Higher costs coming for NSW businesses

A confidential briefing note released on Monday showed the NSW Treasury warned in August the scheme's finances were equivalent to that of the early 2010s, when it was considered to be in "financial crisis".

To overcome a projected shortfall, the note said premiums in 2025 had to be 33 per cent higher than 2021 prices.

The briefing note was handed to the NSW upper house when Labor issued a "call for papers" in October.

Shadow Treasurer Daniel Mookhey said senior ministers knew the state of iCare's finances was catastrophic.

"This agency remains a basket case. But instead of fixing the problem, the government has engaged in a cover-up," he said in a statement on Monday.

A re-elected coalition government would surely - "as night follows day" - try to eject more injured workers from the scheme to shore it up, Mr Mookhey said.

The briefing note advised Treasurer Matt Kean and Finance Minister Damien Tudehope to approve iCare's statement of business intent.

Treasury, which supported iCare's plans, said the insurer had "made significant advances" to address immediate issues and "is making sensible plans for continued progress".

But significant concerns remained for the financial outlook of the workers' compensation scheme.

"This is not a criticism of iCare, rather a reflection of the challenges facing the scheme," the note said.

Annual premiums are currently 1.48 per cent of wages but will need to lift to about 1.85 per cent in two years, representing a $3800 increase on every million dollars of wages, AAP estimates.

Leaving increases capped at 2.9 per cent would cause a key indicator of the scheme's health - the insurance ratio - to fall below 100 per cent, the note said.

iCare's target insurance ratio is 130 per cent.

"The forecast financial improvement is now dependent on premium increases that may not be achievable," the note said.

Mr Kean has been contacted for comment.