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© 2015 Finity Consulting Pty Limited
ACT Workers’ Compensation Review of Scheme Performance to 30 June 2014
Chief Minister, Treasury and Economic Development Directorate
April 2015
Finity Consulting Pty Limited
Sydney Melbourne Auckland
ABN 89 111 470 270 Level 7, 155 George Street Level 3, 30 Collins Street Level 5, 79 Queen St
www.finity.com.au
www.finityconsulting.co.nz
The Rocks NSW 2000 Melbourne VIC 3000 Auckland 1010
Ph: +61 2 8252 3300 Ph: +61 3 8080 0900 Ph: +64 9 363 2894
Fax:
+61 2 8252 3399 Fax:
+61 3 8080 0999
ACT Workers’ Compensation Review of Scheme Performance to 30 June 2014
The Chief Minister, Treasury and Economic Development Directorate (CMTEDD) have requested that Finity
Consulting (Finity) undertake an actuarial review of the performance of the ACT private sector workers’
compensation scheme (the Scheme) in order to inform the CMTEDD on key developments in the scheme
experience.
This report includes:
An investigation of trends in the private sector claims experience to 30 June 2014
An estimate of reasonable premium rates for the 2015/16 financial year.
The terms of reference of our work are set out in our contract with the Chief Minister and Treasury
Directorate (number 2012.20117.210).
Karen Cutter Mimi Shepherd
Fellows of the Institute of Actuaries of Australia
Chief Minister, Treasury and Economic Development Directorate
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ACT Workers’ Compensation Review of Scheme Performance to 30 June 2014
Part I Executive Summary ....................................................................................................................... 3
Part II Detailed Findings ........................................................................................................................... 9
1 Introduction .......................................................................................................................................... 9
2 Overview of Claims Experience ....................................................................................................... 12
3 Claim Analysis and Assumptions .................................................................................................... 23
4 Economic, Expense and Profit Assumptions ................................................................................. 37
5 Results of Hindsight Analysis .......................................................................................................... 42
6 Premium Pool for 2015/16 ................................................................................................................. 46
7 Suggested Relativities and Reasonable Premium Rates .............................................................. 49
Part III Further Information ...................................................................................................................... 52
8 Data ..................................................................................................................................................... 52
9 Compliance with Standards and Approach .................................................................................... 55
10 Reliances & Limitations .................................................................................................................... 61
Part IV Appendices
A Glossary of Terms
B Scheme Background
C Data
D Valuation Approach
E Claim Number Analysis
F Claim Size Analysis
G Workforce, Wages and Premiums
H Recommended Rates by ANZSIC Division
Chief Minister, Treasury and Economic Development Directorate
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Part I Executive Summary
1 Introduction & Background
The Chief Minister, Treasury and Economic Development Directorate (CMTEDD) has requested that
Finity Consulting (Finity) undertake an actuarial review of the performance of the ACT private sector
workers’ compensation scheme (the Scheme) in order to inform the CMTEDD on key developments in
the scheme experience. As part of this review, we were required to investigate trends in the claims
experience to 30 June 2014 and to provide an estimate of reasonable premium rates for the 2015/16
financial year.
We note that the scope of our review is limited to the insured private sector workers’ compensation
scheme, i.e. it does not include self-insured employers or the ACT public sector. Our review
encompasses:
Identifying major trends in the insured private sector claims experience
Estimating future claim costs for past accident years
Developing a reasonable premium pool and average premium rate for the insured scheme for the
2015/16 policy year
Developing premium rates at the ANZSIC Class level for the 2015/16 policy year.
We have used data extracted from the policy and claims system in mid-December 2014. As such, for
some metrics we have also analysed the experience that has emerged in the September 2014 quarter.
2 Claims Experience
Section 2 of the main body of the report details various elements of claims experience that have emerged
in the last year. Section 2 details how our actuarial projections respond to this experience. These
elements are summarised below.
Wage Inflation in 2013/14
The rate of Average Weekly Earnings (AWE) inflation in the ACT was -6% in the year to 30 June 2014.
Given that at our previous review we expected AWE inflation to be 3.5% in the year, actual inflation was
around 9.5% lower than expected. Lower than expected wage inflation will mean:
Compensation amounts which are linked to wages will be lower than expected
Projected wages for the policy year will be lower than otherwise expected.
All else being equal, this leads to a reduction in ultimate claims costs and therefore in the dollar amount
of the risk premium. However, the impact on the risk premium rate is minimal as wages will also have
decreased by a similar amount.
Chief Minister, Treasury and Economic Development Directorate
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Claim Numbers and Frequency
The number of non-nil claims fell by 5% in 2013/14 with around 3,200 new non-nil claims reported. We
understand that this may be related to a safety review of the construction industry conducted in 2012/13
and subsequent improvements in WHS practices as a result of that review.
Similarly, the number of new lost time claims fell by 8%, with just over 2,000 new lost time claims in
2013/14. Again, we understand this may be related to the construction industry review.
Figure 1 shows our estimated ultimate non-nil and lost time claim frequencies for the Scheme.
Figure 1 – Estimated Ultimate Claim Frequency
0.0
0.1
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Accident Year
Non-Nils Lost-Time
While non-nil claim frequency had been stable at just over 0.5 claims per $ million of wages between
2009/10 and 2012/13, estimated frequency reduced by 14% to 0.44 claims per $ million wages for
2013/14. We note however that non-nil claim reports in the first quarter of 2014/15 are at similar to levels
to those observed in 2012/13 i.e. higher than the low 2013/14 year.
We have therefore adopted a non-nil claim frequency of 0.47 claims per $ million of wages for the
2015/16 policy year, similar to the average frequency for the two latest accident years. This results in
around 3,400 non-nil claims for the 2015/16 policy year. This is 6% lower than adopted for the 2014/15
policy year (around 3,600 claims).
The frequency of claims receiving weekly benefits had been stable at around 0.32 claims per $ million of
wages until 2012/13. However lost time frequency also reduced (by around 15%) to 0.28 claims per
$ million wages in 2013/14. We have adopted a lost time frequency of 0.30 claims per $ million wages in
the 2015/16 policy year, again similar to the experience over the last two accident years.
Claim Payments
Almost $146 million of claim payments were made in 2013/14. This was $20 million (16%) higher than
the previous year and much higher than we projected at our previous review. This was largely driven by
lump sum payments that were $17 million (30%) higher than in 2012/13. This much higher level of lump
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sum payments reflects both an increase in the number of lump sum payments and the average size of
these lump sums, noting:
Over 500 claims received a lump sum payment during 2013/14, up 9% and the highest level seen
since 2003/04
The average size of lump sum payments was almost $150,000 compared with an average of
around $110,000 over the previous four years.
We understand that a large part of the increase in the number and size of lump sums in 2013/14 may
reflect:
A number of Supreme Court judgements that exceeded expectations, thus creating a shift in
plaintiff expectations. More recent settlements however appear to have returned to historic levels,
with the average settlement experience in the first three months of 2014/15 reducing to $120,000.
New Practice Directions that aim for finalisation within 12 months, plus ‘court blitzes’ aimed at
clearing the court docket
The deliberate attempt by some insurers to try and proactively settle some of their more difficult
matters pre-trial.
As such, our response to this higher lump sum experience has been to assume that:
The increase in number of lump sums in 2013/14 reflects a ‘speeding up’ of the payment of these
matters; we have not materially changed our view of the ultimate number of lump sums claims
The higher lump sum average claim size is mostly due to a higher than normal number of ‘larger’
lump sum settlements that will not be repeated. While we have increased our adopted average
claim size to $120,000, this is lower than the very high level observed during 2013/14.
With respect to other payments, we note that:
Legal costs were $4 million more than the previous year and $1 million more than expected,
reflecting the higher lump sum settlement activity in the last year
Weekly benefits were $1 million lower than the previous year and lower than expected, attributable
to the lower number of claims for the 2013/14 accident year
Medical costs were similar to the previous year and lower than expected (we had projected
payments would increase). As for weekly benefits, the lower than expected payments are
attributable to the lower number of claims for the latest accident year.
We have responded to this payment experience in our adopted average claim size for the 2015/16 policy
year. We have adopted a net of recoveries average claim size per non-nil claim of around $35,400. This
is 10% higher than that selected in our previous review ($33,330 after adjustment to December 2014
dollars using actual wage inflation) which mainly reflects the increase in the average size of lump sums.
3 Economic Assumptions
We have made allowance for the following economic assumptions in forming reasonable premium rates:
Chief Minister, Treasury and Economic Development Directorate
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Element Assumption Change from Previous Review
Discount rate 2.05% p.a. Down 1.40% p.a., reflecting reductions in yields
available on Commonwealth Government bonds
Wage Inflation 3.25% p.a. Down 0.25% p.a. reflecting medium term wage
inflation forecasts
Superimposed inflation 0.5% p.a. Increased from 0.23% p.a., reflecting evidence of
superimposed inflation in lump sum and legal
costs
The discount rate has reduced significantly since our previous review. This has a large impact on our
assessment of reasonable premium rates. If the discount rate had not changed, our assessment of
reasonable premium rates would be around 6% lower.
4 Expenses and Insurer Margin
We have included an expense loading of 22.1% of premium ($44.4 million) in the reasonable premium
rate for 2015/16, up slightly from 21.6% of premium ($42.3 million) adopted for our previous review. This
increase is due to a higher Regulatory Funding Levy.
The reasonable premium rate for 2014/15 includes an insurer margin of 13.5% of premium, up 1% from
that adopted previously. The increase is due to the impact of the reduction in the yield curve (as insurers
will require a higher margin to offset lower investment income).
5 Average Premium Rate for 2015/16
Our estimate of a reasonable premium pool for 2015/16 is just over $200 million as shown below.
Table 1 – Total Premium Pool
Premium Rate Component ($m)
Risk Premium Pool 129.4
Expense Loading 44.4
Profit Loading 27.1
Total Premium Pool 201.0
Wages Estimate 7,570.9
Average Risk Premium (% wages) 1.71%
Average Premium Rate (% wages) 2.65%
The reasonable average premium rate for 2015/16 is 2.65% of wages. This compares to the reasonable
premium rate for 2014/15 of 2.46% of wages, an increase of 0.20% of wages (an 8% proportional
increase). The main reasons for this increase are:
The changes to the claims assumptions, reflecting the recent experience, resulted in a reduction in
claim numbers which was more than offset by an increase in the adopted average claim size. The
net impact of claims assumptions increased the premium rate by 0.05% of wages.
