SIRA quarterly regulatory update (ending 31 December 2023)

This report is a summary of the regulatory activity undertaken by the NSW State Insurance Regulatory Authority (SIRA) relating to the compulsory third party, workers compensation, home building compensation schemes and healthcare providers operating in the schemes, for the period 30 September 2023 to 31 December 2023. (Figures presented are as of 30 January 2024).

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.

Compulsory Third Party 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 Insurance (Australia) Limited (trading as QBE), and Youi.

Letters of censure

SIRA has issued a Letter of Censure to Insurance Australia Limited trading as NRMA Insurance following delays in commencing weekly payments of statutory benefits.

Read more: SIRA issues Letter of Censure to NRMA Insurance

SIRA has issued a Letter of Censure to Insurance Australia Limited trading as NRMA Insurance (NRMAI) for failing to determine the claimant’s request for treatment within 10 days of receipt of the request.

Read more:  SIRA issues Letter of Censure to NRMA Insurance for delays in determination of treatment requests

Special licence conditions

SIRA imposed special licence conditions on QBE Insurance (Australia) Limited (trading as QBE) on 30 September 2022 following an audit of claims management, specifically in relation to treatment and care.

QBE have since provided monthly updates to SIRA outlining the effectiveness of its remediation activities to address the concerns identified.

SIRA is now assured that QBE have demonstrated substantial and sustained compliance in relation to their treatment and care obligations. In accordance with Section 9.5(2) of the Motor Accident Injuries Act 2017, SIRA has revoked QBE’s special licence conditions, effective 1 December 2023.

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 31 December 2023, there were a total of 22 remediation plans in place for CTP insurers.

There were 14 remediation plans ongoing:

During the period, 8 remediation plans commenced in response to SIRA's supervision of insurers:

Insurer Claims and Conduct Assurance Program

SIRA completed 3 Insurer Claims and Conduct Assurance Program (ICCAP) activities within the period.

ICCAP – Communication of entitlements

SIRA completed a supervisory activity to ensure that licenced insurers were meeting their obligations as they relate to the communication of entitlements to ensure people who make a claim are receiving clear communication about their entitlements after lodgement as well as prior to the claim becoming inactive.

The activity noted all insurers have included information about statutory benefit entitlements in the acknowledgement letter, at time of lodgement. All but one insurer   demonstrated a consistent approach to contact people who made a claim with inactive claims, before closure notices being sent.

Based on the findings of the activity, SIRA has required NRMAI and Suncorp (trading as AAMI and GIO) provide remediation plans to ensure systemic compliance is embedded across all areas where substantial compliance was not demonstrated. QBE will be subject to a further verification activity in Q1 2024 to ensure compliance with the relevant clauses of the Motor Accident Guidelines – CTP Care.

Read more: Communication of entitlements - Insurer claims and conduct assurance program

ICCAP – Claims involving a death

SIRA undertook an ICCAP activity to ensure that licensed insurers were meeting their obligations as it relates to the management of claims involving a death.

The activity noted insurers were generally meeting compliance timeframes in relation to liability decisions and the commencement of weekly benefit payments.

There were observed instances of good practice where insurers were considerate in how sensitive information was released to families.  In addition, there were some positive examples of insurers proactively engaging with claimant’s treatment providers to facilitate timely requests and approvals.

There were opportunities for insurers to improve the experience of people with a claim and consider the lived experience feedback, to ensure claims are handled in a sensitive and respectful manner. Further, that there is greater proactivity and transparency required to assist a person through the claims process when they are dealing with grief.

SIRA has provided all insurers with individual reports outlining their results and required actions. SIRA will take a tailored approach with each insurer to ensure substantial and sustained compliance is achieved across all requirements.

Read more: Claims involving a death - Insurer claims and conduct assurance program

Recovery plans re-audit

SIRA conducted a risk-based re-audit to review the effectiveness of insurers remediation plans in relation to recovery planning and risk screening.

The activity noted insurers demonstrated improved levels of compliance when compared to the initial audit conducted in October 2022. However, the activity also identified that there were still multiple areas of non-compliance for the Insurers to continue to address.

Based on the findings of the re-audit, SIRA has requested the insurers audited to provide an updated remediation plan to ensure systemic compliance is embedded across all areas where substantial compliance was not demonstrated.

Given the risk-based approach to the re-audit, it is noted that Allianz was not reviewed as part of this ICCAP based on their performance in the initial audit, subsequent completion of remediation activities to achieve recovery outcomes and a demonstration of strong customer outcomes and experience performance through metrics monitored by SIRA.

Fraud on Compulsory Third Party Scheme

The Investigation Team received 14 referrals during the quarter (6 from insurers and 8 from CTP Assist). There are 8 open investigations.

One finalised investigation is progressing towards prosecution.

Workers compensation scheme

In the NSW workers compensation scheme, SIRA regulates 4 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

Letter of censure

A Letter of Censure was issued to icare on 19 December 2023 for failure to correctly apply indexation to workers compensation claims  managed on the Guidewire claims management system.

Read more: SIRA issues Letter of Censure to icare for failure to apply indexation to workers compensation

Special licence conditions

Special licence conditions were placed on 3 insurers in the reporting period.

Special licence conditions remain in place for:

Letters of compliance

Four letters of compliance were issued to icare.

• Two letters dealt with icare  breaching legislative timeframes to determine liability,
• One letter for breaching legislative timeframes to conduct internal reviews, and
• One letter for not complying with Standard of practice 21 or the Model Litigation Policy for Civil Litigation when negotiating a whole person impairment.

Remediation plans

Four remediation plans commenced or were requested in response to SIRA  supervision activities:

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

The following remediation plans remained open:

Claims performance audits

SIRA conducts claim performance audits under s202A of the Workers Compensation Act 1987 and in accordance with the requirements outlined in the SIRA Insurer audit tool and Insurer claims management audit guide. Audits measure performance across legislative compliance, case management practice and data quality.

