SIRA quarterly regulatory update (ending 30 September 2023)

This report is a summary of the regulatory activity undertaken by the NSW State Insurance Regulatory Authority (SIRA) relating to the motor accidents, workers compensation, home building compensation schemes and healthcare providers operating in the schemes, for the period 30 June 2023 to 30 September 2023. (Figures presented are as of 31 October 2023.)

SIRA’s compliance and enforcement activities target the areas of highest risk. The actions taken are commensurate to the level of real or potential harm, the scope of non-compliance, the severity of wrongdoing and the need for deterrence.

These activities are complemented by education and support initiatives to drive better outcomes for the people who make claims and hold policies in SIRA-regulated schemes.

Motor Accidents Insurance Scheme

Regulation of insurers

In the NSW Compulsory Third Party (CTP) Scheme SIRA regulates six licensed insurers - Allianz Insurance, Insurance Australia Limited (trading as NRMA Insurance), AAI Limited (brands: AAMI and GIO), QBE Australia, and Youi.

Letters of compliance

Three letters of compliance were issued:

Remediation plans

Insurers are required to implement a remediation plan where non-compliance with their obligations has been self-reported or determined by SIRA. As of 30 September 2023, there were a total of 15 remediation plans in place for CTP insurers.

Ten remediation plans were ongoing, and five remediation plans commenced in response to the weekly benefits Insurer Claims and Assurance Program (ICCAP).

SIRA completed an ICCAP activity in July 2023. The activity included conducting an audit of weekly payments of statutory benefits including issuing liability notices to ensure insurers are meeting their obligations in line with the requirements as set out in the Motor Accident Injuries Act 2017, Motor Accident Guidelines and licence conditions.

The activity noted insurers demonstrated high compliance levels in respect of applying the correct information and algorithm to calculate weekly payments. The activity also identified opportunities for insurers to review and improve their written notices to claimants to ensure they are aligned with the legislative requirements and provide transparency.

Based on the findings of the audit, SIRA has required all insurers to develop and implement a remediation plan to ensure systemic compliance is embedded across all areas where substantial compliance was not demonstrated.

The Scheme report provides further details regarding the findings of the ICCAP activity.

Five remediation plans commenced in the quarter in response to the weekly benefits ICCAP activity.

Workers compensation scheme

In the NSW workers compensation scheme, SIRA regulates four different types of insurers - the Nominal Insurer managed by icare, self-insurers, specialised insurers and government self-insurers (the Treasury Managed Fund) managed by icare and employers.

Regulation of insurers

Civil penalty

A civil penalty of $11,000 was issued to Catholic Churches Insurance Ltd on 14 September 2023 for breaching its licence conditions by failing to provide at least three months formal notice to SIRA if it intends to cease underwriting new workers compensation policies.

Read more: SIRA fines insurer Catholic Church Insurance Limited.

Special licence conditions

No special licence conditions were placed on insurers in this quarter.

Special licence conditions remain in place for:

Letters of compliance

One letter of compliance was issued to Aldi Stores – A Limited Partnership on 14 September 2023 for late lodgement of annual reports.

Two letters of compliance were issued to icare on 06 September 2023 for breaching legislative timeframes to determine liability and medical treatment.

Remediation plans

No remediation plans commenced this quarter in response to SIRA supervision of insurers.

The following remediation plans were reported to SIRA as commencing this quarter following an insurer self-assessment of their obligations:

Four remediation plans remain ongoing:

Insurer licensing

The following insurer licences were renewed:

The following licence application was granted and commenced:

On 31 August 2023 SIRA granted Qantas Airways Limited a group self-insurer licence, changing it from a single self-insurer licence.

On 18 August 2023 SIRA did not approve the licencing applications for:

• Baybrick (group self-insurer)
• Andrews Meat (single self-insurer)

Security reviews

Under the Workers Compensation Act 1987 self-insurers and specialised insurers are required to provide financial security to ensure that other employers in the State will not be required to meet the cost of claims if these entities are not able to meet their workers compensation liabilities.

Self-insurers must prepare and lodge a copy of their annual report (including audited financial statements) each financial year. SIRA reviews the annual report and financial statements and may increase, decrease or maintain the level of security.

Thirteen insurer security reviews resulted in:

• 5 maintained levels of security,
• 6 increased levels of security,
• 2 decreased levels of security.

SIRA quarterly supervision priorities

The focus for this quarter was on indexation of pre-injury average weekly earnings.

SIRA undertook monitoring and assurance activities across all insurers to ensure that workers weekly payments are being indexed twice a year in accordance with the workers compensation legislation.

SIRA analysed data in relation to weekly payments made, and reviewed insurer processes and procedures. Where any under-payments were identified, remediation actions have been put into place and this will continue to be monitored by SIRA.

Fraud on workers compensation scheme

SIRA received 58 fraud matters in this quarter that are under investigation, 20 from insurers and the remaining being other tip offs.

A fraud criminal prosecution resulted in a conviction and sentence. SIRA provided NSW Police evidence to prosecute this matter.

The NSW Supreme Court dismissed a criminal prosecution appeal upholding the conviction and sentence.

Regulation of employers

SIRA has received the following employer supervision referrals:

• 85 uninsured liability matter referrals from icare.
• 57 under-insurance and 6 non-insurance matters from SafeWork NSW.
• 4 non-insurance and 17 under-insurance matters from other referral sources.