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The reduction in the discount rate has increased the premium rate by 0.11% of wages. The flow
on impact to the insurer margin of reduced discount rates further increased the premium rate by
0.04% of wages
The increase in the expense rate increased the premium rate by 0.02% of wages.
6 ANZSIC Division Premium Rates
To derive reasonable premium rates at the ANZSIC Class level in the ACT, we have separately
considered frequency relativities and cost relativities, as shown in Appendix H.
The experience across the range of ANZSIC Classes shows considerable variation, with our reasonable
rates falling in the range 0.39% to 14.35%.
7 Achieved Premium Rates
The insurers achieved premium rate (estimated ultimate premium divided by estimated ultimate wages)
for past accident years are shown in Figure 2. We have also shown the reasonable premium rate for
2015/16. Note we have shown the estimated risk premium component separately.
Figure 2 – Estimated Ultimate Achieved Premium Rates
0.0%
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Risk Premium Expenses/Profit
Insurer achieved premium rates have been around 2.4% of wages since 2010/11. The estimated risk
premium declined from 1.9% of wages for 2010/11 to around 1.7% of premium in both 2011/12 and
2012/13. In 2013/14, the reduction in claim frequency resulted in a further reduction in the risk premium
to 1.6% of wages. We are estimating a risk premium of 1.71% for the 2015/16 policy year. We note that
there is considerable uncertainty over the estimated risk premium for more recent accident years.
We estimate the margin left to cover expenses and profit has risen from around 0.5% of wages (2010/11)
to 0.8% of wages (2013/14). This compares to allowances in our reasonable premium rates of 0.94% of
wages.
Chief Minister, Treasury and Economic Development Directorate
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8 Reliances and Limitations
Our reliances and limitations are an important part of this report and are detailed in Section 10.
Chief Minister, Treasury and Economic Development Directorate
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Part II Detailed Findings
1 Introduction
1.1 Purpose
The Chief Minister and Treasury Directorate (CMTEDD) have requested that Finity Consulting (Finity)
undertake an actuarial review of the performance of the ACT private sector workers’ compensation
scheme (the Scheme) in order to inform the CMTEDD on key developments in the scheme experience.
We understand this report may be made publicly available by the CMTEDD.
As part of this review, we were required to investigate trends in the claims experience to 30 June 2014,
and provide an estimate of a reasonable premium rate for the 2015/16 financial year. We note that the
scope of our review is limited to the insured private sector workers’ compensation scheme, i.e. it does not
include self-insured employers or the ACT public sector.
This is the seventh review of its kind that Finity has conducted. Our previous review is contained in the
report “ACT Workers’ Compensation Review of Scheme Performance to 30 June 2014” dated 17 April
2014 (the previous report).
1.2 Scope
Our review of the ACT private workers’ compensation scheme encompassed:
Identifying trends in the private sector experience that impact on Scheme cost, including
consideration of:
► Claim numbers and frequency for non-nil claims, lost time claims and lump sums
► Claim payments, average claim sizes and payment patterns by the following benefit type
groupings:
Weekly benefits
Medical and related benefits (including medical, hospital, and other
treatment/appliances)
Rehabilitation
Lump sum benefits (including common law settlements, statutory impairment lump
sums, commutations and death benefits)
Legal and investigation costs (including legal costs, investigation and medico-legal
costs, and other non-compensation benefits)
Recoveries (including sharing, employer and other recoveries)
Estimating future claim costs for past accident years
Developing a reasonable premium pool and average premium rate for the insured scheme as a
whole for the 2015/16 policy year
Developing reasonable premium rates at the ANZSIC Class level for the 2015/16 policy year.
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Appendix B of this report summarises the various historical legislative reforms that have had a significant
impact on the cost of the ACT workers’ compensation scheme.
1.3 Data
We have prepared this advice using data as at December 2014 sourced from CMTEDD’s new Workers
Compensation Management System (WCMS). WCMS utilises the National Insurers Data Specification
(NIDS) which was produced in combination with WorkSafe Tasmania, WorkCover WA and NT WorkSafe
and was designed to improve data collection and reporting, including improving the consistency in
information collected across all privately underwritten schemes in Australia.
We note that while the data provided was as at December 2014, not all insurer submissions were
complete as at that date. The last full financial year of data is for the year ending 30 June 2014, and
many of the graphs and commentary in this report are prepared using data to 30 June 2014 only. We
have also specifically utilised the claims data for the three months to 30 September 2014 in projecting
ultimate claim numbers and in forming our lump sum assumptions.
There were a number of areas where the data included in WCMS appears unreliable, in particular, case
estimates, wages and premium information. We understand that these data items are not currently of
sufficient quality due to some initial teething problems associated with implementing the new data
system; we expect these will resolve in time as insurers become more familiar with WCMS requirements.
These items have therefore been sourced from separate summarised data provided to Finity directly by
each insurer for the purposes of this review.
Further details of the data supplied and reconciliations carried out are included in Section 8.
1.4 Structure of the Report
The details of our review are set out in the following report parts and sections:
Part II – Scheme Review and Reasonable Premium Rates
Section 2 provides an overview of trends in claims experience
Section 3 includes our assessment of Scheme claim number and payment experience, including
the assumptions required to estimate ultimate claim costs
Section 4 summarises other assumptions adopted, namely economic, expense and profit
assumptions
Section 5 summarises our estimated ultimate costs for each past accident year and compares our
results to insurer reserves
Section 6 estimates a reasonable premium pool and the average premium rate
Section 7 includes a summary of the selected relativities and reasonable premium rates by
ANZSIC Division
Part III – Further Information
Section 8 describes the data we were supplied with for this investigation
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Section 9 sets out our compliance with the relevant professional standards and our approach to the
analysis
Section 10 details the reliances and limitations to which this report is subject.
Part IV – Appendices
Part IV contains the Appendices which include a detailed description of the data used and our analysis.
Chief Minister, Treasury and Economic Development Directorate
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2 Overview of Claims Experience
This section summarises trends in the Scheme claims experience. Full details of claim frequency and
average claim size, including projections by payment type, follow in Section 2.
2.1 Numbers of Claims Reported
The following graph shows the number of non-nil claims in each year (counted in the year of their first
payment).
Figure 2.1 – Non-nil Claim Numbers
0
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4,000
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Key Findings
The number of non-nil claims fell by 5% with around 3,200 new non-nil claims reported in
2013/14.
The number of new lost time claims fell by 8%, with just over 2,000 new lost time claims in
2013/14.
Almost $146 million was paid in 2013/14, a 16% increase on the previous year, largely
driven by lump sum payments.
Over 500 claims received a lump sum payment during 2013/14, up 9% on the previous year
and the highest level seen since 2003/04. In addition, the average size of lump sum
payments was almost $150,000 compared with an average of around $110,000 over the
previous four years.
Payments were $23 million (20%) higher than expected, driven by the higher level of lump
sum payments. Legal costs were also higher than expected (by 7%), related to the higher
lump sum activity in the year. Weekly benefits and medical costs were both 7% lower than
expected, attributable to the lower number of claims for the 2013/14 accident year.
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The number of non-nil claims has reduced by over 5% per annum over each of the last two years. In
2013/14 there were approximately 3,200 new non-nil claims in the year. We understand that the
reduction in 2013/14 may be related to a safety review of the Construction industry conducted in 2012/13
and subsequent improvements in WHS practices as a result of that review.
The following table compares the number of non-nil claims reported the year to 30 June 2014 with
expected experience taken from our previous report.
Table 2.1 – Actual vs. Expected Claims Reported in 12 months to 30 June 2014
Accident
Year Actual Expected Difference Difference
Prior 17 10 7 75%
2010/11 16 13 3 23%
2011/12 30 28 2 8%
2012/13 421 432 -11 -3%
2013/14 2,713 2,966 -253 -9%
Total 3,197 3,449 -252 -7%
Non-Nil Claims Reported
Non-nil claims reported in the year were lower than expected by 7% driven by the lower number of
reports in the 2013/14 accident year.
2.2 Claim Payments
The following two graphs show the mix of claim payments by year and type. Figure 2.2 shows the
payments in actual historical values while Figure 2.3 shows payments inflated to December 2014 values.
Figure 2.2 – Gross Payments by Type – Actual Historical Values
0
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160
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Weekly Medical Rehab Common Law Lump Sum Legal
Payments had been stable at around $80 million per annum until 2008/09, but have increased every year
since then. Almost $146 million was paid in 2013/14, a 16% increase on the previous year, largely driven
by common law payments.
Insurers received around $4 million in non-reinsurance recoveries in 2013/14, bringing net payments in
the year to around $142 million.
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Figure 2.3 – Gross Payments by Type – Inflated to December 2014 values
0
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Figure 2.3 shows that, after adjusting for historical wage inflation, payments in real terms averaged just
over $100 million until 2011/12, but have increased significantly since then. The increase has been driven
by significantly higher common law payments.
The following table compares net payments in the 12 months to 30 June 2014 by payment type to the
expected payments taken from our previous report.
Table 2.2 – Actual vs. Expected Payments in the 12 months to 30 June 2014
Payment
Type Actual Expected Difference Difference
$m $m $m %
Weekly 26.3 28.3 -2.1 -7%
Medical 16.0 17.3 -1.3 -7%
Rehab 7.5 7.6 -0.1 -2%
Lumpsums1 74.4 49.0 25.4 52%
Legal 21.6 20.2 1.4 7%
Recoveries -4.0 -4.1 0.1 -3%
Total 141.8 118.4 23.4 20%1Includes Common Law
Payments in total in the 12 months to 30 June 2014 were $23.4 million (20%) higher than expected. This
is driven by the increase in common law lump sum payments in the year, which were more than 50%
higher than expected. Legal costs were also higher than expected which is likely related to the higher
lump sum activity.
