Chris Koutoulas & Gary Jeffery - Workcover NSW - NSW Workers’ Compensation legislative change


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Chris Koutoulas, Acting Director and Gary Jeffery, General Manager: Workers’ Compensation Insurance, WorkCover NSW presented this at the National Workers' Compensation Summit 2014. The Summit focused on minimising workplace injury claims through establishing a successful safety culture and embrace working towards successful outcomes should a workers compensation claim arise.

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Chris Koutoulas & Gary Jeffery - Workcover NSW - NSW Workers’ Compensation legislative change

  1. 1. NSW Workers Compensation Legislative Change National Workers Compensation Summit 2014 27 February 2014 Gary Jeffery, A/General Manager Workers Compensation Insurance Chris Koutoulas, A/Director Claims Safety, Return to Work and Support Division 1
  2. 2. Outline • Reasons and intent for workers compensation legislative changes • Overview of legislative changes and implementation • Focus of the changes • Outcomes and emerging claims experience • Opportunities and challenges ahead Safety, Return to Work and Support Division 2
  3. 3. Reasons for legislative changes Performance and impacts • • • • The Scheme was in deficit of $4 billion The Scheme was financially unsustainable Funding it would have required a 28% increase in employer premiums Employers were already paying premiums between 20 and 60 percent higher than Victoria and Queensland The Workers Compensation Legislation Amendment Act 2012 implemented reforms designed to address all of these serious shortcomings Safety, Return to Work and Support Division 3
  4. 4. Intent of the legislative changes 1. Enhance NSW workplace safety by preventing and reducing incidents and fatalities 2. Contribute to economic and jobs growth by ensuring premiums are comparable with other states and there are optimal insurance arrangements 3. Promote recovery and the health benefits of returning to work 4. Guarantee long-term medical and financial support for seriously injured workers Safety, Return to Work and Support Division 4
  5. 5. Intent of the legislative changes 5. Support less seriously injured workers to recover and regain their financial independence 6. Reduce the high regulatory burden and make it simple for injured workers, employers and service providers to navigate the system 7. Strongly discourage unnecessary treatments and services that do not contribute to recovery and return to work Safety, Return to Work and Support Division 5
  6. 6. Snapshot of the Changes Key features of the legislative changes i. Changes to weekly benefits • Aligning weeklies with earnings, particularly for long term claims • Step downs from day 1 and complete cutoff after 5 years • Work capacity assessments introduced ii. New thresholds and limits on lump sum benefits and medical benefits iii. High WPI claimants exempt from limits and thresholds iv. Introduction of new decision review process and WIRO v. No direct change to WID (common law) vi. Exclusion of journey claims and claimant legal costs Safety, Return to Work and Support Division 6
  7. 7. Implementing the changes Key Milestone Dates 31 Dec 2013 1 Jan 2013 1 Oct 2012 17 Sep 2012 19 Jun 2012 New claims managed under the new legislative arrangements Begin transition of all existing claims (pre 1 Oct 2012) to new legislative arrangements Complete transition of existing claims (in the Scheme) Seriously injured workers transitioned to new legislative arrangements Immediate claims changes: - Disease injuries - Nervous shock - Heart attack and stroke - Journey claims Safety, Return to Work and Support Division 7
  8. 8. Implementing the changes • Smooth transition to new legislation – “planned approach” • Consistency in approach and implementation • Foster a system around “work capacity” not “incapacity” • Facilitate cultural as well as legislative reform • Build and support capability across the system Safety, Return to Work and Support Division 8
  9. 9. Implementing the changes The Transition Process • Transition required for approximately 30,000 existing claims (at December 2012) onto new weekly benefits, with the introduction of work capacity assessments. • Completed by the end of calendar year 2013. • WorkCover’s approach was to:  build knowledge and capacity of Scheme Agents and insurers to transition claims according to the legislative intent  promote consistency and sound decision making to minimise risk of disputes  ensure all opportunities are provided to support return to work  plan communication approach to manage stakeholder expectations Safety, Return to Work and Support Division 9
  10. 10. Outcomes for NSW Sustainable return to work, health & recovery outcomes  Additional funding allocated for rehabilitation services to injured workers to support return to work  NSW Return To Work rates improved by 3% and ahead of the national average  Better Return To Work outcomes on long term claims Safety, Return to Work and Support Division 10
  11. 11. Outcomes for NSW Return To Work Safe Work Australia – National Return To Work Survey Results 2013 Return To Work Rate • Proportion of injured workers with 10 or more days off work who returned to work for any period of time at some stage since they had their first day off work 100 90 88 84 88 82 87 88 87 86 85 80 70 62 60 • NSW RTW rate increased by 3% from 85% in 2011/12 to 88% in 2012/13 • NSW’s RTW rate at 88% is higher than the national average at 86% % 50 40 30 20 • NSW result among the highest in Australia 10 0 NSW VIC QLD SA^ WA TAS COM SEA* AUS NZ Safety, Return to Work and Support Division 11
  12. 12. Outcomes for NSW Return To Work Safe Work Australia – National Return To work Survey Results 2013 Current Return To Work Rate (durable RTW) • Proportion of injured workers with 10 or more days off work who were working at the time of the survey 100 90 80 80 77 75 75 79 80 78 77 70 70 59 60 • NSW current RTW rate the equal highest in Australia in 2012/13 % 50 • NSW’s current RTW rate at 80% is 3% higher than the national average at 77% 40 30 20 10 0 NSW VIC QLD SA^ WA TAS COM SEA* AUS NZ Safety, Return to Work and Support Division 12
