The State Insurance Regulatory Authority (SIRA) has released the findings of its review into under-insurance within the NSW Workers Compensation Scheme. The review highlights widespread inconsistencies in wage declarations, ultimately leading to underpayments in premiums being made. Additionally, it found that there is substantial non-compliance and insurer failings, jeopardising the fairness and long-term financial health of the scheme.
Within these findings, it was discovered that there was:
- Approximately $60 million in unpaid premiums because of missing wage declarations.
- 75% non-compliance rate of audited employers, creating a $24.5 million in additional premiums.
- Deficiencies in underwriting practices, outdated wage estimates, inadequate follow-up and quality controls.
The review also found that specialised insurers had stronger compliance controls and a reduced risk of under-insurance. In response to the review’s findings, SIRA and icare have taken several steps since late last year to strengthen compliance, including the following actions:
- Decrease of more than 294,000 outstanding wage declarations.
- $353 million recovered in premiums.
- An improved renewal process that calculates premiums based on actual wages to minimise retrospective adjustments.
- The rollout of an enhanced self-service portal allows for immediate processing of more than 90% of wage submissions.
In response to the key gaps identified in the review, the NSW Government is considering introducing financial penalties for under-insurance as part of proposed amendments to the Workers Compensation Act. Additionally, in Q3 of the 2025/26 financial year, SIRA will launch an enforcement program targeting employers with premiums above $250,000 who have not lodged their actual wage declarations as required.
What is involved in the NSW workers’ compensation scheme?
Workers’ compensation is designed to provide financial support and medical assistance to workers who are injured or become ill due to their work-related activities. It also aims to facilitate a timely and smooth return to work for injured employees.
In NSW, the regulatory body responsible for overseeing and administering the workers’ compensation system is the State Insurance Regulatory Authority (SIRA). SIRA’s role includes setting and reviewing regulations, guidelines and policies related to workers’ compensation.
Most employers in NSW are required by law to have workers’ compensation insurance to cover their employees in case of work-related injuries or illnesses. This insurance provides compensation to employees who are injured while performing their job duties, regardless of whether the injury occurred on the employer’s premises or elsewhere during work-related activities.
When an employee sustains a work-related injury or illness, they must report it to their employer as soon as possible. The employer then initiates the workers’ compensation claim process. The injured employee may receive medical treatment and rehabilitation services covered by the workers’ compensation insurance.
The NSW workers’ compensation system places strong emphasis on supporting a safe and timely return to work for injured employees. Employers are expected to provide suitable duties to accommodate an injured worker’s restrictions and capabilities while they recover.
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Disclaimer – these articles are provided to supply general safety information to people responsible for OHS in their organisation. They are general in nature and do not substitute for legal and/or professional advice. We always suggest that organisations obtain information specific to their needs. Additional information can be found at https://www.safeworkaustralia.gov.au/