Sophie Cotsis MP steps in to prevent rising insurance premiums for businesses

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Minister for Work Health and Safety, Sophie Cotsis, has moved with a last-minute intervention to prevent an average 20% insurance increase from icare, the state’s workplace injury insurer.

Minister Cotsis wrote to icare, the state’s workplace injury insurer, late on Friday directing it to limit average premium increase to 8 per cent in each of the next three financial years.

Ms. Cotsis acknowledged this would still be incredibly tough on small businesses, but noted the an average increase was limited to 8 per cent in future years there was a lot more work ahead to put downward pressure on any average increase. 

However, the Minister warned against false hope, saying it would still take years to fix a decade of dysfunction in the state’s injured workers compensation system.

Incoming briefs received by the new government warn that the nominal insurer is so seriously run down it will not regain financial sustainability without significant premium increases.

According to a government’s media release, briefings make clear that the primary reason for this is the previous government’s refusal to put in place adequate rate increases between 2014 and 2021. 

The release mentions that the previous government was warned last year it would need to increase premiums by 15 per cent – and if it didn’t, even higher increases would be needed in future years.

Currently the average premium rate is 1.48 per cent of wages, well below both the break-even point of 1.91 per cent and the national average of 1.7 per cent.

As the press release highlights, this crunch point comes after years of scandal including a $140 million IT contract awarded in a seven-day tender and an $18 million printing contract awarded without tender to the Liberal Party’s printer and a major donor.

In 2018, icare launched a model where the new claims were largely managed by a single claims service provider – a move which injured workers and businesses both agree was a disaster. Icare is now moving away from this model.

“Since taking office I have been advised of the parlous financial state of the workplace injury system. It is entirely unacceptable,” Ms Cotsis said.

“Small businesses have been through so much hardship over the last few years. We are putting in place an immediate process of reform with the needs of both business and workers paramount.

“It will take years to fix a decade of decline in the workers compensation system, but the reform starts now.”

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