by insurers.  The creation of SIRA and SafeWork has separated the regulatory and insurance functions of the old WCA.  What if icare then floats the insurance company?  Would this not be a win for all?  The NSW Government would gain a $1 billion in extra funding and lose any perceived (by ratings agencies) liabilities for future claims.  If such a float is contemplated, then private underwriting will need to be introduced to satisfy competition principles which in turn will bring back insurer competition and private sector efficiencies.  Alternatively, as the SA Government did with CTP, icare could invite selected private insurers to tender for a portion of the insurance company and achieve the same objective.  Machiavellian at the least!

SIRA is also seeking to exert his new powers following the demise of WCS but not without some early blundering.  Changes to the way that claims are managed by insurers are being made by decree and without an Authority to do so.  For instance, on 29 July SIRA published Orders related to fees for Psychology and Counselling Services relying on the provisions of s61(2) of the 1987 Act for its powers to do so.  The difficulty with SIRA issuing such orders (as pointed out by WIRO) lies with s59 of the Act which defines medical or related treatment.

According to WIRO “the clear statements by the Court of Appeal in two cases appear to cast significant doubt upon the power of SIRA to determine that “Psychology and Counselling Services” fall within the definition in sect 59.”

In the months to come, expect more changes, some will be beneficial others less so.  Expect to see more words and phrases like exciting, transparent, we have listened, simplified way, works in partnership, tailored insurance and putting customers’ needs at the centre of everything they (icare) do.

Meanwhile, I’m an old man who continues to mourn over the loss of his faithful mistress, WCA.