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APRA weighs in on worker rehab reforms

The prudential regulator has told policymakers to exercise “care” in any legislative changes that give life insurers a role in worker rehabilitation.

Reform must not come at the expense of consumers, the Australian Prudential Regulation Authority (APRA) warns.

“The interaction between the relevant pieces of legislation that impact this issue are… complex,” it says in a submission to a parliamentary inquiry.

“If the Government was to consider changes to the legislative framework administered by various agencies, APRA believes care would need to be taken to ensure there were no unintended consequences and that the desired policy outcomes continued to be met across life insurance, private health insurance and the health system more generally.”

Anecdotal evidence suggests current regulatory settings may have been detrimental to policyholders in certain situations, APRA says.

“There is growing evidence that early intervention should, in principle, be expected to improve outcomes for policyholders, because the likelihood of a person returning to work decline significantly the longer their absence… while their medical expenses increase.”

The National Insurance Brokers Association says the full range of potential funding mechanisms for worker rehabilitation and support should be considered in any review.

Insurer Allianz’s submission supports legislative change to let life insurers fund rehabilitation programs for injured claimants.

“Such legislation would promote optimal recovery from injury and illness and mitigate the effects of long-term disablement and worklessness,” Allianz says.