Insurer vows to work with government to implement order
New South Wales insurer icare has been directed to limit its average premium increases to eight per cent following reports that it is asking for a 22% hike.
NSW Work Health and Safety Minister Sophie Cotsis wrote a letter to icare on Friday directing it to limit the average premium increase for the next three financial years.
Cotsis attributed the move to the situation of small businesses.
"Small businesses have been through so much hardship over the last few years. We are putting in place an immediate process of reform with the needs of both business and workers paramount," she said in a statement.
The order follows reports that the state insurer would be asking for a 22% hike in premiums to keep it financially viable.
‘Reform starts now’
According to the government, an eight per cent increase would bring about a $300 increase for a small business restaurant owner whose wages are $200,000.
This means that the owner's current $3,700 premium could be hiked to $4,000 in the financial year 2023/24 if the limit is implemented.
Cotsis said that while this would still be tough for small businesses, the average increase was limited to eight-per-cent because there was a "lot more work ahead to put downward pressure on any average increase."
"It will take years to fix a decade of decline in the workers compensation system, but the reform starts now," Cotsis said.
A spokesman for icare told The Sydney Morning Herald that it is "not appropriate" to make further comments as the insurer has yet to lodge its premium filing for the 2023-24 financial year.
However, the company expressed its willingness to work with government.
"Icare acknowledges moderating an increase in premiums balances the cost impacts on NSW businesses with the long-term sustainability of the insurance scheme and the needs of injured workers," the spokesperson told the Herald.
Proposed 22% increase
In a media release from the NSW government, the state said it also received internal briefs that warned the nominal insurer is "so seriously run down" it will not regain financial sustainability without significant premium increases.
The current average premium rate is 1.48% of wages, below the break-even point of 1.91% and the 1.7% national average.
The government pinned the blame on the previous government's refusal to implement adequate rate increases between 2014 and 2021.
"Since taking office I have been advised of the parlous financial state of the workplace injury system. It is entirely unacceptable," Cotsis said.
Icare is a government agency that carries out the functions of the Nominal Insurer, which covers more than three million employees for weekly payments and any medical treatments should they get injured at work.