Weekly benefit and medical payments were lower than expected by 7%. This is attributable to the lower
number of claims for the 2013/14 accident year; payments for older accident years were close to
expected.
Payments for other benefit types were close to expected.
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2.3 Claims Involving Lost Time
Figure 2.4 below shows the number of new weekly benefit claims (i.e. claims involving lost time) in each
year. We have counted claims as “new” lost time claims in the year that they first receive a weekly
benefit payment.
Figure 2.4 – Lost Time Claims Reported
0
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2,500
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There were around 2,000 new lost time claims in 2013/14, an 8% decrease relative to the previous year.
This is the first such reduction since the GFC impacted on lost time claims in 2008/09. We understand
that this reduction may also be related to a safety review of the Construction industry.
The following table shows the number of new lost time claims was 8% lower than expected.
Table 2.3 – Actual vs. Expected Claims Reported in 12 months to 30 June 2014
Accident
Year Actual Expected Difference Difference
Prior 0 6 -6 -100%
2010/11 6 6 0 -2%
2011/12 25 34 -9 -26%
2012/13 455 481 -26 -5%
2013/14 1,522 1,663 -141 -8%
Total 2,008 2,190 -182 -8%
Lost Time Claims Reported
The following graph shows the weekly benefit continuance rates in the first two years (8 quarters)
following the date of injury i.e. the proportion of lost time claims that “continue” to be on benefits from one
period to the next. All else being equal, a lower continuance rate implies better outcomes for the Scheme
(as more claimants are returning to work).
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Figure 2.5 – Weekly Benefit Continuance Rates
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DQ 2:3 DQ 3:4 DQ 4:5 DQ 5:6 DQ 6:7 DQ 7:8
While the continuance rate between development quarters 3 and 4 (‘DQ3:4’) appears to have improved
over the last two years (i.e. less claimants are continuing on weekly benefit), the continuance rate for
DQ4:5 appears to have increased. Continuance rates for all other development quarters have been
reasonably stable.
2.4 Common Law and Other Lump Sums
Number of Lump Sums Paid
Injured workers may choose to pursue either:
A common law claim (receiving either a damages award or negotiated settlement)
A redemption of statutory entitlements (a ‘commutation’)
A statutory permanent impairment benefit.
Pursuing either a common law claim or a commutation results in finalisation of the claim, as all of the
worker’s entitlements are settled via this path. However, payment of a statutory permanent impairment
benefit results in the settlement of the impairment benefit component only – the worker continues to have
an entitlement to receive future weekly benefits and medical costs. In reality, very few claimants pursue
statutory permanent impairment benefits relative to common law or commutations.
Figure 2.6 shows the number of claims that have received common law, negotiated settlement,
commutation, statutory impairment benefits or death benefits in each payment year. Note that around
5% of claimants receive more than one type of lump sum, with the bulk of these claims (around 80%)
receiving both a common law and a commutation payment. For the purpose of this graph we have
counted claims using the following hierarchy:
If a claim has a common law payment then it is counted as common law.
If a claim has no common law payment but has a negotiated settlement payment then it is a
settlement. Note that in the previous claims database (prior to 2013/14) there was no ability to
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distinguish between common law awards and negotiated settlements; all of these matters have
been deemed to be negotiated settlements.
If a claim has no common law or negotiated settlement payments but has a commutation payment
then it is counted as a commutation lump sum.
If a claim has no common law, negotiated settlement or commutation payments but has a statutory
impairment payment then it is counted as a statutory impairment benefit.
If a claim has no common law, negotiated settlement, commutation or impairment benefit
payments but has a death benefit then it is counted as a death lump sum.
Figure 2.6 – Number of Claims Receiving a Lump Sum Payment
0
100
200
300
400
500
600
20
04
/05
20
05
/06
20
06
/07
20
07
/08
20
08
/09
20
09
/10
20
10
/11
20
11
/12
20
12
/13
20
13
/14
Nu
mb
er
of
Cla
ims
Payment Year
Common Law Settlement Commutation Stat Death
Figure 2.6 shows:
Over 500 claims received a lump sum payment in the year, the highest level seen over the past
decade. Note that around 90 of these claims had already received a lump sum payment in a
previous year.
The number of claimants receiving either common law or negotiated settlement damages
increased from less than 200 per annum prior to 2011/12, to almost 300 in 2013/14. We
understand that there are environmental factors that may have impacted on the number of such
claims, including:
► New ACT Court Practice Directions that aim for finalisation within 12 months, plus ‘court
blitzes’ aimed at clearing the court docket
► The deliberate attempt by some insurers to try and proactively settle some of their more
difficult matters pre-trial.
► Anecdotal evidence that there has been an increase in advertising by plaintiff law firms
The number of commutations has been reasonably stable, with just under 200 commutations paid
per annum.
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The number of claims receiving only a statutory benefit lump sum in 2013/14 was low, with just 15
new statutory lump sum paid compared to an average of around 30-40 per annum in previous
years.
As expected, there are very few death benefit claims in each year. In 2013/14 there were two new
lump sum death benefit paid.
The following table shows the number claims receiving a lump sum payment in 2013/14 compared with
expectations from our previous review.
Table 2.4 – Actual vs. Expected Lump Sum Payments in 12 months to 30 June 2014
Accident
Year Actual Expected Difference Difference
Prior 21 12 9 75%
2005/06 4 4 0 -7%
2006/07 11 5 6 111%
2007/08 11 10 1 6%
2008/09 24 14 10 74%
2009/10 52 30 22 72%
2010/11 64 51 13 26%
2011/12 113 104 9 9%
2012/13 126 129 -3 -2%
2013/14 88 65 23 35%
Total 514 424 90 21%
Lump Sum Claims Paid
The number of claims in receipt of a lump sum payment in the 12 months to 30 June 2014 was 514,
which was 21% higher than expected (424). The number of lump sums paid was higher than expected
for almost all accident years.
We note that when preparing our previous advice (upon which the 424 expected number is based), we
had observed the higher number of claims receiving a lump sum in 2012/13 but assumed at the time that
this was impacted by the imminent retirement of a Supreme Court judge and did not expect this to be an
ongoing feature. As such, we projected a drop in the number of lump sum payments in 2013/14 to more
normal levels, which, with the benefit of hindsight, has not eventuated.
Average Size of Lump Sums (Lump Sum Component)
The following graph shows the average size (inflated to December 2014 dollars) of lump sum claims by
year of settlement.
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Figure 2.7 – Average Size of Lump Sum Settlements
0
25,000
50,000
75,000
100,000
125,000
150,000
20
04
/05
20
05
/06
20
06
/07
20
07
/08
20
08
/09
20
09
/10
20
10
/11
20
11
/12
20
12
/13
20
13
/14
20
14
/15
Ave
rag
e S
ize
($D
ec
-14)
Settlement Year
* Note 2009/10 has been adjusted to exclude a single large jockey claim (these claims are no longer
covered by the scheme) and 2014/15 includes just over 4 months’ worth of settlements
The average size of lump sum settlements in 2013/14 was almost $150,000 which is substantially higher
than earlier years. As noted above, some insurers have tried to proactively settle some of their more
difficult matters during 2013/14, which may explain this high average settlement experience. We note the
early experience in the first four months of 2014/15 suggest settlements have averaged around
$120,000.
Average Size of Lump Sums (Total Claim Cost)
We have also investigated the total average cost of claims that receive common law or commutations
(i.e. for those claims which receive a common law, negotiated settlement or commutation payment, the
average across all benefit payments received, not just the lump sum component).
Figures 2.7 to 2.9 show the average amount received for the following claims:
Those that have received a common law or negotiated settlement
Those that have received a commutation benefit (but no common law or settlement)
Those that have received a both a common law amount and a commutation.
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Figure 2.8 – Average Size of Claims Receiving Common Law or Negotiated Settlement
0
50
100
150
200
250
300
350
20
04
/05
20
05
/06
20
06
/07
20
07
/08
20
08
/09
20
09
/10
20
10
/11
20
11
/12
20
12
/13
20
13
/14A
ve
rag
e C
laim
Siz
e ($D
ec-1
4)
Settlement Year
CL/Settlement LS Weekly Medical + Rehab Legal
Figure 2.7 shows the overall average cost of claims receiving common law payments (or negotiated
settlements) averaged around $270,000 (in December 2014 values) over the four years to 2012/13 with
the 2013/14 year significantly higher at around $320,000. The total cost of a common law/negotiated
settlement claim (ignoring the high 2013/14 year) is approximately made up as follows:
The common law component of the claim is around $150,000 per claim
Weekly benefits add around $40,000 per claim
Medical and rehabilitation costs add around $30,000 per claim
Legal costs account for around $40,000 per claim.
Figure 2.9 – Average Size of Claims Receiving Commutations
0
50
100
150
200
250
20
04
/05
20
05
/06
20
06
/07
20
07
/08
20
08
/09
20
09
/10
20
10
/11
20
11
/12
20
12
/13
20
13
/14A
ve
rag
e C
laim
Siz
e ($D
ec
-14)
Settlement Year
Commutation Other LS Weekly Medical Legal
Figure 2.8 shows that the overall average cost of claims receiving commutations (but no common law) is
lower than for common law claims at around $150,000 (in December 2014 values), noting that the
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2009/10 year is impacted by a single large jockey claim (such claims are no longer covered in the
Scheme). The average claim size is broken down as follows:
The commutation component of the claim is around $70,000 per claim. This is around half the
amount that common law claims receive as a common law component.
Weekly benefits add around $30,000 per claim.
Medical and rehabilitation costs add around $20,000 per claim.
Legal costs account for around a further $30,000 per claim.
Figure 2.10 – Average Size of Claims Receiving both Common Law & Commutation
0
50
100
150
200
250
300
350
400
450
20
04
/05
20
05
/06
20
06
/07
20
07
/08
20
08
/09
20
09
/10
20
10
/11
20
11
/12
20
12
/13
20
13
/14A
ve
rag
e C
laim
Siz
e ($D
ec
-14)
Settlement Year
Commutations CL/Settlement Other LS Weekly Medical Legal
Figure 2.10 shows the overall average cost for those claims that receive both a common law and
commutation is highly variable from year to year, noting there are between 10 and 25 such claims each
year. The cost of these claims has averaged around $300,000 (in December 2014 values) over the last
five years:
The common law component is around $105,000 and the commutation component is around
$75,000 (total of $180,000)
Weekly benefits add around $40,000 per claim
Medical and rehabilitation costs add around $25,000 per claim.
