Twin reports condemn icare board, culture

·3-min read

The board of NSW public insurer icare "comprehensively failed" to govern the organisation and oversaw an excessively hasty and "sloppy" overhaul of claims management activities, separate reports have found.

The NSW government may also need to intervene to maintain the viability of icare's workers' compensation scheme, one of the reports suggested.

And the twin reports have prompted NSW Labor to castigate Treasurer Dominic Perrottet, saying he'd let down sick and injured workers and needed to face repercussions for his role in icare's failures.

For the past 12 months, icare has faced allegations of poor performance and financial management in its workers' compensation scheme.

This has resulted in the departure of icare chief executive and managing director John Nagle and chairman Michael Carapiet.

Along with the State Insurance Regulatory Authority and SafeWork NSW, icare was created after the break-up of WorkCover in 2015.

It manages the Nominal Insurer, which holds most of the NSW workers' compensation scheme market. The Nominal Insurer's net loss at June 30, 2020, sat at almost $1.9 billion, while its net underwriting loss was $2.2 billion.

A parliamentary report on the insurer's workers' compensation scheme released on Friday found worker return-to-work rates have plummeted and the insurer's funding ratio has fallen below 100 per cent.

It found attempts to overhaul icare's claims management model and move to a "single platform" had ultimately eroded the scheme.

The inquiry last year heard the organisation had sought to terminate payments to 17,000 workers on compensation due to its funding woes.

"Clearly, icare's ambitious approach to pursue a significant transformation has come at a detriment to not only injured workers but the public," committee chair and Nationals MP Wes Fang says in the report.

A separate report issued on Friday - a statutory five-year review that was last year brought forward - says icare's attempts to modernise were "well intentioned" but conducted too quickly and sloppily.

"It is clear that icare sought to change more than was necessary to achieve its statutory purposes and implemented its changes far too quickly and without adequate testing," report author Robert McDougall QC says.

The parliamentary report agreed icare had "too often failed" to meet NSW public agency standards, including on public access to information.

Additionally, the decision to select firms Guidewire and Capgemini for a tender to create the icare single platform appeared "predetermined".

Mr Nagle's failure to properly declare his wife's contract with icare was criticised, as well as a Guidewire-sponsored 2018 trip to Las Vegas.

Mr Nagle's predecessor, Vivek Bhatia, was also criticised - alongside Mr Carapiet - for failing to declare, record or manage conflicts of interest arising from Mr Bhatia's relationship with leaders of Capgemini.

The board "comprehensively failed to properly govern icare", the report says, and also lacked expertise in injury management or workers' compensation.

Mr McDougall's report came to a similar conclusion.

The parliamentary inquiry also found the icare board was insufficiently accountable to Mr Perrottet, to whom it reports, with both reports arguing for more regular reporting and oversight involving the treasurer.

The committee recommended an independent evaluation of icare's claims management model, and said the NSW government should consider addressing icare's "deteriorating financial position".

Mr Perrottet on Friday reiterated Mr McDougall's finding the 2015 reforms that spawned icare were "fundamentally sound".

He said the government would accept 35 of Mr McDougall's 49 governance recommendations and consider the remaining 14. He did not comment on the parliamentary committee's nine recommendations.

But Opposition Leader Jodi McKay said Mr Perrottet needed to face consequences as the responsible minister.

"He came out and said the icare executives were doing a superb job. Well, they weren't - they were looking after themselves," Ms McKay told reporters.