An excerpt from an article in the Australian Financial Review by Ruth Liew, 24th November, 2015.
National Australia Bank director Peeyush Gupta, former Herbert Smith Freehills chief Gavin Bell and HCF Group director Lisa McIntyre have been appointed to the board of the NSW government's $30 billion general insurance arm, Insurance & Care NSW (icare).
The directors will join other newly appointed board members – BT Financial Group chair elect David Plumb, First State Super director Mark Lennon and Elizabeth Carr, chair of the Macular Disease Foundation Australia – to the icare business which opened on Tuesday.
The six directors will work with former Macquarie Bank executive Michael Carapiet, who was named as the chair of icare in late August.
He is flanked by deputy chair Michael Pratt, the NSW Customer Service Commissioner and deputy chancellor of Western Sydney University.
icare CEO Vivek Bhatia says his organisation is like an ASX20 company in that once the Finance Minister appoints the board, the board governs it.
The icare board, which also includes chief executive Vivek Bhatia among its directors, will be in charge of the general insurer's future strategies such as the management of its enormous workers' compensation business. icare, Australia's biggest insurer in terms of assets, was created after the NSW State Insurance and Care Governance Act came into effect in early September.
The act saw the creation of three organisations: icare, State Insurance Regulatory Authority and SafeWork NSW. icare has been tasked to execute the government's insurance and care schemes, including addressing the needs of Australians who have suffered road injuries and workplace incidents.
"We believe the organisation [icare] is like an ASX 20 company. Once the minister [NSW Minister for Finance Dominic Perrottet] appoints the board, the board actually governs the organisation," said Mr Bhatia, formerly CEO Of Wesfarmers Insurance, about the appointments.
"It's an opportunity now to look through a singular lens of all the insurance and care operations, the activities that happen through a common organisation as opposed to disparate agencies.”
icare currently outsources its workers' compensation claims management processes to insurers such as Allianz and Suncorp Group-owned GIO.
Revisiting 'human centred design'
Mr Bhatia is embarking on a sweeping review of its claims processes including how it engages with injured employees, rehabilitates workers and deals with employers. "We really want to bring back human-centred design into our processes, into our systems, into how we deal with the injured worker," he said.
One of Mr Bhatia's biggest priorities as CEO is managing the insurer's assets amid rocky investment markets. The performance of icare, like many of its insurer peers, is linked to the returns from investments to match the liability on its insurance books.
The division had previously been in deficit, partly due to poor investment returns. "If I look at our region, it is obviously very closely tied to Asia and China in particular, and it is ensuring that we are always prepared should there be longer-term recessionary trends in the market," he said. Under the new structure, icare will be in charge of the NSW Workers Compensation Scheme, the Lifetime Care and Support Authority, the Dust Diseases Authority, the NSW Self Insurance Corporation and NSW Sporting Injuries Compensation Authority.
Nearly 75 per cent of the icare business is concentrated in workers compensation. icare reports to the NSW Minister for Finance.
The NSW Minister for Innovation and Better Regulation Victor Dominello said the structural changes marked "the end of the inherent conflict of interest that has existed in NSW between the operation and regulation of insurance".