Legal costs account for around a further $60,000 per claim.
Other than legal costs, each of these components is similar to the averages for the claims that receive
only a common law; legal costs are significantly higher.
Lump Sum Contribution to Total Costs
Figure 2.10 shows:
The number of lump sum settlements in each year expressed as a proportion of scheme non-nil
claims reported in that year
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The amount spent on lump sum settlements in each year (including the weekly benefit, medical,
rehabilitation and legal cost components) expressed as a proportion of total payments made in
each year.
Figure 2.11 – Contribution of Lump Sum Claims
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20
04
/05
20
05
/06
20
06
/07
20
07
/08
20
08
/09
20
09
/10
20
10
/11
20
11
/12
20
12
/13
20
13
/14
Pro
po
rtio
n
Year
Proportion of Numbers Proportion of Costs
Figure 2.10 demonstrates the importance of lump sum claims to the scheme financials; generally only
around 10% to 15% of claims receive a lump sum but the cost of these claims represents between 75%
and 85% of total payments each year. In 2013/14, the number of lump sums made up a slightly higher
proportion of non-nil claims (16%) and a much higher proportion of payments (93%).
Claim Size Distribution
The following table shows the claim size distribution of all common law and other lump sum claims
recorded in WCMS (in December 2014 values) and includes all benefit payments made on these claims
(i.e. not just the lump sum component).
Table 2.5 – Claim Size Distribution
Size of
Settlement
$Dec-14
Number of
Claims Proportion
Average
claim size in
band ($000
Dec-14)
Number of
Claims Proportion
Average
claim size in
band ($000
Dec-14)
0-50k 307 10% 30,200 841 21% 29,700
50k-100k 441 14% 76,500 936 24% 73,300
100k-150k 450 15% 123,300 718 18% 122,900
150k-200k 399 13% 173,800 458 12% 173,900
200k-300k 594 19% 247,600 534 14% 245,100
300k-400k 351 12% 345,600 255 6% 346,600
400k-500k 182 6% 445,600 96 2% 444,800
500k-1m 276 9% 651,900 86 2% 633,300
>1m 47 2% 1,326,100 14 0% 2,245,200
Common Law Other Lump Sums
Almost 50% of common law claims settle for more than $200,000 and more than 10% settle for $500,000
or more. The distribution of other lump sums is skewed to lower cost claims.
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3 Claim Analysis and Assumptions
This section describes our findings in relation to trends in wage inflation, exposure measures, claim
numbers and frequency, claim payments and average claim size. We also document the assumptions
required to estimate ultimate claim costs.
3.1 Wage Inflation
The following graph shows the historical rate of change in the Australian Bureau of Statistics’ Average
Weekly Earnings (AWE) in the ACT. The grey bars show the actual rate of change (i.e. the wage
inflation in the period) whereas the orange bars show the wage inflation rate assumed at our previous
review.
Figure 3.1 – AWE Inflation
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
AW
E I
nfl
ati
on
Ra
te
Year Ending 30 June
Expected Actual
Key Findings
Earned wages grew by 9% in real terms to $7.3 billion in 2013/14.
We estimate there will be around 3,175 non-nil claims for the 2013/14 accident year, down
7%. We believe the reduction in numbers reflects an increased focus on safety and
compliance in the construction industry and subdued employment conditions in other
industries.
We have adopted a non-nil claim frequency of 0.47 claims per $ million of wages for the
2015/16 policy year; resulting in a projected 3,390 claims. This is 6% lower than adopted
previously.
The selected average claim size per non-nil claim is around $35,400 for the 2015/16 policy
year, up 10% since our previous review, primarily due to an increase in the average size of
lump sums.
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The AWE index fell during 2013/14, implying AWE inflation of -6% in the year to 30 June 2014. By
comparison, we expected wage inflation would be 3.5% in this year; i.e. actual wage inflation was around
9.5% lower than expected. The impacts of this difference on our projections are:
Our projected wages base for the 2015/16 policy year will be lower than expected (compared with
our previous review)
Compensation amounts such as weekly benefit payments are linked to wages, and as such, lower
than expected wage inflation can mean claim payment experience is also lower than expected,
resulting in a decrease in the selected average size of such benefits. As a result, the projected
ultimate claims costs and the risk premium pool will decrease (all else being equal).
As both wages and ultimate claims costs are expected to reduce in around the same proportion, the
impact on the risk premium rate is minimal.
3.2 Exposure
Number of Employees
Employee numbers are used as a measure of exposure in the calculation of ultimate claim frequency.
Figure 3.2 shows the estimated ACT private sector workforce relevant to each accident year, split
between full time and part time workers. The number of employees is calculated as the ACT total (as
shown in ABS figures), less the number of Commonwealth and ACT Government employees (as
provided by the CMTEDD).
Figure 3.2 – Workforce (000s)
0
20
40
60
80
100
120
140
20
04
/05
20
05
/06
20
06
/07
20
07
/08
20
08
/09
20
09
/10
20
10
/11
20
11
/12
20
12
/13
20
13
/14
Wo
rkfo
rce
(000s)
Accident Year
Full Time Part time
Total employee numbers grew by 3.6% in 2013/14, driven by an increase in the number of full time
employees. We have used the number of full time ACT private sector employees as a measure of
exposure in the calculation of ultimate claim frequency.
As these employee figures are not provided by the insurers, and are compiled from two different sources
of data, we rely more heavily on frequency per $ million wages measure rather than per full time
employee in our premium estimates.
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Earned Wages
Wages are also used as a measure of exposure in the calculation of ultimate claim frequency. When an
employer purchases workers’ compensation cover, the amount they pay is usually expressed as a
premium rate that is a percentage of “wages covered” for the policy year. In our analysis of claim
numbers, we estimate the ultimate number of claims for each accident year (as opposed to policy year).
In order to determine the relevant wages for each accident year, we use policy-year wages spread over
the period of cover (“earned” wages for each accident year).
Figure 3.1 shows earned wages by accident year. In this graph the wages have been increased for
historical wage inflation, i.e. all amounts are expressed in December 2014 values so that the graph
shows real growth in total wages. Note, the figures shown are estimates based on information to
September 2014 (wages are often revised from initial estimates to actual figures at the end of the policy
year and the figures shown here allow for the expected movement from initial to final wages); see
Appendix G. We have also shown our estimates from last year, increased with expected inflation in the
year.
Figure 3.3 – Estimated Ultimate Earned Wages
Earned wages increased by 9% in real terms in 2013/14 and are estimated to be around $7.3 billion in
December 2014 values. We note that while earned wages increased in real terms, our current wages
estimate for 2013/14 is around 4% lower than the expected wages ($7.6 billion), reflecting the impact of
negative wage inflation during 2013/14.
3.3 Total Claim Numbers and Frequency
Figure 3.3 shows the number of non-nil claims that have been reported to the insurers to 30 June 2014
and our estimate of ultimate numbers of claims for each accident year. We have shown claims reported
by duration, or “development years” following the accident; i.e. “DY1” represents claims reported within
one year of the accident, “DY2” represents claims reported between 1 to 2 years after the accident and
so on.
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
Ea
rne
d W
ag
es
($b
n D
ec
-14)
Accident Year Ending 30 June
Previous
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Figure 3.4 – Ultimate Number of (Non-Nil) Claims
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
20
04
/05
20
05
/06
20
06
/07
20
07
/08
20
08
/09
20
09
/10
20
10
/11
20
11
/12
20
12
/13
20
13
/14
Accident year
DY1 DY2 DY3+ IBNR Previous Ultimate
Figure 3.3 shows that there are generally very few claims reported more than two years after the
accident, and as such, the number of Incurred But Not Reported (IBNR) claims is small for all but the
most recent accident year.
The estimated ultimate number of non-nil claims fell by 6% in 2012/13 and a further 7% in 2013/14. We
estimate there will be around 3,175 non-nil claims for 2013/14.
The reduction in claim numbers during 2013/14 reflects a combination of:
A review into the safety standards in the construction industry in late 2012, which led to an
increased focus on safety and compliance in the industry. As a result, claim numbers in this
industry reduced by around 25% in the year.
Generally subdued employment conditions in the ACT may have resulted in reduced claim
reporting across other industries. Claim reporting may be expected to return to a more ‘normal’
level once economic conditions improve.
The estimated ultimate number of non-nil claims is divided by both earned wages and full time
employees to arrive at a measure of the ultimate claim frequency per $ million earned wages and per 100
full time employees respectively, as shown in Figure 3.4 below.
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Figure 3.5 – Ultimate Non-Nil Claim Frequency
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
15
/16 P
olY
r
Cla
im F
req
ue
ncy
(pe
r 100 e
mp
loye
es)
Cla
im F
req
ue
ncy
(pe
r $m
wa
ge
s)
Accident Year Ending 30 June
Freq (per $m wages) (Freq (per 100 eee's)
Non-nil claim frequency reduced by 14% to 0.44 claims per $ million wages for 2013/14, the lowest level
seen in the past 10 years. Prior to this, frequency had been stable at around 0.5 claims per $ million of
wages.
Similarly, frequency per 100 full time employees reduced by 12% to 3.48 for 2013/14.
Claim reports in the first quarter of 2014/15 indicate that non-nil claims have increased back to levels
observed in 2012/13. We have therefore adopted a non-nil claim frequency of 0.47 claims per $ million
of wages for the 2015/16 policy year, similar to the average observed over the last two accident years.
This results in around 3,390 claims for the 2015/16 policy year, 6% lower than adopted for the 2014/15
policy year (around 3,600) reflecting the lower than expected claim numbers that have emerged in the
past year.
Appendix E provides further details of our claim number analysis.
3.4 Weekly Benefits
Lost Time Claims
In order to understand the trends in the numbers of claimants receiving weekly benefit payments, we
have estimated the ultimate number of lost time claims. Figure 3.5 shows our estimated ultimate number
of lost time claims and the estimated proportion of non-nil claims that involve weekly benefits.
