NSW insurer icare is a new public-private model that aims to reshape how government enterprises do business.
When you think of the biggest insurance businesses in Australia, icare may not come to mind. The NSW Government-owned corporation was established in 2015 to combine the State Government’s insurance activities. It has $32 billion in assets, about $4b in premium income and covers some 284,000 employers, 3.4 million workers and $180b worth of state assets – putting it on the scale of an ASX 50 company.
We’ve incorporated the notion of a commercial mind and social heart. We need to run the organisation commercially for a social purpose”, Vivek Bhatia, CEO icare.
Chief executive Vivek Bhatia describes icare as a radical experiment that aims to unite the strengths of public and private sector governance and practice to benefit broader society. “We’ve been building this organisation as a changing face of government business,” says Bhatia. “We’ve incorporated the notion of a commercial mind and social heart. We need to run the organisation commercially for a social purpose.”
Break the mould
Icare has incorporated best-practice private sector approaches, from the structure and composition of the board to hiring a CEO, chair and management team with deep experience of financial and management disciplines. There’s also a focus on the customer and stakeholders, as well as the use of human-centric design principles throughout the organisation. Two years into the transformation, substantial early progress points to a possible alternative to privatisation for governments wanting to improve their services. The insurer is financially sound, it is delivering better-quality and more efficient services to its customers and its workforce is energised and motivated.
Create a common purpose
icare (Insurance and Care NSW) was created in September 2015 under the NSW State Insurance and Care Governance Act as part of reforms to secure long-term financial sustainability. The result is an insurer with active investments of $30b producing an income of $1b to $2b a year. icare provides workers compensation, motor vehicle accident injury insurance and building insurance for homeowners. It covers the workers of NSW and state assets, from the Sydney Harbour Bridge and Opera House to more than 2200 schools and some 230 hospitals.
“The biggest opportunity we had was to bring it all together and give it a common sense of purpose,” says Bhatia. This gave icare the chance to improve customer experience and outcomes; develop a blueprint of how to make its insurance schemes financially sustainably over decades; and change the way people think about insurance and care – to restore community trust in insurers.
First, get the right board
icare runs as a public financial corporation governed by an independent board of directors. It has a fiduciary board with the same responsibilities as a company board. The minister appoints the board, but it operates as if regulated by the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC).
The relationship between chair and CEO has been fundamental to the change. Carapiet is a long-time Macquarie Group executive with 30 years’ experience across global financial markets. Bhatia was the first chief executive in the NSW Government insurance sector with a commercial insurance background (McKinsey & Company, Wesfarmers Insurance, QBE). He was also chair of the NSW Dust Diseases Board and on the board of Safe Work Australia.
Korn Ferry was briefed to fill the board as if it were an S&P ASX 50. Former banker and NSW Customer Service Commissioner Michael Pratt AM (now Secretary of Treasury) was appointed Carapiet’s deputy. Its nine directors include Elizabeth Carr AM, Peeyush Gupta FAICD, Lisa McIntyre, Gavin Bell, Mark Lennon and David Plumb.
Mix up the culture
The organisation now has an equal split of ex-public service and private sector staff, with most new hires coming from the private sector. Combining these two cultures has worked because of the focus on internal culture. Icare has the highest employee engagement score (20 per cent above average) of any NSW Government organisation with a sizeable staff. Bhatia puts the improvement down to a transparent culture where employees have more autonomy, the offices are open-plan and the CEO is approachable. A highly visible board might also be boosting engagement.
icare at a glance
- Formed 2015
- $5b revenue
- $32b assets
- $25b long-term liabilities
- 3.4 million workers in 284,000 organisations covered
- $180b state assets covered
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