How many claims have been reviewed?
As at July, the program has completed a full review of PIAWE calculations and associated weekly payments for 100 Nominal Insurer claims from last year's project and an initial PIAWE review of around 300 claims.
To date, 19 closed claims have been identified to have been underpaid in weekly benefit payments and we will be starting to make contact with these customers, including possibly some employers, by the end of July.
What impact will this have on employer premiums?
Any repayment made against an open or closed claim will not impact prior or future year employer premiums.
For experience-rated employers, an increase or decrease in ongoing weekly benefit payments for open claims may require a premium recalculation at the premium renewal period.
How does the remediation process work?
The remediation process is complex, and we are taking the time to carefully set up the framework and processes to ensure it's done correctly.
Remediation of weekly benefit payments resulting from a miscalculation of PIAWE is a completely new process for the NSW Workers Compensation Scheme and requires setting up a rigorous process for reviewing claim files, recalculating PIAWE and any payments.
How will you be contacting customers?
Initial communication to workers is a critical part of the remediation process.
All communication with customers will initially be made over the phone to thoroughly explain the outcome of the file review and remediation process and also seek consent from the worker to proceed with payment.
Customers will also receive a letter explaining the review outcome and their options for payment.
In 2019, icare reviewed a sample of scheme agent claim files to understand whether PIAWE had been calculated correctly since its implementation in 2012.
From the sample, we identified errors in initial PIAWE calculations made by scheme agents between 2012 and 2018.
We are reviewing each of these claim files individually and remediating customer weekly benefit payments if an underpayment is discovered.
While we’re still in the early stages of the review, probing into the fine details of each claim has found that about five per cent of these historic claims are likely to need underpayments corrected.
We are now expediting the remediation process to ensure that any payments owed to customers are made as quickly as possible. Any worker impacted will receive a letter detailing the amount owed and payment options.
More information on icare’s PIAWE Review and Remediation Program can be found in the Frequently Asked Questions below.
How to contact us
Customers who are concerned they may have been impacted by this issue can visit the SIRA website for more information; or contact SIRA on 13 10 50 or register their details with SIRA for further communication over the coming months.
Background: Pre-injury Average Weekly Earnings (PIAWE)
Employment and remuneration arrangements for workers in NSW are extremely diverse and can vary between industries and the type and size of an organisation.
To accommodate the complex nature of these agreements, PIAWE methodology was introduced in 2012 as part of legislative changes, to implement through broader benefits reforms. PIAWE came into effect in 2013 as part of the Workers Compensation Legislation Amendment Act 2012.
It was designed to establish a more accurate earnings determination based on all earnings and related benefits in the 52 weeks prior to a worker’s injury. PIAWE has been included in several reviews of the workers compensation scheme over the last few years, and multiple concerns have been raised about the inherent complexity of calculating PIAWE.
The workers compensation scheme in NSW has had a long history of reviews and major legislative changes, including four changes relating to PIAWE between 2012 and 2019, reflecting feedback on PIAWE calculations received from workers, employers and other key stakeholders.
In 2019, significant improvements to, and simplification of PIAWE calculations were introduced. These originated from a major review of the workers compensation scheme in 2016 since icare’s establishment in 2015.
- An initial review of 299 claims completed.
- Initial contact commenced with 19 customers to explain review findings, the process to remediate any underpayment of weekly benefits and seek consent to make payment.
- Review of 1,000 claim files for mostly claims with 2016 and prior accident years continues.
- Engagement with TMF Government Agencies initiated to better understand their processes for calculating PIAWE.
- Review of 100 GIO claim files concludes.
- Commence Review and Remediation Phase One - review of 1,000 claim files.
- Expected duration of Review and Remediation Phase One is three months.
- TMF Risk Discovery Review completed.
- Review of 100 GIO claim files continues.
- Engagement with Nominal Insurer scheme agents, GIO, EML and Allianz began.
- GIO engaged to undertake the recalculation of PIAWE identified in the 2019 Review as having an incorrect initial PIAWE calculation.
- GIO review of 100 claim files commenced to determine whether workers’ payments were correct, a quality assurance framework, peer review process, and best practice approach to PIAWE calculation, file review and remediation.
- icare notified SIRA of PIAWE Risk Discovery Review.
Who is included in the review?
icare's scheme agents will initially review all customer claim files managed under the Nominal Insurer identified as having an initial miscalculation in PIAWE.
How many workers have been impacted?
As we are still undergoing the review, at this stage it is too early to determine this.
What is the approach and timeframe for scheme agents repaying workers who have been underpaid statutory benefit entitlements?
If an underpayment is discovered, icare scheme agents will aim to remediate payments to customers as soon as the review of their claim file is complete.
What is the approach and timeframe for repaying employers that have paid a higher than appropriate premium as a result of a scheme agent error?
The original review focused on determining the accuracy of the initial PIAWE calculation and the effect that calculation had on subsequent weekly benefit payments is underway.
We will not be adjusting prior year premiums. Each employer will be assessed on a case-by-case basis to determine any need for future premium adjustments. However, from the sample reviewed, there is a negligible impact on employer premiums.
When will files be reviewed and how long will each file review take?
Given the volume of claims being worked through we cannot provide an exact timeframe at this time.
icare's scheme agents will begin to contact any workers impacted in Q3 of this year and will continue to update customers on timeframes throughout the review process.
How will icare be engaging other government agencies and other key stakeholders?
SIRA has advised it will lead the engagement with government agencies. We have consulted with NSW Treasury and the Public Service Commission to work through any issues that may impact NSW public service employees.
We have also consulted with the Workers Compensation Independent Review Office and Workers Compensation to provide the background and current approach to the PIAWE Review and Remediation Program.
What is icare's proposed approach to communicating with affected customers?
Workers will be contacted over the phone if, and when their claim file has been reviewed. This communication will include any actions workers need to undertake, such as providing more information. Relevant communication will also be provided to employers as necessary.
What are icare scheme agents doing to review existing claims to ensure the problem is not continuing?
icare has a quality and assurance program in place designed to systematically review claim files managed by its scheme agents to identify and remediate any issues.
Is icare doing a risk assessment audit of TMF workers compensation claims?
Yes, the review will include the NSW public sector.