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Figure 3.6 – Estimated Ultimate Lost Time Claims and Proportion
0%
15%
30%
45%
60%
75%
0
500
1,000
1,500
2,000
2,500
20
04
/05
20
05
/06
20
06
/07
20
07
/08
20
08
/09
20
09
/10
20
10
/11
20
11
/12
20
12
/13
20
13
/14
Accident year
DY1 DY2 DY3+ IBNR Lost Time %
As with non-nil claims, there are very few new lost time clams reported more than two years after the
accident, and as such, the number of Incurred But Not Reported (IBNR) claims is small for all but the
most recent accident year.
The estimated ultimate number of lost time claims reduced by 3% in 2012/13 and by a further 5%
2013/14. We project around 2,190 lost time claims in the 2013/14 accident year.
As the number of non-nil claims reduced by more than lost time claims, the estimated ultimate lost time
proportion increased. For the 2015/16 policy year, we have adopted a lost time proportion of 64.5%,
similar to the average over the two most recent years.
Figure 3.6 shows the ultimate lost time claims expressed as a frequency (per $ million of wages and per
100 full time employees respectively).
Figure 3.7 – Estimated Ultimate Lost Time Claim Frequency
0.0
0.5
1.0
1.5
2.0
2.5
3.0
0.0
0.1
0.2
0.3
0.4
0.5
0.6
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
15
/16 P
olY
r
Cla
im F
req
ue
ncy
(pe
r 100 e
mp
loye
es)
Cla
im F
req
ue
ncy
(pe
r $m
wa
ge
s)
Accident Year Ending 30 June
Freq (per $m wages) (Freq (per 100 eee's)
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After having been stable at around 0.33 claims per $m wages between 2008/09 to 2011/12, the lost time
frequency has reduced to around 0.28 claims per $ million wages in 2013/14. We project a lost time
frequency of 0.30 claims per $ million wages in the 2015/16 policy year, similar to the average observed
over the last two accident years.
The lost time claim frequency had been stable at around 2.60 claims per 100 full time employees up until
2011/12, but decreased in the last two years to be 2.25 claims per 100 full time employees in 2013/14.
Average Weekly Benefit Payments
Figure 3.7 below shows the average weekly benefits paid per lost time claim by accident year. Each of
the accident years is split into payments made in the year of accident (“DY1”), the year following the year
of accident (“DY2”), etc. Our selected average weekly benefit claim size per lost time claim for the
2015/16 policy year is also shown.
Figure 3.8 – Weekly Benefits per Lost Time Claim
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
20
04
/05
20
05
/06
20
06
/07
20
07
/08
20
08
/09
20
09
/10
20
10
/11
20
11
/12
20
12
/13
20
13
/14
Sele
cted
Pa
ym
en
ts p
er
Lo
st T
ime
Cla
im
($D
ec-1
4)
Accident Year
DY1 DY2 DY3 DY4 DY5+
Average weekly benefits per lost time claim reduced slightly in development year 1 but increased in
development year 2.
Our selected average claim size for the 2015/16 policy year for weekly benefits is $12,332 (in December
2014 dollars) per lost time claim. This is 2% higher than the selected average claim size at the previous
review (inflated to December 2014 dollars using actual wage inflation) reflecting the emerging
experience.
The average claim size expressed over all non-nil claims (not just lost time claims) is $7,954. This is 4%
higher than selected in our previous review ($7,643 after adjustment to December 2014 dollars using
actual wage inflation) due to both the increase in the number of lost time claims as a proportion of non-nil
claims and in the average weekly benefit size.
The full analysis of weekly benefit average claim sizes can be found in Appendix F.
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3.5 Medical and Related Payments
Figure 3.8 shows the average medical payments per non-nil claim for each past accident year and our
selected average medical claim size per non-nil claim for the 2015/16 policy year.
Figure 3.9 – Medical Benefits per Non-Nil Claim
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
20
04
/05
20
05
/06
20
06
/07
20
07
/08
20
08
/09
20
09
/10
20
10
/11
20
11
/12
20
12
/13
20
13
/14
Sele
cted
Pa
ym
en
ts p
er
Cla
im ($D
ec
-14)
Accident Year
DY1 DY2 DY3 DY4 DY5+
As for weekly benefits, average medical benefits per non-nil claim reduced in development year 1 but
increased in development year 2.
The selected average claim size for the 2015/16 policy year for medical benefits is $4,697 per non-nil
claim in December 2014 dollars. This is similar to that selected in our previous review ($4,647, inflated).
The full analysis of medical and related payment average claim sizes can be found in Appendix F.
3.6 Rehabilitation
Figure 3.9 shows the average rehabilitation benefits per non-nil claim along with our selected average
rehabilitation claim size per non-nil claim for the 2015/16 policy year.
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Figure 3.10 – Rehabilitation Benefits per Non-Nil Claim
0
500
1,000
1,500
2,000
2,500
20
04
/05
20
05
/06
20
06
/07
20
07
/08
20
08
/09
20
09
/10
20
10
/11
20
11
/12
20
12
/13
20
13
/14
Sele
cted
Pa
ym
en
ts p
er
Cla
im ($D
ec
-14)
Accident Year
DY1 DY2 DY3 DY4 DY5+
Average rehabilitation benefits per non-nil claim increased quite substantially in development years 1
and 2.
Our selected average claim size for the 2015/16 policy year for rehabilitation benefits is $2,213 per non-
nil claim in December 2014 dollars. This is 8% higher than selected in our previous review ($2,055,
inflated).
The full analysis of rehabilitation benefit average claim size can be found in Appendix F.
3.7 Lump Sums
Number of Lump Sums
Due to differing practices in the classification of lump sum payment types between insurers (as discussed
in Appendix C.4) we have grouped all lump sum claims together when performing our analysis.
The following graph shows the estimated ultimate number of lump sum claims for each past accident
year. We also show the rate of lump sum utilisation (expressed as the ultimate number of lump sum
claims over ultimate number of non-nil claims).
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Figure 3.11 – Estimated Ultimate Lump Sum Claim Numbers and Utilisation
0.0%
2.5%
5.0%
7.5%
10.0%
12.5%
15.0%
0
100
200
300
400
500
600
20
04
/05
20
05
/06
20
06
/07
20
07
/08
20
08
/09
20
09
/10
20
10
/11
20
11
/12
20
12
/13
20
13
/14
20
15
/16
Uti
lisa
tio
n
(pe
r n
on
-nil
cla
im)
Cla
im N
um
be
rs
Accident Year
Settled Future Previous Utilisation Utilisation
The changes made to the estimated ultimate number of lump sums for accident years up to 2012/13
reflects the experience which has emerged in the last 12 months; i.e. lump sum utilisation has reduced in
the 2010/11 to 2011/12 years but increased slightly in 2012/13. The utilisation rate for 2013/14 and
adopted for later years remains unchanged at 13.6%, in line with the experience over the previous four
years. We note that while the number of lump sums paid in the last year has been much higher than
observed previously (see section 2.4), we do not expect that this will translate into much higher ultimate
numbers of lump sums (i.e. the higher payment levels represent a bringing forward of lump sum
payments).
We estimate the ultimate number of lump sum claims to be just over 430 in 2013/14. This is lower than
the adopted number for recent accident years due to the lower total number of claims for this accident
year. For the 2015/16 policy year, we are projecting 460 lump sum claims.
We note the considerable level of uncertainty in these projections and the large IBNR component, even
for quite old accident years.
Settlement Experience and Adopted Average Size of Lump Sums
The following table shows the number and average size (inflated to December 2014 dollars) of lump sum
claims by year of settlement. Note that the table also shows the three months’ worth of settlement
experience to 17 December 2014. Figure 3.12 shows the information in graphical form.
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Table 3.1 – Average Size of Common Law & Other Lump Sum Settlements
Year of
Settlement
Number
of
Claims
Average
size ($ Dec-
14)
Change
(%)
Number
of
Claims
Average
size ($ Dec-
14)
Change
(%)
Number
of Claims
Average
size ($ Dec-
14)
Change
(%)
2004/05 218 111,100 280 76,363 472 96,878
2005/06 195 122,000 10% 277 71,993 -6% 443 98,707 2%
2006/07 204 117,500 -4% 313 74,259 3% 477 99,019 0%
2007/08 174 124,900 6% 236 65,710 -12% 382 97,468 -2%
2008/09 199 127,400 2% 253 65,133 -1% 426 98,176 1%
2009/10 157 136,900 7% 212 108,850 67% 351 126,961 29%
2010/11 173 173,600 27% 229 71,248 -35% 392 118,219 -7%
2011/12 187 138,500 -20% 251 66,754 -6% 420 101,542 -14%
2012/13 256 149,400 8% 245 61,028 -9% 473 112,445 11%
2013/14 294 195,800 31% 226 78,966 29% 514 146,741 31%
2014/15 * 208 136,300 -30% 81 73,360 -7% 285 120,297 -18%
* Note: 2014/15 shows settlements in the six months to December 2014 only
Common Law Lump Sums Lump Sums & Common Law
Figure 3.12 – Average Size of Lump Sum Settlements
0
25,000
50,000
75,000
100,000
125,000
150,000
20
04
/05
20
05
/06
20
06
/07
20
07
/08
20
08
/09
20
09
/10
20
10
/11
20
11
/12
20
12
/13
20
13
/14
20
14
/15
Sele
cted
Ave
rag
e S
ett
lem
en
t S
ize
($D
ec-1
4)
Settlement Year
Impact of jockey claim
The average size of lump sum settlements had been relatively stable at just under $100,000 (in
December 2014 values) until 2008/09, but has generally increased since then. The average size of lump
sum settlements in 2013/14 was almost $150,000, which is substantially higher than observed previously.
As noted in Section 2.4, some insurers have tried to proactively settle some of their more difficult matters
during 2013/14, which may explain this high average settlement experience. Also, we understand a
number of recent Supreme Court decisions have exceeded expectations, thus creating a shift in plaintiff
expectations. More recent settlements however appear to have returned to historic levels, with the
average settlement experience in the first three months of 2014/15 reducing to $120,000.
