WorkCover struggles with $1.36 billion liability
South Australia’s workers’ compensation body WorkCover is still carrying more than $1.36 billion in unfunded liabilities, despite another year of changes to its structure.
The liability is the difference between estimated future claims costs and estimated income from investments and levies.
It had reached $843 million in 2007-07, rising to $911 million by December 2007, forcing the State Government to legislate wide-ranging reforms to compensation payments and rehabilitation.
By the time the new laws were passed and in place in mid-2008 the unfunded liability had reached $984 million.
The reforms sparked angry protests from unions, not convinced they would do anything other than marginalise injured workers.
Employers were hoping improved scheme performance would deliver lower levies.
The liability went down slightly for two years to $982 million in 2009-10 and $952 million in 2010-11.
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In 2011-12 it took another major leap as WorkCover Corporation posted a $1.389 billion in 2011-12.
WorkCover chairman Philip Bentley, who ends his five-year term overseeing the organisation at the end of this year, said he was confident there would be improved performance in the future – a message he’s pushed every year.
“It is imperative that the corporation and the claims managers remain focused on more effective and efficient front-end management of claims,” he said in his final report.
“Early intervention is critical to improving return to work outcomes and reducing the claims liability.”
Bentley has had to ring in more changes in the past financial year, ranging from replacing the chief executive to ramping up the corporation’s investigation team to pursue fraudulent claims.
“Following the departure of Rob Thomson as Chief Executive Officer (CEO) in September 2012, the Board set about recruiting a new CEO and assembling a more experienced workers’ compensation executive team,” he said.
Bentley’s board looked interstate for its new executive team, hiring Greg McCarthy from New South Wales as the new CEO.
Queenslanders Rob Cordiner and Michael Francis were recruited as General Manager Insurance and General Manager Scheme Improvement and Regulation.
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“The board believes that this executive team is the most experienced and knowledgeable workers’ compensation management team in WorkCoverSA’s history,” Bentley said in this year’s annual report, tabled in parliament yesterday.
“This new team is well equipped to lead the corporation into an era of more actively regulating scheme performance as its number one priority.
“The increased focus on scheme regulation has meant we have strengthened our investigations approach to expose fraudulent activity by providers, workers and employers operating within the scheme.
“This has included recruitment of specialist staff with extensive investigations experience.”
Bentley said the scheme still had problems with the level of disputed claims and their settlement.
“In South Australia’s case it has the highest frequency of disputes per worker and its disputes last far longer than in other jurisdictions.
“This problem, which exacerbates injured worker return to work rates, can only be addressed through changed legislation and changed procedures at the Workers Compensation Tribunal.”
Five years ago, Bentley’s 2008 annual report attributed the scheme’s poor performance to outside issues and the need for reform.
“The increase in unfunded liability is primarily due to those factors that are outside our control,” he wrote.
“The good news is that the contribution from claims management is continuing to produce savings for the scheme upon each valuation and I am confident that this will continue in the coming year.”
History shows that a succession of changes to claims management, legal services, redemptions and executive staffing, WorkCover’s promised improvements have failed to eventuate.
Bentley remained positive: “I believe that with the new and enhanced management team and the changed measures that this team has put in place, I am confident that I leave the board having put the organisation in a place where we will see improvements in the scheme’s performance.”
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