Application for approval of specialised insurer outsourcing arrangements: requirements

1. Introduction

Specialised insurers are licensed by the State Insurance Regulatory Authority (SIRA) under the Workers Compensation Act 1987 (1987 Act) to underwrite workers compensation risks and manage associated claims for employers of a defined industry.

Section 8.2 of a Specialised insurer licence conditions requires an insurer to obtain SIRA’s prior approval before outsourcing the whole or any part of its key operational functions.

SIRA regards the use of sub-contractors as a form of outsourcing.

In order to obtain an approval, a specialised insurer must satisfy SIRA that:

such an outsourcing arrangement will not lead to a decrease in service standards to employers and workers
the performance of the specialised insurer will not be weakened
SIRA's powers will not be actually or potentially impaired as a result of the proposed outsourcing.

This document outlines SIRA’s requirements.

2. Key operational functions

Key operational functions are as defined within the licence conditions.

3. Approval requirements

A specialised insurer must:

notify SIRA of its prior intention to outsource a key operational function
provide SIRA with the information requested in Appendix A
provide SIRA with any other relevant information that will assist SIRA in considering the proposal.

4. Review of outsourcing arrangements

SIRA will review the information submitted by the specialised insurer and may consider other information from a variety of sources which may include on-site audits, interviews and inspections. Additional information may be requested.

5. Submitting an application for approval

The application for approval should be lodged with:

Manager – Licensing and Monitoring
Workers Compensation Regulation
State Insurance Regulatory Authority
Locked Bag 2906, Lisarow, NSW 2252
Email: self&[email protected]

6. Further information

Requests for further information should be directed to:

Manager – Licensing and Monitoring
Workers Compensation Regulation
State Insurance Regulatory Authority
92–100 Donnison Street, Gosford, NSW 2250
Locked Bag 2906, Lisarow, NSW 2252

SIRA Customer Service Centre 13 10 50
Email: self&[email protected]

7. Confidentiality

Where information is provided to SIRA, the information is protected by provisions in the Workplace Injury Management and Workers Compensation Act 1998 and may only be disclosed externally in very limited circumstances. These provisions do not inhibit SIRA’s ability to:

create comparative data to conduct research and assess the performance of the workers compensation scheme
publish de-identified statistical, performance and research reports
provide information to the responsible Minister or as directed by the Minister
provide information to the Australian Prudential Regulation Authority.

Apart from these protections, personal information or health information provided to SIRA can only be dealt with in accordance with the Privacy and Personal Information Protection Act 1998 and the Health Records and Information Privacy Act 2002.

Although the Government Information (Public Access) Act 2009 (GIPA) creates a presumption in favour of the disclosure of government information when an access application is made, this can be overcome where there is an overriding public interest against disclosure.

GIPA provides a specific public interest consideration against disclosure of information held by SIRA if, amongst other things, disclosure of the information could prejudice the business interests of any person or corporation.

GIPA provides a mechanism for consultation with a person or corporation if an access application is made for information that concerns the business, commercial or financial interests of that person or corporation.

Any objection to disclosure received in the course of consultation must be taken into account in determining whether there is an overriding public interest against disclosure. Any decision by SIRA to make available that information contrary to an objection made in the course of consultation would be subject to a right of review by the Information and Privacy Commissioner or by the NSW Civil and Administrative Tribunal.

Appendix A

No.	Outsourcing requirements
1.	Outsourcing arrangements and notification Notify SIRA in writing: identifying the key operational function or functions being outsourced organisation to which it is proposed to outsource the function a summary of the terms of the outsourcing arrangement. Include the rationale as to why the insurer has decided to outsource its key operational function or functions. Indicate when the proposed outsourcing contract will be executed and when it is to be implemented.
2.	Provider expertise Provide a biography of the provider including a description of their expertise. Provide sufficient information to demonstrate the provider’s capacity to undertake the outsourcing arrangement to a professional and commercially acceptable standard under NSW workers compensation legislation.
3.	Communication (if applicable) Outline the proposed communications plan to inform staff, employers and claimants of the proposed outsourcing arrangements.
4.	Transition Outline the transition arrangements to transfer to the outsourcing arrangements. Describe the controls to mitigate transition risks including: a. untimely notification of injuries and acceptance of liability b. untimely and inaccurate payments to injured workers c. continued case and injury management d. data reporting to the insurer and SIRA Describe other transition risks not related to claims management and the implemented controls if relevant.
5.	Data reporting Identify the data reporting system. Provide information of how the insurer is ensuring claims data reporting will continue seamlessly under the outsourcing arrangements.
6.	Injury management program Update the injury management program to clearly identify the integration of the outsourcing arrangements (if applicable). In accordance with section 43 of the Workplace Injury Management and Workers Compensation Act 1998, lodge the updated injury management program with SIRA.
7.	Outsourcing arrangements Ensure the outsourcing arrangements (contract) makes provision for the following: a. description of scope of the arrangement and services to be supplied b. the provider being bound by the terms and conditions of the insurer’s licence in so far as it is applicable to the provider c. the provider performing its functions consistent with the licence to the satisfaction of SIRA d. permitting SIRA to gain entry to premises and access to information concerning the outsourced services e. adequate confidentiality, privacy and security of files and information f. commencement and end dates g. insurer’s ownership of documents and records subject to the arrangements h. no agreement to the conduct of outsourcing activities outside of Australia. Provide a copy of the outsourcing arrangements and reference the sections that demonstrate the above requirements.