We have adopted an average settlement size of $120,000 (in December 2014 values) for lump sum
claims in the 2015/16 policy year. This partially recognises the higher average claim size for the 2013/14
settlement year but also responds to the lower size for the first three months of the 2014/15 year. Our
assumption is 15% higher than our previous selection of $104,000 (inflated to December 2014 values
using actual wage inflation). We test the sensitivity to this assumption in Section 6.5.
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The average lump sum size across all non-nil claims (not just lump sum claims) is $16,345. This is 16%
higher than in the previous report ($14,136 after adjustment to December 2014 dollars using actual wage
inflation).
The full analysis of average claim size for lump sum benefits can be found in Appendix F.
3.8 Legal and Investigation
Figure 3.12 shows legal and investigation costs per non-nil claim along with our selected average claim
size per non-nil claim for the 2015/16 policy year.
Figure 3.13 – Legal and Investigation Costs per Non-Nil Claim
0
1,000
2,000
3,000
4,000
5,000
6,000
20
04
/05
20
05
/06
20
06
/07
20
07
/08
20
08
/09
20
09
/10
20
10
/11
20
11
/12
20
12
/13
20
13
/14
Sele
cted
Pa
ym
en
ts p
er
Cla
im ($D
ec
-14)
Accident Year
DY1 DY2 DY3 DY4 DY5+
Average legal and investigation costs have generally increased across most development years, which is
likely related to the higher lump sum activity during 2013/14. As such, we have not fully reflected this
higher experience in our selections as we do not believe this higher lump sum activity will continue to the
same extent in future.
Our selected average claim size for the 2015/16 policy year for legal and investigation costs is $5,273 per
non-nil claim in December 2014 dollars. This is 8% higher than the average claim size adopted in the
previous report ($4,861, inflated).
The full analysis of the average claim size for legal and investigation costs can be found in Appendix F.
3.9 Recoveries
Figure 3.13 shows the amount recovered by insurers per non-nil claim along with our selection for the
2013/14 policy year. Recoveries include recoveries from other insurers (sharing), employers (excess)
and other sources.
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Figure 3.14 – Recoveries per Non-Nil Claim
0
200
400
600
800
1,000
1,200
1,400
1,600
20
04
/05
20
05
/06
20
06
/07
20
07
/08
20
08
/09
20
09
/10
20
10
/11
20
11
/12
20
12
/13
20
13
/14
Sele
cted
Pa
ym
en
ts p
er
Cla
im ($D
ec
-14)
Accident Year
DY1 DY2 DY3 DY4 DY5+
Recoveries vary significantly from year to year. Our selected average size for the 2015/16 policy year for
recoveries is $1,081 per non-nil claim in December 2014 dollars, up 7% relative to the previous report
($1,013, inflated).
The full analysis of the average size of recoveries can be found in Appendix F.
3.10 Overall Average Claim Size
Figure 3.14 summarises the adopted gross average claim sizes for each past accident year, and our
selection for the 2015/16 policy year.
Figure 3.15 – Adopted Gross Average Claim Size (per Non-Nil Claim) by Payment Type
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
20
04
/05
20
05
/06
20
06
/07
20
07
/08
20
08
/09
20
09
/10
20
10
/11
20
11
/12
20
12
/13
20
13
/14
Sele
cted
Pre
vio
us
Ave
rag
e C
laim
Siz
e ($D
ec
-14)
Accident Year
Weekly Medical Rehab Legal Lumpsum (incl Common Law)
Our selected gross average claim size per non-nil claim for the 2015/16 policy year is around $36,500.
After allowing for recoveries, the selected net average claim size per non-nil claim reduces to around
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$35,400. This is 10% higher than that selected in our previous review ($33,330, inflated) which mainly
reflects the increase in the average size of lump sums.
3.11 Payment Pattern
The valuation methods incorporate assumptions about the pattern of payments by development year.
The analysis is done by payment type, and the resulting payment pattern is shown below in Figure 3.15
for all payment types combined. Full details of each of the selected payment patterns can be found in
Appendix F.
Figure 3.16 – Selected Net Payment Pattern
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Pro
po
rtio
n o
f T
ota
l C
urr
en
t V
alu
e
Pa
ym
en
ts
Development Year
Figure 3.15 shows the majority of payments tend to be made within the first few years after the accident,
with 85% of payments being made within 5 years of the accident.
3.12 Summary of Assumptions for 2015/16 Policy Year
Table 3.2 summarises the adopted claim number and average claim size assumptions for estimating
reasonable premium rates for the 2015/16 policy year.
Table 3.2 – Claim Assumptions for 2015/16 Policy Year
Payment Type Number basis
Claim
Frequency
(per $m)
Ultimate
Claim
Numbers
Average
Claim Size
($Dec-14)
Average
Claim Size
per Non-Nil
($Dec-14)
Weekly benefits Lost time claims 0.30 2,185 12,332 7,954
Medical Non-Nil claims 0.47 3,387 4,697 4,697
Rehabilitation Non-Nil claims 0.47 3,387 2,213 2,213
Lump Sums Lump Sum claims 0.06 461 120,151 16,345
Legal & Investigation Non-Nil claims 0.47 3,387 5,273 5,273
Recoveries Non-Nil claims 0.47 3,387 -1,081 -1,081
Total Non-Nil claims 0.47 3,387 35,402
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4 Economic, Expense and Profit Assumptions
This section outlines the economic assumptions, expense assumptions and insurer margins incorporated
into our assessment of a reasonable premium pool.
4.1 Summary of Assumptions
Table 4.1 summarises the assumptions used in estimating a reasonable premium for the 2015/16 policy
year along with the assumptions adopted in our previous review. These are discussed in the remainder
of this section.
Table 4.1 – Summary of Economic, Expense and Profit Assumptions
Assumption Selected Previous
Discount Rate (p.a.) - valuation assumption 2.95% 3.30%
Discount Rate (p.a.) - premium rate assumption 2.05% 3.45%
Wage Inflation (p.a.) 3.25% 3.50%
Economic growth (p.a.) 0.50% 1.00%
Superimposed Inflation (p.a.)1 0.50% 0.23%
Expenses (% of premium) 22.1% 21.6%
Insurer margin (% of premium) 13.5% 12.5%1 average across all payment types
4.2 Discount Rate
For estimating the discounted cost of claims used to estimate outstanding claims liabilities, risk premiums
and insurer profitability, we have calculated the discount rate applicable to the duration of the ACT
workers’ compensation claims, based on the yields available on Commonwealth Government bonds at
30 June 2014 (the ‘valuation’ date). The yields available on Commonwealth bonds reduced since 30
June 2013. As a result, the discount rate adopted for this review is 2.95% per annum, down 0.35% per
annum relative to our previous valuation assumption of 3.30% per annum.
We also allow for the time value of money when estimating a reasonable premium rate for 2015/16. We
have used a risk free rate based on forward rates implied by yields available on Commonwealth
Government bonds as at 28 February 2015 (the latest available) in the determination of the premium
rate. Any margin above the risk free rate earned by the licensed insurers from their actual investments
contributes to profits and is taken into account in deriving an appropriate insurer margin. The discount
rate applicable for the 2015/16 policy year is 2.05% per annum (down from 3.45% per annum previously).
To discount past payments back to the premium receipt date in calculating hindsight risk premiums we
have used the actual average historical cash rates (as published by the Reserve Bank of Australia)
applicable in each year from 1999 to 2014.
4.3 Inflation
Two types of inflation are incorporated into our cost models: normal economic inflation (in this case wage
inflation based on AWE increases, given the income-related nature of the workers’ compensation
benefits) and superimposed inflation.
Wage inflation
Independent forecasts for wage inflation over the next few years are around 2.75% to 3.5% per annum,
with the lower end of the forecasts for shorter durations and the higher end for longer durations. As such,
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we have adopted a uniform assumption of 3.25% per annum for all future periods relevant to the 2015/16
underwriting year, down from 3.5% per annum adopted for the 2014/15 policy year.
The implied gap between the discount rate and inflation rate of -1.2% per annum (2.05% per annum
discount rate less 3.25% per annum inflation rate) compares to a gap of 0.05% adopted for the 2014/15
premium rates. All other things being equal, the decrease in the gap will act to increase the estimated
premium rate, reflecting that the real risk-free investment returns available to insurers are lower than a
year ago.
Superimposed Inflation
Superimposed inflation is the tendency for payments to increase at a higher rate than normal economic
inflation (i.e. wage inflation). Some examples of the forms superimposed inflation can take are:
Longer periods of payment – for example, in the case of weekly benefits and medical costs
More claims for particular heads of damage – for example, more claimants seeking lump sum
benefits.
We analysed the experience of the ACT workers’ compensation portfolio in order to detect any evidence
of superimposed inflation; this was done for each payment type. We observed evidence of
superimposed inflation over the longer term in medical and rehabilitation costs and to a lesser extent in
weekly benefits. In more recent years, we have observed some evidence of superimposed inflation in
lump sum and legal costs.
We have therefore incorporated a superimposed inflation assumption of 0.5% per annum across all
benefit types. This compares to an assumption of 2% per annum for medical and rehabilitation costs
only at our previous review, which equated to 0.23% per annum across all payment types.
We believe our assumption takes a balanced view of the likely rates of future superimposed inflation, but
acknowledge that this is one of the areas in the actuarial basis that is highly subjective.
The sensitivity to the superimposed inflation assumption is demonstrated in Section 6.5.
4.4 Economic Growth
In order to project wages for the coming policy year, we need to make an assumption about the growth of
the workforce due to general growth in the economy. We have adopted an assumption of 0.5% per
annum for economic growth to 2015/16, based on market forecasts (including budgetary forecasts)
available to us at the time of this review. This assumption has reduced since our previous review (1%
previously).
4.5 Expenses
Commission/Brokerage
The following table shows the commission/brokerage rates paid by each of the licensed insurers writing
workers’ compensation insurance in the ACT as well as the assumptions adopted in each of the insurer
premium rate filings for 2013/14 to 2014/15.
