Unions Slam Insurers for Draining NSW Workers Compensation System Amid Claim Limit Controversy

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Unions New South Wales (NSW) has accused insurance companies of exploiting the state’s workers compensation scheme, wasting millions on legal battles while the Australian Labor Party (ALP) government pushes controversial limits on claims. The backlash highlights concerns over fairness and efficiency in supporting injured workers.

On July 29, 2025, Unions NSW told a parliamentary committee that insurers are “bleeding the system dry” with $332 million spent annually on legal fees and investigations, often with little benefit to workers. Mark Morey, secretary of Unions NSW, cited a case where an insurer burned through $85,000 in public funds to fight a $5,000 knee surgery claim, which a tribunal ultimately approved. “This inquiry has exposed shocking waste happening right under our noses,” Morey said, criticizing insurers for prioritizing profits over workers’ needs. The state’s 4.5 million workers face proposed reforms by the ALP government, led by Treasurer Daniel Mookhey, to raise the threshold for psychological injury claims and restrict lifetime payments, citing a $2.6 billion shortfall in the Treasury Managed Fund (TMF).

The proposed changes, intended to curb rising premiums, have sparked fierce opposition. Unions and educators argue the ALP’s focus on limiting claims ignores root causes like workplace bullying and excessive demands. A snap parliamentary inquiry saw most submissions reject the reforms, urging better prevention of psychological injuries over restricting workers’ rights. The government dropped a plan requiring workers to prove injuries at the Industrial Relations Commission (IRC) first, but still demands a 30% whole-of-person impairment for long-term psychological claims—double the current 15% threshold. This has drawn criticism from medical professionals and lawyers, who see it as unfairly punitive.

The controversy underscores a deeper issue: a system skewed toward insurers’ interests, with workers caught in the crossfire. Posts on X reflect public frustration, with users like @NSWWorkerRights calling the reforms a “betrayal of the vulnerable.” As the ALP government pushes cost-cutting, critics demand accountability for insurers’ wasteful spending and stronger workplace protections. Without addressing these core issues, the system risks failing those it’s meant to serve, leaving injured workers to fight for fair treatment.