Personnel Issues
The remuneration of agents has not encouraged investment in staff training and development. Workers compensation staff are now generally poorly trained and tend to “burn out” quickly. Some would say that the industry has become “dumbed down”. One of the ramifications of a lack of industry training is that agents compete aggressively for staff and there is a great deal of poaching.
This in turn has lead to many employees receiving promotions which are not merit based but used as enticements to change or stay with their current employer. Thus a grade 4 clerk may only have the equivalent training of a grade 1/2. This has also had ramifications to the average wages paid for workers compensation staff and these are generally regarded as high in comparison with other equivalent grades of work.
It is estimated that there are approximately 1,400 workers compensation claims and associated staff employed by agents in NSW and that there are 180,000 active workers compensation claims in the system at any one time. This means that there is an average of 130 claims per claims officer. In a privately operated system, insurers have recognised that cutting claims personnel numbers and not providing sufficient training and development rapidly leads to badly managed claims and excessive claims costs. The ratio of claims to claims officer in the private systems is rarely greater than 70:1. Some agents operate with claims to staff ratios in excess of 150:1.
Political Issues
It is highly unlikely that workers compensation will ever be discontinued; however there is a threat that the manner of its provision might be changed. A change in Government is highly unlikely to destabilise the market. It is unlikely that agency arrangements will be discontinued unless the business is privatised, in which case new entrants can be expected and competition will be fierce.
An emerging trend is likely to be new industry based licences and more self insurance. (Refer COMPAS March 2005 – Della Bosca’s 9th Principle)
Economic issues
Significant shifts in the economy have limited effect on workers compensation policy numbers (it is estimated that up 30% of small businesses fail or retire each year only to be replaced with new ones). Most of the impact of economic variance is on premium volume as employers shed/gain employees and the WCA manipulates the premium algorithm.
Technology Issues
The remuneration available has not encouraged investment in systems development and most agents have legacy systems which only just cope. Some agents still use DOS based systems which may have been state of the art in 1990 and whilst still sufficiently robust to manage the scheme are becoming increasingly stressed and in need of a major upgrades.
The workers compensation product is subject to significant externally driven change. Each year premium rates change; claims benefits change and the manner in which the system is managed changes. All of these changes require systems development, which is very expensive.