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Table 4.2 – Commission Rates
Insurer 2012/13 2013/14 2013/14 2014/15
AAL 3.0% 3.0% 3.6% 3.8%
IAG 3.3% 3.4% 3.2% 3.3%
QBE 4.2% 4.1% 4.2% 4.1%
SUN 3.4% 3.4% 3.4% 3.3%
ZUR 4.6% 4.6% 4.3% 5.7%
CCI 0.0% 0.0% 0.0% 0.0%
GUI 0.0% 0.0% 0.0% 0.0%
Average 3.4% 3.4% 3.4% 3.5%
Achieved Filed
Note: The average is a w eighted average based on
premium volume.
The overall average commission/brokerage paid in 2013/14 of 3.4% of premiums is unchanged from the
previous year and is also consistent with the average commission/brokerage rate assumed in the
insurers’ filed rates. We have therefore allowed for commission/brokerage of 3.4% of premium in our
estimated reasonable premium pool for 2015/16 (unchanged from the previous review).
Administration Expenses
The table below shows the expense rates included in the insurer’s filed rates over the last three policy
years.
Table 4.3 – Administration Expense Rates
Insurer 2012/13 2013/14 2014/15
AAL 15.0% 14.1% 11.9%
QBE 12.3% 11.2% 18.4%
SUN 18.5% 18.6% 18.3%
IAG 11.4% 9.5% 8.9%
CCI 42.9% 39.6% 41.0%
GUI 32.0% 31.0% 31.0%
ZUR 17.5% 16.8% 16.2%
Average 15.9% 14.7% 15.6%
Note: The above expense rates exclude statutory levies. The
average is a w eighted average based on premium volume.
We have included an allowance for other administration costs after consideration of the expense rates
included in the insurers’ filed rates and the expense levels in the other privately underwritten workers’
compensation schemes. We have adopted an allowance equal to 15% of premium, unchanged since our
previous review.
Statutory Charges and Levies
Our recommended premium rates also include the following levies for 2015/16:
Magistrates Court Levy of 0.29% of premium based on the expected collection during 2015/16, as
advised by the CMTEDD. This is down slightly from 0.30% adopted in the 2014/15 year.
Default Insurance Fund (DIF) levy of 1.4% of premium (unchanged), as advised by the CMTEDD
Regulatory Funding Levy of 1.9% of premium (up from 1.51% of premium previously) resulting in
total levies of $3.996 million. While the target levy collection for 2015/16 is $6.703 million, the
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increase in the levy is capped at 0.015% of wages (excluding GST for insurers) resulting in a
maximum allowable levy collection of $3.996 million. The shortfall between target and allowed levy
collections is expected to be funded out of ACT government consolidated revenues.
Total Expense Loadings
Table 4.4 below breaks down the total expense loading we have adopted into the component parts.
Table 4.4 – Assumed Expenses (% of premium)
Equivalent
Dollars ($m)
Commission & Brokerage 3.4% 6.8
Administration 15.0% 30.1
Statutory Charges & Levies
Magistrates Levy 0.3% 0.6
DIF Levy 1.4% 2.8
Regulatory Funding Levy 2.0% 4.0
Total Expense Loading 22.1% 44.4
Loading
(% of premium)
Our total expense loading is 22.1% of premium, down slightly from 21.6% of premium adopted for our
previous review.
4.6 Insurer margin
In determining an appropriate insurer margin for profit for this business we have utilised a model that
projects the after tax profits of the 2015/16 business in each future year until the cohort of business has
completely run off. In applying this model we have made the following long-term assumptions (in addition
to those detailed above in relation to claims costs and expenses):
Technical provisions will all be invested in risk free assets and will, on average, earn the risk free
rate of 2.05% per annum. The duration of these assets is assumed to match the duration of the
technical liabilities (around 3 years)
Additional capital allocated to the business will be invested in a mix of risk free and riskier assets
(equity, property, managed trusts) which earn on average 3.0% per annum above the risk free
rate. The duration of these assets is assumed to be longer than the duration of the technical
liabilities (around 5 years)
Claims provisions will be established incorporating a 12.5% risk margin
Capital will be allocated at a level necessary to achieve 1.5 to 2.0 times the APRA Prudential
Capital Requirement
Shareholders will demand a return on capital of 12% after tax.
The results of our modelling indicate that under these assumptions an appropriate insurer margin for this
business is around 12% to 15% of premium for an insurer which desires to hold capital at 1.5 to 2.0 times
the APRA minimum. We have adopted an insurer margin of 13.5% of premium in determining a
reasonable premium for the 2015/16 policy year (i.e. in the middle of this range). This is 1% higher than
adopted at the previous review reflecting the fact that reduced yields on risk-free assets acts to increase
the required insurer margin (i.e. insurers will require a higher margin as they are expecting to earn less
investment income on the capital required to support the business).
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This adopted margin of 13.5% compares to:
An average (weighted by premium volume) of 11.7% of premium adopted in the insurer filed rates
for 2014/15
13.0% of premium included in Tasmania’s 2015/16 suggested premium rates
11% of premium in the Western Australia 2014/15 gazetted premium rates.
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5 Results of Hindsight Analysis
We have prepared estimates of the future payments for outstanding workers’ compensation claims and
the ultimate claims cost for each accident year, using the valuation methods referred to in Section 9, the
claim assumptions detailed in Section 2, and the economic and other assumptions described in Section
4. This section summarises these results.
5.1 Estimated Ultimate Cost
Table 5.1 summarises our central estimate of ultimate costs by accident year, split between what has
been paid to 30 June 2014 and what we estimate to be outstanding at that date. The ultimate costs
shown are inflated to the time of payment and are undiscounted.
Table 5.1 – Estimated Ultimate Cost
Accident
Financial
Year
Paid to
30-Jun-14
Estimated
Outstanding
Estimated
Ultimate
Claims
Cost1
Change
Year-on-
Year
$m $m $m %
2001/02 60.6 2.2 62.8
2002/03 72.4 1.2 73.6 17%
2003/04 76.1 2.0 78.2 6%
2004/05 85.8 2.6 88.5 13%
2005/06 87.1 3.5 90.6 2%
2006/07 81.2 4.0 85.2 -6%
2007/08 75.0 6.8 81.8 -4%
2008/09 92.2 11.6 103.8 27%
2009/10 96.4 21.3 117.7 13%
2010/11 98.6 32.2 130.7 11%
2011/12 71.6 51.4 123.0 -6%
2012/13 51.2 78.0 129.2 5%
2013/14 18.7 100.8 119.6 -7%
As the ultimate costs shown in are inflated but undiscounted, if there were no trends in claim numbers,
average claim sizes or superimposed inflation, then we would expect each year to be higher than the
previous year by the amount of wage inflation.
We can see that the growth in ultimate costs has been somewhat variable over the years shown. Across
the whole period, growth in ultimate costs has averaged 6% per annum, around 1% higher than wage
Key Findings
For 2013/14, we estimate that ultimate costs will be 7% lower than 2012/13, reflecting the fact
that claim numbers fell significantly during the year.
Insurers as a whole appear to be adequately reserved; insurer central estimates of outstanding
claims liabilities are close to our central estimate.
Risk premiums (ultimate costs expressed as a proportion of wages) are estimated to be 1.6% of
wages for the 2013/14 accident year.
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inflation on average. For 2013/14, we estimate that ultimate costs will be 7% lower than 2012/13,
reflecting the fact that claim numbers fell significantly during the year.
5.2 Comparison to Insurer Central Estimates
The following table compares our estimated outstanding claims cost (inflated to date of payment and
discounted to 30 June 2014) and the central estimate of insurer reserves (i.e. case estimates plus
IBNR/ER reserves) at 30 June 2014.
Table 5.2 – Comparison to Insurer Central Estimates
Accident
Financial
Year
Finity
Central
Estimate
Insurer
Case
Estimates
Insurer
IBNR/ER
Insurer
Central
Estimate
Difference
(Insurer less
Finity)
% Difference
$m $m $m $m $m %
Prior 9 3 3 5 -4 -42%
2006/07 4 2 2 3 -1 -15%
2007/08 6 2 2 3 -3 -47%
2008/09 11 3 2 5 -5 -50%
2009/10 20 14 5 19 -1 -4%
2010/11 30 24 8 31 1 5%
2011/12 48 36 13 49 1 2%
2012/13 73 64 18 82 9 12%
2013/14 93 56 34 91 -3 -3%
Total 294 203 87 289 -5 -2%
Our central estimate of outstanding claims liability is $294 million. Insurer case estimates plus IBNR/ER
reserves of $289 million are therefore $5 million (2%) lower than our central estimate.
Proportionately, the insurer estimates are considerably lower than the Finity estimates for the 2008/09
and prior accident years, although the amounts involved are small. The insurer and Finity estimates are
close for all years after 2009/10 with the exception of 2012/13 where insurer estimates are higher than
the Finity estimates.
Insurers are also required by APRA to hold a risk margin in addition to this IBNR/ER reserve, which we
expect would be of the order of around 10% to 15% of the insurer central estimates as a whole (i.e.
around $30 million to $40 million). This would indicate that as whole, the insurer group is adequately
reserved.
The above estimate of reserve adequacy is performed at a high level, for the scheme as a whole. The
adequacy of any individual insurer’s reserves will vary depending on the insurer’s own reserving
practices.
5.3 Scheme Risk Premiums
Table 5.3 shows our estimate of the historical risk premium rates. Historical risk premiums are calculated
from actual past payments plus our latest estimate of outstanding claims. Claims costs are then
discounted to the beginning of the accident year and expressed as a proportion of earned wages for that
year.
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Table 5.3 – Risk Premiums
Accident
Financial
Year
Estimated
Ultimate
Claims Cost1
Earned
Ultimate
Wages
Cost as a % of
Earned Wages
$m $m %
2004/05 75.0 4,143 1.8%
2005/06 76.1 4,365 1.7%
2006/07 73.1 4,879 1.5%
2007/08 71.3 5,411 1.3%
2008/09 91.7 5,665 1.6%
2009/10 104.7 5,734 1.8%
2010/11 117.5 6,225 1.9%
2011/12 112.1 6,700 1.7%
2012/13 118.9 6,845 1.7%
2013/14 109.9 7,047 1.6%1 Net of recoveries, inflated and discounted to beginning of accident year
The estimated risk premiums reduced from around 1.8% of wages in 2004/05 to a low of 1.3% of wages
in 2007/08. Estimated risk premiums then increased over the next three years to 2010/11, before
stabilising at around 1.7% of wages in 2011/12 and 2012/13. In 2013/14, the risk premium has reduced
to 1.6% of wages, reflecting the reduction in claim numbers in the year.
