Australia
NSW workers’ comp - Are you ready for the claims transition?

NSW workers’ comp
Are you ready for the claims transition?


Background

In April 2017, icare announced that as a result of its tender it had selected three Agents to assist in the management of workers’ compensation claims from 1 January 2018. The successful Agents are:

  • Employers Mutual NSW Limited (EML), selected as the sole claims agent for new claims from 1 January 2018;
  • Allianz Australia Workers Compensation (NSW) Limited (Allianz) with responsibility to run off their existing claims portfolio until 31 December 2018; and
  • AAI Limited trading as GIO (GIO) with responsibility to run off their existing claims portfolio until 31 December 2019 as well as the existing claims portfolios of CGU Workers Compensation Ltd (CGU) and QBE Workers Compensation (NSW) Ltd (QBE) from 31 December 2017 (the two agents that were not successful in maintaining a license).

In addition to the decision surrounding claims Agents, icare has now assumed all underwriting responsibilities for the NSW scheme, therefore the responsibility for processing and the adjustment of all workers’ compensation policies now rests with icare.

Concurrently, icare has been developing a new claims management model. This will be supported by a new Information Technology (IT) system that will replace the individual IT systems currently being utilised by each claims Agent.

Recent developments

With both CGU and QBE ceasing to be scheme Agents from 31 December 2017 there will be a staged transition of the claims portfolios from each of these Agents to GIO. This transition is already occurring with GIO already on boarding staff to meet the increased claims volumes. An outline of the transition plan is as follows:

Claims lodgement

  • For clients currently with CGU and QBE, any new claims post 30 September 2017 will now be processed by GIO up to 31 December 2017.
  • Allianz, EML and GIO will continue to register new claims as normal up until 31 December 2017.
  • From 1 January 2018 EML will register all new claims (unless icare has granted an exemption).

Claims management

  • Existing claims currently being managed by Allianz, EML and GIO will remain with each of these Agents.
  • Claims currently being managed by CGU and QBE will be transitioned to GIO in cohorts, from July 2017 to December 2017.
  • The new model for the management of claims will be introduced from 1 January 2018. The new model is intended to increase the level of automation for ‘low touch’ claims with employers having greater autonomy in the management of their claims. The new model does have the potential to increase the administration costs for employers.
  • With the introduction of the new claims model, claims lodged after 31 December 2017 are likely to be segregated from claims lodged prior to this date, as icare seeks to evaluate the efficiency of the new claims model.

What this means for employers

Claims lodgement
Employers will need to be aware of the new requirements and mechanism for claims lodgement to ensure any potential delays are minimised. In addition employers need to understand who their key contacts will be within their new claims Agent(s).

Transition
The transition process from CGU and QBE, to GIO has the potential to increase the cost of claims as there may be delays in claims management activities. In addition, it is possible that these delays will be compounded as GIO will still need to determine key contacts within each employer, build relationships, understand the business and determine whether current claims management activities are indeed appropriate to facilitate an early return to work. Employers need to be aware of the additional complication due to the transition of the ‘paperless’ claims management systems from CGU and QBE, to GIO.

Claims management
With new claims from 1 January 2018 being managed by EML, the majority of large employers will need to work with two or more Agents to control their premium impacting claims under different claims management models. This has the potential to increase the administration burden for employers as well as needing to understand how their current systems and models will integrate with the new claims management model.

What is Aon doing?
Aon has been actively working with icare, EML, Allianz and GIO to understand the implications of the proposed changes. We are assisting clients to ensure that the transition to both EML and GIO is as seamless as possible. In addition we are monitoring claims cost movements to ensure that any increase in claims costs specifically as a result of the transition, is quarantined and where appropriate a business case for premium relief will be referred to icare for their consideration.

Recommended action
All employers should be tracking the implications of these changes and the impact to both their business and employees, by monitoring claims outcomes and costs. In addition employers should make themselves aware of the changes to the claims model to ensure that they are appropriately prepared and that their management systems support the new model. Aon can assist by acting as your transition manager, developing an integrated roadmap with all Agents and preparing a strategy to mitigate any financial or operational burdens, arising out these changes.

If you wish to obtain further information or discuss how Aon can further assist your business in the management of your workers’ compensation program please contact your client manager or one of the contacts listed on this page.