Commonwealth departments will soon be able to use the private sector to manage compensation claims.

Reports say fewer insurance claims were lodged with Comcare and more employees returned to work over the last three years, saving taxpayers about $700 million.

Government agencies are set to fork out $87 million less in insurance premiums this financial year.

The Federal Government is claiming a win.

“These results are another clear example of the Turnbull government cleaning up after Labor’s slack financial management, while still delivering the most efficient and effective service for injured and ill employees,” Employment Minister Michaelia Cash has told News Corp reporters.

“Under Labor, Comcare had become a budget black hole into which taxpayer’s money simply disappeared.”

The Government says it is working on new legislation to cut unnecessary compensation cases.

Meanwhile a trial that allowed the Australian Taxation Office and Department of Human Services to use privately-owned insurance companies to manage claims will be opened to all federal departments.

“It really is about making sure that the Comcare scheme is delivering the most efficient and effective service for injured and ill employees. It’s about testing different claims management over the longer term to ensure we achieve that,” Comcare CEO Jennifer Taylor said.

“Because they’re two large agencies, we’ve seen similar improvements in the ATO and DHS as in Comcare. The private sector brings a different way of managing claims and certainly those trials have contributed to the overall (improvements in the) scheme.”

Opposition employment spokesperson Brendan O’Connor said moves to change Comcare have “always come at the expense of properly compensating workers who are injured and providing genuine support to rehabilitate them in order to improve their chances of returning to work”.