On 27 February 2020 SIRA was notified by icare that errors have been detected in weekly payment calculations in a sample of closed Nominal Insurer workers compensation claims.
The errors were found during an icare risk discovery review in 2019. The review, which excluded the Treasury Managed Fund, was designed to test the extent to which the initial Pre-Injury Average Weekly Earnings (PIAWE) calculation was correct from 2012-2018.
The scope and results of the review as advised by icare as follows:
- approximately 3,000 claim files were reviewed
- where there was sufficient information on file to recalculate PIAWE, approximately one-quarter of the claims were potentially underpaid, at least initially, and a similar proportion were potentially overpaid
- in instances where weekly payments were incorrect, premium calculations for experience-rated medium to large businesses may also be incorrect
Legislative reforms implemented in 2019 simplified the calculation of PIAWE and the risk review did not cover more recent or open claims. The 2019 reforms implemented last year were in response to reviews and stakeholder concern about the complexity of PIAWE.
SIRA directions to icare
SIRA has instructed icare to take swift action to fully quantify the scale of this issue and is requiring icare to repay any underpaid workers.
SIRA has directed icare to produce a Review and Remediation Plan by 13 March 2020 setting out:
- details on when the full extent of the problem will be known;
- a proposed approach and timeframe for repaying any workers who have been underpaid statutory benefit entitlements, and all employers that subsequently paid a higher premium than appropriate;
- a proposed approach to communicating with affected injured workers and employers;
- details of efforts review existing claims to ensure the problem is not continuing; and,
- a risk assessment audit for NSW government agency workers compensation and government property insurance scheme managed by icare, known as the Treasury Managed Fund.
SIRA has confirmed icare is responsible for repaying any injured workers impacted by the error in calculating weekly benefits, and for associated remediation costs.
Advice for injured workers
At this stage, injured workers and employers who believe they may have been impacted by an error in PIAWE do not need to do anything. SIRA has required that icare's Review and Remediation Plan to include identifying and communicating with customers impacted by any error in payments.
However, any injured worker who is concerned they may have been impacted by this issue are welcome to register their details for further communication over the coming months. They can also call us on 131050.
Any injured worker with a specific complaint or concerns about weekly payments should contact WIRO on 13 94 76.
Employers who wish to receive further updates can also register their details.
SIRA audits and requirements
SIRA officers, with the support of EY, are already undertaking Nominal Insurer claims file reviews as part of the 21-point Action Plan following the 2019 SIRA Compliance and Performance Review of the Nominal Insurer (icare). SIRA is providing icare daily feedback on files where potential problems are identified.
SIRA will also undertake an urgent focussed audit of Nominal Insurer claims investigating the PIAWE matter.
In addition, SIRA has launched a review of weekly payment calculations across other insurers.
SIRA is also working with the Workers Compensation Independent Review Officer (WIRO) and the Workers Compensation Commission (WCC) to assess the extent to which complaints managed by the WIRO and disputes resolved by the WCC may have already fixed PIAWE weekly payment errors.
SIRA has previously issued this guidance to all workers compensation insurers about how to approach any overpayments to injured workers.
SIRA requires all insurers who charge employers premiums to provide an avenue for review of premiums charged and to report regularly to SIRA on these reviews, in accordance with the SIRA Market Practice and Premiums Guidelines (May 2018 version).
Register your details
Please register your details so we can keep you updated over the coming months.