As a result of SIRA's non-insurance investigations:

• 108 Penalty Infringement Notices (PINs), totalling $135,000 and 81 Double Avoided Premium (DAP) notices, totalling $1,496,949 were issued.
• 346 workers' compensation policies were initiated, insuring an additional 949 employees, with a total value of $803,378.

SIRA's Uninsured Liability Scheme matters, which were investigated, resulted in:

• 25 PINs, totalling $27,750 and 21 DAP notices, totalling $588,778 being issued.

Employer Enforcement's investigations into underinsurance have detected:

• $29,545,786 in undeclared wages and referred an additional $934,456 in premiums to icare for collection, thereby insuring an additional 249 workers.

In total, Employer Enforcement referred 133 PINs and 102 DAPs, totalling $2,248,477 to Revenue NSW for collection.

SIRA’s Employer Enforcement team is continuing to ramp up their approach to contacting NSW employers that are highly likely to be operating without a workers compensation policy. On 1 July 2023, a pilot project commenced that focused on increasing NSW employer’s awareness and understanding of their workers compensation obligations, whilst ensuring they are holding a current policy if deemed necessary.

Since the project commenced, 421 employers have been contacted with a result of 288 new policies incepted, $1,745,977 in premium has been invested back into the scheme and an additional 2,329 employees are now covered by a policy. The letters issued to employers under this project were designed in collaboration with the DCS Department of Customer Service Behavioural Insights Unit and have achieved a 70% policy inception rate, which is an improvement of 35% from previous projects.

Other actions:

• SIRA Inspectors engaged with 82 employers to enforce SIRA’s compliance with their workplace injury management obligations.
• SIRA issued 1,067 letters to employers with injured workers at moderate risk of not returning to work.
• SIRA issued 54 employer improvement notices for failure to establish a RTW program and/or failure to appoint a RTW coordinator.
• SIRA issued 43 penalty notices for failure to comply with improvement notices, failure to provide suitable employment, failure to notify the insurer of a workplace injury within 48 hours and failure to provide a compliant RTW program.

Home building compensation scheme

• Three applications for exemption were received under section 97 of the Home Building Act 1989. One application was granted, and two applications were still under consideration. From 1 June 2023, exemption applications that have been granted are published on SIRA’s HBC Insurance Exemption Register.
• SIRA launched its state-wide compliance audit in August 2023, targeting non-insured, residential building projects or projects where payments have been taken before home building insurance is in place. Approximately 100 builders have been selected for the audit to be reviewed. Notices will be sent to the businesses, requiring them to produce information. To date, notices under Section 127 of the Home Building Act 1989 have been sent to 14 businesses, which are currently under review. The audit is expected to be finalised in 2024.
• From 1 July 2023, icare commenced new premium pricing , which had been assessed and not rejected by SIRA on 27 April 2023 (icare’s premium filing was received by SIRA on 28 February 2023). On 25 September 2023 icare submitted a further premium filing for prices proposed to commence in 2024. SIRA is assessing the filing for decision in the following reporting period.
• SIRA’s new version of the public register of home building compensation insurance on the NSW Verify licence platform continued to operate in beta mode. As at the end of the reporting period SIRA was considering the future of the register.

Regulation of healthcare providers

SIRA regulates health and rehabilitation providers to ensure the services delivered within the personal injury insurance schemes are in line with the legislation and conditions of the relevant approval framework. As of September 2023:

Allied health practitioners

There are 11,638 practitioners approved to provide services in the workers compensation system and in this quarter SIRA approved 305 new practitioners. There were 53 practitioners who had their approval revoked as they did not meet the eligibility requirements.

Health practitioners authorised to give evidence

There are 470 active health practitioners authorised to give evidence in the motor accidents scheme. SIRA approved 25 new health practitioners in this quarter and one applicant was not approved as they did not meet the eligibility requirements.

Hearing service providers

There are 209 hearing service providers approved to deliver services in the workers compensation scheme.  In this quarter SIRA has approved 6 new hearing service providers.

Workplace rehabilitation providers

• There are 102 workplace rehabilitation providers approved to deliver services in the workers compensation scheme.
• One provider, Rehabilitation Injury Management had their SIRA approval to deliver services revoked as they failed to meet the requirements of a remediation plan.

Health Provider Supervision Assurance Program

Following from last quarter’s focus on accredited exercise physiology supervision program, the providers who received letters of compliance from SIRA have now submitted their financial audits to demonstrate compliance. SIRA continues to investigate and monitor providers identified for irregular billing practices.

SIRA issued direction

In accordance with new legislative powers introduced under the State Insurance Care and Governance Act, SIRA may issue directions to a relevant service provider requiring the provider:

• to take a specified action
• to provide specific relevant services in a specified way
• not to provide specified relevant services
• not provide any relevant services.

A register of directives is published on the SIRA website.

On 5 September 2023, SIRA issued a section 26D (1)(d) direction on Mr David Kaye (aka Ali Davut Sarikaya) and associated ABNs, not to provide any relevant services for the purposes of the workers compensation and motor accident legislation. This includes any practitioner delivering services to injured people under the workers compensation or CTP scheme for the associated ABNs.

Read more: SIRA issues direction to health service provider.