Federal workplace insurer Comcare has lost one of its biggest customers, as the ACT Government moves to take its 20,000 public servants out of the embattled scheme.

The ACT Government says a premium bill approaching $100 million and exasperation at the snail’s pace of reforms has driven it away.

The territory says Comcare is dragging its feet on reforms to cut the amount of dubious claims for psychological injuries, payouts for dodgy therapies, doctor shopping and decades-long compensation sagas.

The call for reforms came over two years ago.

Because the scheme allows public servants to sit at home for years while receiving generous compensation benefits, the ACT Government says is sick of footing the ever-increasing bill.

ACT Employment Minister Mick Gentleman says the Government will get better results for less money by going it alone.

It is understood they will have a commercial insurer underwriting the venture.

“Rather than saying it's not working, we believe there's a better way of doing it for the ACT and that's the road we've decided to go down,” Mr Gentleman said this week.

“The Comcare system is quite burdensome, not only for claimants but for their employers as well.

“The focus we want to see is recovery and rehabilitation for our staff and getting them back to the workplace.

“The studies show that if you get people back to work earlier, their lives are better in the long run.”

The ACT’s new system will reportedly put time limits on payments for medical treatment, and provide no compensation for non-economic loss, commonly known as “pain and suffering”.

But it may allow workers to go around the scheme and sue the government in court for lump sum compensation.

“We certainly don't want to take rights away,” Mr Gentlemen said.

“We've got a framework which we want to go ahead with.

“We really want to engage with workers' representatives and we've started that today, we advised them today that we want to make sure the final elements of this are things that they want as well.”

It may not be a clean break from the current arrangement though, with the ACT Government expected to continue paying for years of support for the 540 territory public servants who are off work, claiming compensation, but may never return.

It would also require the consent of Federal Employment Minister Eric Abetz, who has warned that it would have to pay the lengthy ongoing claims.