Finance Minister Mathias Cormann says the alternative insurance arrangements for more than 160,000 public servants might be considered as part of the government's "contestability" agenda for the public sector.

Tax Office boss Chris Jordan was the latest Canberra mandarin to go public with his complaints about Comcare, telling Senate estimates last week that it costs the ATO 14 times more to insure one of its public servants than a private sector outfit would pay.

The insurer emphatically rejected Mr Jordan's comments, but Senator Cormann backed the Tax Commissioner, saying the ATO was "a very obvious manifestation of a broader systemic problem".

Resentment at the top of the public service has been building for years as bosses of cash-strapped Canberra departments have seen their premiums soar, from $201 million in 2011 to $411 million in 2014, even as some of them managed to improve their work health and safety efforts.

The ill-feeling has been heightened by the insurer enforcing a 13.5 per cent "penalty charge" slapped on top of premiums to reflect the scheme's underperformance in years past.

One large premium payer, the ACT government, announced in February that it was taking its 20,000 public sector employees out of the scheme and going it alone, after being presented with a bill for $95 million.

Now the Finance Minister says that departments and agencies in the federal bureaucracy might be granted the freedom to follow the ACT out of the Comcare scheme.

The minister told The Canberra Times that workers' compensation arrangements across the Commonwealth government sector was being reviewed as part of the government's "contestability" agenda.

Senator Cormann says he is committed to applying tough tests to much of the federal government's activity to see if it can be done cheaper or better by private sector players or other government service providers, with few corners of the vast federal apparatus to escape scrutiny in the coming years.

"The government is reviewing how government provided insurance arrangements are currently delivered and whether this can be done more efficiently or effectively under different approaches," the minister said.

"The review of existing schemes is looking at both workplace and non-workplace categories of risk insurance.

"The review is a part of the government's contestability program that will examine Commonwealth functions to look for opportunities to improve efficiency or effectiveness across and within programs."

A spokesman for the insurer said it had been co-operating with the "contestability" review but was confident that its performance was improving all the time.

"Comcare has been involved in providing information to the review as we manage the Commonwealth's insurable risks for workers' compensation," the spokesman said.

"Comcare is always interested in improving performance of the management of our insurable risks.

"Comcare is currently engaged with staff to review processes and plans including best practice and innovative processes for delivering improved work health and safety, and rehabilitation outcomes in the workplace."

Sweeping reforms to the legal framework of the scheme have been introduced to Parliament by Employment Minister Eric Abetz, which he says will cut down on "rorting" and "malingering".

But with Labor and the Greens already indicating they are not keen on Senator Abetz's reforms, the legislation might end up hostage to Senate crossbench.