Outsourcing Myths and Workers' Compensation Claims Administration

The outsourcing of claims administration is a feature of some Australian workers' compensation jurisdictions. While the benefits of outsourcing in this area of public administration have often been asserted there has been a lack of research into these claims. In this article the South Australian workers' compensation scheme is used as a case study to address whether the supposed benefits of outsourcing are soundly based. A number of other issues associated with the outsourced claims management environment are also considered as they have had an important bearing on the scheme's performance. The main finding to emerge is that outsourcing has failed to meet financial and other key objectives. Outsourcing has also created new tensions that have added to the complexities of scheme management. In light of these findings, there is a strong case that the scheme's business model should be recalibrated to facilitate a return to in-sourced claims management.