Some employers hit with icare premiums above 16 per cent

The embattled state insurer will hit some employers with premium increases of more than 16 per cent, despite the NSW government rejecting its pleas to be allowed to force businesses to pay significantly more for workers’ compensation.

The scandal-plagued icare – which needs a $669 million government top-up by next week to keep operating within its requirements – has revealed that premiums for some businesses will rise well above the 8 per cent target demanded by Industrial Relations Minister Sophie Cotsis.

Industrial Relations Minister Sophie Cotsis demanded that scandal-plagued icare cap its premium rises at 8 per cent.Credit: James Alcock

Icare made an urgent plea in April to be allowed to make 330,000 employers pay a premium increase of 22 per cent, equivalent to hundreds of millions of dollars, but Cotsis knocked back that request, and issued a directive that rises must be limited to an average 8 per cent.

The insurer maintained that high premiums were necessary to stay financially viable but Cotsis did not accept that argument and instead responded: “The parlous state the insurer finds itself in is entirely unacceptable to the new government, to injured workers and to the businesses of NSW.”

However, icare has released its “external premium filing update 2023-24”, which confirms that while the average rise for premiums will be 8 per cent, some “rate increases will be lower and some higher, ranging from 2 per cent to 16.7 per cent”.

As Australia’s largest public sector insurer, icare covers more than 3 million employees for wages and medical costs for workplace injuries. It collects more than $3 billion annually in premiums.

The latest rises have infuriated business groups, with Business NSW CEO Daniel Hunter warning that increases “will have a negative impact on businesses’ future operations – especially in light of wage increases, interest rate rises, energy price spirals and softening consumer demand”.

“While the state government describes the increase as an average increase of 8 per cent, in reality, the increases range between 2 per cent and 16.7 per cent,” Hunter said.

He warned that the recent national wage review would push many businesses into a higher cost bracket, which would force them to pay significantly more for premiums.

An icare spokesperson said increases to premiums were unavoidable for some businesses.

“Small businesses in the NSW Workers Compensation scheme pay a premium based on their wages and their industry profile. Premiums can increase due to business growth, higher wages, changes in industry profile or increases in average premium rates,” the spokesperson said.

The scheme average premium rate increase for 2023-24 is 8 per cent and the industry profile is based on “risk of workplace injury and death”.

“Riskier industries will pay more. Safer industries will pay less. Taking into account these risk profiles, some increases will be lower than the average and some higher,” the spokesperson said.

As well as pleading to be allowed to increase premiums, icare needs a one-off top-up by the end of next week to ensure it can continue to pay injured frontline public servants.

Treasurer Daniel Mookhey said the $669 million payment was needed to guarantee injured public sector workers had access to financial support, but acknowledged the funding injection would add to the government’s gross debt, which is projected to reach $187 billion by 2026.

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