  13. 13. Outcomes for NSW Focus on Workers • Claims Model adopts intent of the legislative changes and is designed to provide tailored support to all classes of claims Early Intervention Long Term Claims Complex & Serious Injury Claims • Promoting the health benefits of Recovery at Work for new claims • Driving industry to provide upfront support to injured workers • Bringing together employers, workers, doctors and insurers for collaborative approach to reach outcomes • Working with insurers to provide enhanced rehabilitation to support workers who have been out of the workforce for an extended period due to workplace injury • Identification of barriers preventing workers from regaining independence Improved health and social outcomes for injured workers • Providing individual case management planning to seriously injured workers to allow for appropriate support and maximum levels of independent living • Alignment to NIIS model to support those workers with the most serious disability into the future • Promote community participation Safety, Return to Work and Support Division 13
  14. 14. Scheme Outcomes Claims Return to Work Employer Incentives • NSW return to work rate improved by 3% to 88% • Higher than the national average • Durable return to work rate in NSW equal highest at 80% • Return To Work Assist Program for employers with <5 staff who can access work-trial funding for their injured workers • 10% Return To Work Incentive for Small Employers who achieve RTW outcomes within 13 weeks Implementation of Reforms • Most seriously injured workers receiving 70% more in benefits • Focus on capacity for work for less seriously injured workers • Higher average weekly & rehabilitation payments per claim Other Claims Initiatives Better outcomes for Injured Workers • Return To Work Engagement with Workplaces Program • Expanded vocational programs – 88% increase in utilisation • Specialist case managers for Severe Injury claims in the NSW Scheme Safety, Return to Work and Support Division
  15. 15. Scheme Outcomes Underwriting Premium reductions • Average up to 12.5% rate reduction in 2013 premium cycle • About $330m returned to NSW business • Up to 200,000 employers will benefit from reductions • Without reforms, premiums may have increased up to 28% Small Employer Incentives • Employer Safety Incentive premium discount of 10% • Return To Work Incentive for RTW outcomes in 13 weeks • Increased discount to 5% for premium paid in full Small Employer Initiatives Better outcomes for Employers” • Expanded definition of Small Employer • Easier policy renewals with removal of 260,000 wages forms • Renewal date rationalisation – aligned with month end • Extended period for submitting wages Safety, Return to Work and Support Division
  16. 16. What are we seeing in the Scheme? Emerging claims experience as at 30 June 2013 Claims reported •Reduction in total number of claims reported •Partly attributed to elimination of journey claims •Likely attributed to increased focus on recovery at work and return to work outcomes Weekly benefits •Lower number of active weekly claims •Higher average weekly payments per claim •More benefits to seriously injured workers Medical benefits •Reduction of total medical payments •Favourable experience in the period likely attributed to increased return to work outcomes on claims •Not attributed to 12 month medical limit Other benefit types •More funding allocated for rehabilitation to support injured workers to return to suitable employment •Higher average payments for rehabilitation per claim Improved claims outcomes & Scheme valuation Safety, Return to Work and Support Division 16
  17. 17. Uncertainties Key uncertainties about the impact of legislative changes Work Capacity Assessments Work Injury Damages Effectiveness unclear WPI Assessments Most claims that ceased receiving weekly benefits not due to work capacity assessments Increased utilisation in recent years Not directly affected by the reforms Almost a fifth of total Scheme liabilities and still increasing Reform thresholds for WPI and caps on weekly benefits may impact experience Stability in assessments unknown What does a sustainable system look like in the postreform environment? Safety, Return to Work and Support Division
  18. 18. Opportunities and challenges The road ahead – Uncertainties • The behaviours of system participants • Common law / Work Injury Damages • ‘Bracket creep’ for impairment thresholds • Work capacity assessments • Alternative interpretations of the legislation – Opportunities • Building industry capability and capacity – opportunity for new case management approach • Cultural change across the system Safety, Return to Work and Support Division 18
  19. 19. Opportunities and challenges What to expect The new operating model for WorkCover remains committed to:  Ensuring sustainable outcomes for injured workers and employers in NSW  Providing injured workers with the support they need and deserve to recover from their injuries and return to work  Providing seriously injured workers with increased support to improve health outcomes and community participation  Ensuring our insurance product is affordable, fair and competitive for NSW Safety, Return to Work and Support Division 19
  20. 20. Safety, Return to Work and Support Division WorkCover NSW © Copyright Safety, Return to Work and Support Division Safety, Return to Work and Support Division 20
  21. 21. Disclaimer This presentation may contain work health and safety and workers compensation information. It may include some of your obligations under the various legislation that WorkCover NSW administers. To ensure you comply with your legal obligations you must refer to the appropriate legislation in its most current form. Information on the latest laws can be checked by visiting the NSW legislation website ( or by contacting the free hotline service on 02 9321 3333. This presentation does not represent a comprehensive statement of the law as it applies to particular problems or to individuals or as a substitute for legal advice. You should seek independent legal advice if you need assistance on the application of the law to your situation. Although all care has been taken to ensure that the information is correct at the time of publication, the laws change over time and you need to ensure that you are accessing the most current legislation to ensure that the information is up to date. The information contained in this presentation is provided as a guide and it does not necessarily represent the views of WorkCover. You may use this presentation for educational purposes in your organisation for internal training and development however, you are not permitted to edit, change or add to this presentation in any way. You are not allowed to remove this disclaimer from the presentation and you are not allowed to charge any fees for using this presentation. © Copyright Safety, Return to Work and Support Division Safety, Return to Work and Support Division 21