Understanding How We Got Here
The Promise
Workers' compensation is, at its heart, a form of insurance. It exists because no individual, family or employer should bear the full burden of workplace injury alone. Across Australia, generations of workers helped build industries, communities and prosperity. In return, society made a promise: when people were injured through their work, they would be supported.
It is a promise worth protecting.
Across the early twentieth century, Australian states introduced workers' compensation laws in response to the realities of industrial work. Mining, steelmaking, railways, construction and manufacturing helped build the nation, but they also left many workers and families carrying the consequences of injury alone.
The principle was simple: if people were injured in the course of their work, they should not be abandoned to poverty or forced to prove fault before receiving support.
As industry expanded, so too did the systems designed to administer that promise. Governments, insurers and employers faced a common challenge: how do you manage growing numbers of claims fairly, consistently and sustainably?
Over time, actuarial science, standardised processes and emerging technologies offered an answer. Data promised objectivity. Automation promised efficiency. Administrative systems promised consistency. Many of these innovations brought genuine improvements
But they also introduced a new question.
How do systems built to operate at scale respond to experiences that resist standardisation — grief, trauma, uncertainty and the complexity of recovery?
Today, as workplaces increasingly recognise psychosocial hazards alongside physical risks, the challenge is not simply technological.
It is human.
How do we ensure that systems designed to support people never lose sight of the people they were created to serve?
Efficiency and Its Consequences
Law professor Jay M. Feinman argues that, over time, certain practices became embedded within insurance systems internationally as organisations sought greater consistency and tighter cost control.
Efficiency and standardisation can improve fairness and reduce variation. Yet critics suggest they can also shape behaviour in ways that unintentionally undermine trust and recovery, particularly in complex claims involving psychological injury.
The challenge is ensuring that systems designed to manage risk never lose sight of the people behind the claim.
A Global Shift
By the late 1980s, Australian insurers were among the first to use computer-assisted systems to standardise claims decisions. One of the best known was Colossus, developed to improve consistency and reduce what the industry called "claims leakage" by assigning values to different types of injury and loss.
Over time, this approach spread internationally. The idea that claims could be managed through rules, data and automated decision-making became embedded across the insurance industry. Today's digital platforms are far more sophisticated, but the underlying challenge remains the same: how do you balance efficiency with human judgement?
Modern systems, including global platforms such as Guidewire, do not make decisions in isolation. They reflect the business rules, priorities and assumptions programmed into them by the organisations that use them. Data fields, triage models and recovery pathways are designed by people.
Technology can improve consistency and support decision-making at scale. But when efficiency becomes the overriding objective, there is a risk that the complexity of human experience is reduced to categories, probabilities and projected costs.
The question is not whether technology has a role to play. It is whether the systems we build remain accountable to the people they were created to serve.
The Economics of Insurance
When an insurer collects a premium, in this case compulsory premiums paid by employers to the government, it receives the money long before it must pay a claim — sometimes months, sometimes years later. That pool of unpaid claims money is called the float. While it sits on the books, it’s invested — earning returns for the insurer, or the government, not the injured person.
In theory, it’s just good capital management. Hence the involvement of Treasury in overseeing workers compensation.
In practice, it creates a powerful incentive to delay, deny, or minimise payouts — because every extra day a claim remains unsettled keeps the float earning profit.
Insurance relies on balancing present obligations with future uncertainty. Understanding these financial structures helps explain why strong governance, transparency and accountability matter.
The challenge is ensuring that financial sustainability and human dignity remain equally important considerations.
When Systems Fail
Fast-forward to New South Wales. In 2020, the state-run insurer icare faced a storm of public scrutiny. Whistleblowers exposed under-payments, mis-managed claims, and millions spent on untested IT systems. Yet publicly examining the human impact of the IT scandal got lost in the political landscape. So here we are again....
At the heart of the scandal was a new model designed with advice from McKinsey & Company in 2017 — recommending the “streamlining and automation of claims management through a single IT platform.”
That platform — Guidewire, implemented as the Nominal Insurer Single Platform (NISP) — was programmed to triage claims automatically, sorting workers by algorithmic severity ratings and predefined recovery paths.
Independent reviews later found inaccuracies in those triage outcomes, governance failures, and significant declines in return-to-work results.
By 2026, the platform was still under remediation. Hundreds of millions had been spent, but the core question remained unanswered:
The experience raised important questions about implementation, oversight and accountability. It also highlighted how difficult it can be to restore trust once confidence in a system is lost.
Can a system built to save money ever be trusted to deliver care? And why has it taken until 2025 for the regulator, SIRA to call for a cultural shift in claims management. The scale of this harm is staggering.
Where Human Judgement Matters
Every system begins with human decisions.
Every dataset reflects choices about what is measured and what is overlooked.
Technology can support consistency and efficiency, but it cannot replace empathy, context or professional judgement.
As our understanding of injury evolves — from visible physical harm to psychosocial risks that are often harder to recognise — relationships remain central to recovery.
The future of workers' compensation will depend not only on what technology can do, but on the values that guide the people who design, regulate and work within these systems.
The Human Question?
The challenge is not whether systems should evolve. They must.
From asbestos exposure to psychosocial hazards, our understanding of workplace harm has changed dramatically over the past century. The systems designed to respond to injury must change too.
The question is whether, as they become more sophisticated, they remain worthy of the people they exist to serve.
Efficiency matters. Sustainability matters. But so do compassion, dignity and human judgement.
The future of workers' compensation will depend not only on what technology can do, but on the values that guide the people entrusted with its care.
References
NSW Parliamentary Library Research Service, History of the Government Insurance Office (GIO) — Jane R. Nauta (1999)
Jay M. Feinman, Delay, Deny, Defend: Why Insurance Companies Don’t Pay Claims and What You Can Do About It (2010)
McKinsey & Company, icare Claims Operating Model: Design and Transition Recommendations (2017), as cited in the NSW State Insurance Regulatory Authority, Independent Review of icare Claims Management Model (2025)
Extra Reading:
NSW Parliamentary Library — Colossus
AFR Colossus Covers Claims Future
How Different Insurance Companies Use Colossus/DXC Technology
Colossus: Artificial Intelligence Before ChatGPT
From System Failure to Legal Exposure
Allstate Fined $10m for Colossus Computer Claims Handling Process
Women Speak Out - Featuring the lived experience stories of women impacted from NSW, Victoria, Queensland and South Australia (Tasmania, NT and WA to follow)