Scathing icare review finds a need for cultural change

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“There was no evidence … the board was sufficiently emphatic or insistent enough in holding management to account to ensure that icare met its obligations as a [government] agency,” the review found.

An interview extract with one executive exposed icare was not always open to public scrutiny and accountability.

“We wanted more time to fix our issues in a silo, and we did not recognise the need for accountability to the broader community and stakeholders who supervise us and to whom we are accountable,” the executive said.

Members of the executive were “confused” about icare’s identity, resulting in inadequate procurement processes more consistent with a start-up culture and a perception that due processes tended to “get in the way”.

Until mid-2020 the board did not set “a clear or strong enough tone from the top” on risk, compliance or its relationship with the State Insurance Regulatory Authority.

“Shortcomings were allowed to continue for lengthy periods, for example, in the areas of procurement and conflicts of interest management,” the report said.

Among the notable conflicts of interest exposed during parliamentary hearings last year was that of former chief executive John Nagle, who failed to properly declare that his wife had been given a contract with the agency

Last year NSW Auditor-General Margaret Crawford made her own finding of inadequate conflict of interest practices in icare’s procurement processes.

The icare review also found the board was slow to respond to concerns over the suitability of the chief executive, the decline in return-to-work rates and the deterioration of the scheme, which suffered a net loss of more than $2.5 billion in the two years to 2020.

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PWC made 76 recommendations including the need to improve management reporting, address financial risks including medical cost payments that have blown out and improve compliance, record-keeping.

Mr Perrottet, who is responsible for the insurer, said icare had transformed “what was an archaic and out-of-date” scheme.

“Over the past six months we have spearheaded significant renewal of icare’s board and senior executive to address issues and ensure icare is match-fit for the next stage,” he said.

He said a smaller and more accountable leadership team would oversee improved governance and compliance, a focus on return to work rates, reduced internal costs and stronger accountability.

In the past six months the board has undergone an extensive refresh, including a new chair in former NSW Labor leader John Robertson and new chief executive Richard Harding.

The Herald last month revealed three icare executives left amid a clean-out, collectively taking almost $1.2 million in entitlements.

Changes to senior leadership will “help rectify under-weighted skills, capabilities and experience in governing a public organisation and personal injury management,” the report said.

Mr Harding said tighter rules, more stringent reporting and “new avenues to speak up when there is an issue” were among changes under way.

Peter McCarthy, retired actuary and former senior partner at EY, said the review showed “a collapse of governance at all levels and a toxic culture” within icare.

“Culture is very hard to change, it starts from the top. But you’ve got to put the cleaners through the organisation – not just senior ranks. For me the jury is still out on whether it is going to improve outcomes for injured workers or not.”

Labor finance spokesman Daniel Mookhey said the review confirmed icare’s systemic failures were the product of an “arrogant management team and incompetent board run riot.”

The review’s 76 recommendations will be considered alongside findings of an independent review by retired Supreme Court judge Robert McDougall QC, due to be handed down in April.