The NSW workers’ compensation scheme is facing significant financial challenges, with projections indicating it may only remain sustainable for another two years without substantial reforms. This situation has serious implications for employers, as potential changes could affect insurance premiums, claims processes, and overall compliance requirements.
Context
The sustainability of the NSW workers’ compensation scheme is currently under scrutiny due to rising costs and inefficiencies, particularly in handling psychological injury claims. These claims have doubled in the past six years and now account for 12% of total claims but 38% of the scheme’s costs. The average cost per psychological injury claim has nearly doubled since 2019-20, reaching $288,542 in 2024-25.
Without reforms, businesses may face a 36% increase in premiums by 2027-28, even if they have no claims against them. The NSW Government has proposed reforms to address these challenges, including clearer definitions of psychological injury, anti-fraud measures, and changes to how bullying and harassment claims are handled.
While these reforms aim to improve the scheme’s sustainability, the current trajectory suggests significant challenges remain.
Key Points for Employers
- Financial Viability at Risk – the scheme is currently under financial strain, raising concerns about its ability to continue supporting injured workers without additional funding or structural changes
- Potential Reforms Ahead – to address the sustainability issues, the government may consider reforms that could impact how employers manage workplace injuries and insurance obligations
- Employer Preparedness – employers should stay informed about potential changes to the workers’ compensation scheme and be prepared to adapt their workplace injury management and return-to-work programs accordingly
Recommendations for Employers
- Review Current Policies – assess your existing workers’ compensation policies and procedures to ensure they are robust and compliant with current regulations
- Enhance Injury Management – implement proactive injury prevention and management strategies to reduce the incidence and impact of workplace injuries
- Stay Informed – stay informed of announcements or consultations from the NSW government regarding changes to the workers’ compensation scheme
- Engage with Stakeholders – collaborate with industry bodies, insurers, and advisors to understand the implications of potential reforms and to advocate for fair and effective solutions
By taking these steps, employers can better navigate the uncertainties surrounding the NSW workers’ compensation scheme and continue to support the health and safety of their workforce.
Need Help?
At ABILITY GROUP, we take pride in helping businesses of all sizes across Australia. Our experience and making things happen (results) make us a valuable partner for businesses aiming to maintain compliance, enhance employee well-being, and achieve financial sustainability. Need help with your workers compensation? Contact us to discuss.
Further Information
Source: Sydney Morning Herald
Title: NSW workers’ comp scheme only sustainable for ‘another two years’
Read Time: 5 minutes