SIRA conducted 9 audits in the quarter on the following insurers:

• BIC Services Pty Ltd
• Comfort Delgro Corporation Australia Pty Ltd
• Fletcher International Exports Pty Limited
• NSW Trains
• Racing NSW
• RGF Staffing Melbourne One Pty Ltd
• Sydney Trains
• Thomas Foods International Consolidated Pty Ltd
• Toll Holdings Limited.

Any regulatory action, such as a remediation plan, arising out of these audits will be reported on as part of this or future Regulatory Activity Quarterly Reports.

Insurer licensing

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.

The 17 insurer security reviews  resulted in:

• 4 maintained
• 8 increased
• 5 decreased.

Regulation of employers

Employer insurance obligations

The Employer Enforcement team has received the following employer insurance obligation referrals this period:

• 71 uninsured liability matter referrals from icare.
• 75 under-insurance and 13 non-insurance matters from SafeWork NSW.
• 6 non-insurance and 8 under-insurance matters from other referral sources.

In total, Employer Enforcement referred 215 Penalty Infringement Notices (PINs) and 205 Double Avoided Premium (DAP) notices totalling $4,322,812 to Revenue NSW for collection.

Uninsured Liability Scheme investigations, resulted in:

• 34 PINs, totalling $40,500
• 30 DAP notices, totalling $637,612 being issued.

Underinsurance investigations have detected:

• $40,801,418 in undeclared wages and referred an additional $1,497,223 in premiums to icare for collection, thereby insuring an additional 83 workers.

Non-insurance investigations, resulted in:

• 48 PINs, totalling $60,000 and 67 DAP notices, totalling $1,188,735 were issued.
• 471 workers' compensation policies were initiated, insuring an additional 1,330 employees, with a total value of $919,332.

SIRA continues to proactively contact NSW employers that have higher risk factors for operating without a workers compensation policy.

Employer workplace injury management obligations

Predictive modelling of employers at risk of poor return to work performance is used to focus SIRA’s inspectorate activity. The inspectors have:

• issued 1,278 letters to employers with injured workers at moderate risk of not returning to work
• engaged with 67 employers at a higher risk    of poor return to work performance to promote and assess compliance with their workplace injury management obligations
• issued 86 employer improvement notices for failure to establish a Return To Work (RTW) program and/or failure to appoint a RTW coordinator
• issued 41 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.

Fraud on workers compensation scheme

• SIRA received 48 fraud referrals during this quarter.
• Currently, there are 89 cases on hand.
• One finalised investigation is progressing towards prosecution.

Home building compensation scheme

• Nine applications for exemption were received under section 97 of the Home Building Act 1989 (HBC Exemptions). Seven applications were granted, and 2 applications were still under consideration. Two applications that were received in the previous quarter were granted in this quarter. From 1 June 2023, exemption applications that have been granted are published on SIRA’s website (HBC Insurance Exemption Register).
• SIRA continued its state-wide insurance compliance check project 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 are being progressively sent to the businesses, requiring them to produce information. As at the end of this quarter, notices under Section 127 of the Home Building Act 1989 have been sent to 36 businesses, which are currently under review. The audit is expected to be finalised in 2024.
• On 25 September 2023, icare submitted a premium filing for prices proposed to commence from 1 March 2024. SIRA assessed the filing and determined to not reject it on 14 December 2023.
• SIRA’s new version of the public register of home building compensation insurance on the NSW Verify licence platform transitioned from beta mode to live mode on 30 November 2023 (Home Building Compensation Check) and the old HBC Check was decommissioned.
• During this quarter SIRA published new key performance measures for icare’s handling of claims under the scheme.

Regulation of healthcare providers

Health provider supervision

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 at 1 December 2023:

Allied Health Practitioners

There are 11,941 practitioners approved to provide services in the workers compensation system.

In this quarter SIRA has approved 303 practitioners and 1 practitioner had their approval revoked as they did not meet the eligibility requirements.

Health Practitioners Authorised to give evidence

There are 475 active health practitioners authorised to give evidence in the motor accidents scheme.

In this quarter SIRA has appointed 15 new health practitioners.

Hearing Service Providers

There are 211 hearing service providers approved to deliver services in the workers compensation scheme.

In this quarter SIRA has approved 2 hearing service providers and  2 applicants were revoked as they no longer met their conditions of approval.

Workplace rehabilitation providers

There are 101 Workplace rehabilitation providers approved to deliver services in the workers compensation scheme.

One provider withdrew their application.

Health Provider Supervision Assurance Program

The program focuses on SIRA approved allied health providers working in the schemes.

SIRA monitors healthcare trends, performance, compliance and outcomes with scheme requirements.

In a rolling program, SIRA will focus on health provider groups, including the following:

Accredited Exercise Physiologists

• Following on from SIRA’s supervision focus on accredited exercise physiologist’s billing practices in the workers compensation scheme, SIRA wrote to all SIRA approved Accredited Exercise Physiologists (AEP) outlining expectations to deliver treatment and services across the NSW workers compensation and motor accident schemes.
• To promote quality provision of accredited exercise physiology services and compliance with SIRA fees orders, SIRA reinforced the requirement for AEPs to bill in accordance with fees orders, and accurately monitor invoices and reimbursements.

Psychologists

• SIRA conducted a review of payment data of psychologist billing practices in the workers compensation scheme for the 2022/2023 financial year. The focus was on anomalous billing practices, over servicing and excessive travel.
• SIRA has written compliance letters to 50 psychologists requiring submission of financial audits to SIRA to demonstrate compliance by the 8 January 2024.