Premium increases alone will not fix the NSW workers’ compensation scheme, brokers have told a parliamentary committee examining the government’s planned overhaul of workplace mental injury laws.

They say the ways claims are managed and decisions made are among many issues hampering the scheme.

National Insurance Brokers Association CEO Richard Klipin says the reform bill before state parliament “aims to address the rising incidence of psych injuries and claims, and we support measures that strengthen early intervention and support for injured workers.

“However, we believe the proposed legislative changes are unlikely to resolve the broader financial and structural pressures facing the scheme.”

He told the upper house Public Accountability and Works Committee that return to work outcomes “are a critical area of concern. Despite various initiatives to improve results, the scheme’s performance in this area is trending in the wrong direction. These trends highlight the need for a renewed focus on early intervention, care co-ordination and effective case management.”

Treasurer Daniel Mookhey – who also appeared before the committee yesterday – says the nominal insurer scheme for private sector employees “is plunging further into insolvency at a faster rate” based on the latest update from state insurer icare.

The scheme’s deficit is projected to rise from $4.9 billion at December 31 to nearly $6 billion by July 1 “in the absence of reform”, he said.

“The nominal insurer is likely to hold 78c in assets for every dollar of future liability. Or to put it even more simply, the scheme is no longer going backwards by $5 million per day. It is going backwards by more than $6 million every day.”

Last month, icare announced NSW employers will pay 8% more, on average, for workers’ compensation cover.

NIBA’s NSW and ACT VP Rebecca Wilson told the committee: “There’s absolutely an issue with employers not being able to afford the premium and going out the door ... this is not just about psychological claims. This is about case management.”

Tim Wedlock, AEI Insurance Broking Group executive chairman and a former NIBA president, added: “The whole scheme … is absolutely going the wrong way. What is the solution to that? That’s a million-dollar question, and I think it all comes back to the management of the scheme.”

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