5.4 Achieved Premium Rates
The following graph shows the estimated ultimate achieved premium rates split between the risk
premium component and insurer expenses/profit.
Figure 5.1 – Estimated Ultimate Achieved Premium Rates
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
20
04
/05
20
05
/06
20
06
/07
20
07
/08
20
08
/09
20
09
/10
20
10
/11
20
11
/12
20
12
/13
20
13
/14
20
15
/16
Ach
ieve
d P
rem
ium
Ra
te
Accident Year
Risk Premium Expenses/Profit
Insurer achieved premium rates have been around 2.4% of wages since 2010/11. The estimated risk
premium declined from 1.9% of wages for 2010/11 to around 1.7% of premium in both 2011/12 and
2012/13. In 2013/14, the reduction in claim frequency resulted in a further reduction in the risk premium
to 1.6% of wages. We are estimating a risk premium of 1.71% for the 2015/16 policy year. We note that
there is considerable uncertainty over the estimated risk premium for more recent accident years.
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We estimate the margin left to cover expenses and profit has risen from around 0.5% of wages (2010/11)
to 0.8% of wages (2013/14). This compares to allowances in our reasonable premium rates of 0.94% of
wages.
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6 Premium Pool for 2015/16
This section brings together the analysis of previous sections, establishing our estimate of a reasonable
premium pool and the average premium rate.
6.1 Wages
Consistent with the assumptions used in our estimate of the risk premium pool, we have assumed wage
inflation of 3.25% per annum from 2013/14 to 2015/16 and employment growth of 0.5% per annum.
Hence we project earned wages of around $7.6 billion in the 2015/16 policy year, as shown in Figure 6.1
below.
Figure 6.1 – Estimated Wages Covered
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
20
04
/05
20
05
/06
20
06
/07
20
07
/08
20
08
/09
20
09
/10
20
10
/11
20
11
/12
20
12
/13
20
13
/14
20
15
/16
Pro
jecte
d
Wri
tte
n W
ag
es
(ori
gin
al
va
lue
s)
Year
Previous
Written wages in 2013/14 were around 9% lower than previously projected; this reflects the fact that
wage inflation during the year was -6% whereas we expected a 3.5% increase. This has a flow on
impact, with the projected wages for the 2015/16 policy year also around 9% lower than expected.
6.2 Average Renewal Date
Based on past patterns of wages covered and earned wages, we have estimated that the average
renewal date for workers’ compensation policies in the ACT is in mid-September of each year.
Hence the dates of key events we have assumed for the 2015/16 policy year are:
15 September 2015 – average renewal date, assumed equal to the average premium receipt date
Key Findings
We estimate a reasonable premium rate for the 2015/16 policy year to be 2.65% of wages. This
compares with 2.46% estimated for the 2014/15 policy year, an 8% proportional increase. Most of this
increase is due to the reduction in the risk free discount rate.
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15 March 2016 – average accident date, average date of first year’s claim payments
15 March 2016 – average date of second year’s claim payments, etc.
As we have selected our average claim size in December 2014 values, the above dates mean that claims
payments in the first year will need 14.5 months of inflation (including superimposed inflation) added,
payments in the second year need 26.5 months of inflation added, etc. All payments are then discounted
back to the average date of renewal, i.e. 15 September 2015.
6.3 Reasonable Premium Pool
The total scheme risk premium for 2015/16 represents the total expected claim costs, and is derived as
the number of non-nil claims adopted for 2015/16 times the adopted average claim size (refer Section
3.12), plus allowance for inflation and discounting (refer Sections 4.2 and 4.3). This results in a risk
premium of $129.4 million, or 1.71% of wages.
When expenses (Section 0) and insurer profit margins (Section 4.4) are added to the risk premium, our
estimate of a reasonable premium pool for 2015/16 is $201.0 million. Table 6.1 shows the breakdown of
this amount into the component parts.
Table 6.1 – Total Premium Pool
Premium Rate Component ($m)
Risk Premium Pool 129.4
Expense Loading 44.4
Profit Loading 27.1
Total Premium Pool 201.0
Wages Estimate 7,570.9
Average Risk Premium (% wages) 1.71%
Average Premium Rate (% wages) 2.65%
The estimated reasonable average premium rate for 2014/15 is 2.65% of wages. This compares to our
estimated reasonable premium rate for 2014/15 of 2.46% of wages.
6.4 Comparison with 2014/15 Premium Rate
The reasonable premium rate has increased by 0.20% of wages (a 8% proportional increase). The
following table shows a reconciliation of the movement in the reasonable premium rate.
Table 6.2 – Movement in the Reasonable Premium Rate
Average
Premium
Rate
Increase/
(Decrease)
(% of Wages)
Suggested rate for 2014/15 2.46%
Expected rate for 2015/16 2.46% 0.01%
Change due to wage inflation 2.43% -0.03%
Change in claim assumptions 2.49% 0.05%
Change in economic assumptions 2.59% 0.11%
Change in expense loadings 2.61% 0.02%
Change in insurer margin 2.65% 0.04%
Total change 2.65% 0.20%
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The increase in the reasonable rate is due to:
Lower than expected wage inflation meant that, all else being equal, both average claim sizes and
wage estimated were lower than expected. The two impacts were roughly offsetting, reducing the
premium rate by 0.03% of wages.
The reduction in claim numbers was more than offset by the increase in the average size of lump
sum claims. The net impact increased premium rates by 0.05% of wages.
The decrease in the yield curve increased the premium rate by 0.11% of wages. The reduction in
assumed future wage inflation was offset by the increase in superimposed inflation.
Changes to the expense rate increased premiums by 0.02% of wages
The flow on impact to the insurer margin of reduced discount rates further increased the premium
rate by 0.04% of wages.
6.5 Sensitivity Analysis
The estimate of the average premium rate is sensitive to the assumptions used, and the selection of our
assumptions is subject to uncertainty. The effect on the average premium rate of changing each of the
assumptions is shown below. Note that the scenarios tested do not indicate the full range of possible
outcomes. Note also that each scenario is independent of the others shown.
Table 6.3 – Sensitivity Analysis
Scenario
Best
Estimate
Value
Sensitivity
Assumption
Premium
Rate Difference
Percentage
Difference
Base Case n/a n/a 2.65%
Claim frequency up 10% 0.47 0.51 2.92% 0.27% 10%
Average claim size up 10% 35,402 38,942 2.92% 0.27% 10%
Lump sum numbers up 10% 461 507 2.78% 0.12% 5%
Lump sum average size up 10% 120,151 126,159 2.78% 0.12% 5%
Discount rate up 1% p.a. 2.05% 3.05% 2.58% -0.08% -3%
Superimposed inflation at 2% p.a. 0.50% 2.00% 2.80% 0.15% 6%
Expense loadings up 1% 22.10% 23.10% 2.70% 0.04% 2%
Insurer margins up 1% 13.50% 14.50% 2.70% 0.04% 2%
The scenarios presented show:
A 10% increase in frequency or a 10% increase in overall average claim size would result in a 10%
increase in the average premium rate
If the number of claims receiving lump sum benefits were to increase by 10% or if the average cost
of these claims were to increase by 10%, the average premium rate would increase by 5%
A 1% per annum increase in the risk-free discount rate would result in a 3% reduction in our
estimate of the average premium rate
If benefit payments were to increase as a result of superimposed inflation at a rate of 2% per
annum, our estimate of average premium rate would increase by around 6%
If expenses or insurer margins were to increase by 1% of premium, the average premium rate
required would be 2% higher.
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7 Suggested Relativities and Reasonable Premium Rates
This section documents our suggested relativities and average premium rates by ANZSIC Division, and
provides some comparisons with insurer achieved rates.
7.1 Relativities
Our approach to calculating the relativities is explained in Section 9.5. Appendix H contains a summary
of the results of our analysis for each ANZSIC Division with non-nil wages in the ACT. The table shows:
ANZSIC Class and description
The Finity grouping used
Observed claim frequency relativities – average for latest three years
Observed capped claims cost relativities – average for latest five years
Our selected relativity
Our estimate of a reasonable premium rate.
We note that the relativity analysis shown in Appendix H uses data from different sources, with the claims
data being sourced from WCMS while the wages and premium data were sourced directly from insurers.
This may lead to some discrepancies with the classification of information by ANZSIC Division and/or
year between the two data sources.
7.2 Reasonable Premium Rates
The following example (for ANZSIC Code 7834 – Computer Consultancy Services) shows how we have
applied the selected relativities shown above to determine the ANZSIC premium rates:
1. average risk premium for Scheme = 1.71% (see Section 6.3)
2. suggested relativity for ANZSIC 7834 = 15 (see Appendix H)
3. average risk premium for ANZSIC 7834 = 0.26%
[equals 1.71% * 15/100]
4. average premium rate for ANZSIC 7834 = 0.39%
[equals (0.26%)/(1 – 22.1 % – 13.5%) * 0.98 which is
(average risk premium for ANZSIC 7834)/(1 – expenses as % of premium – insurer margin) *
scaling factor].
The scaling factor is applied to ensure that the overall average premium rate is achieved. We followed
this process to derive an average premium rate for each ANZSIC Class.
Key Findings
The experience across the range of ANZSIC Classes shows considerable variation, with our reasonable
rates falling in the range 0.39% to 14.35%.
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The experience across the range of ANZSIC Classes shows considerable variation, with our reasonable
rates falling in the range 0.39% to 14.35%.
The rates shown in Appendix H are indicative of the average rates that we consider to be appropriate for
the employers at the ANZSIC Class level, consistent with a target average rate of 2.65% overall. The
actual rates charged by insurers to individual employers would be expected to differ from these rates,
reflecting the following:
The actual expense loadings and profit requirements will differ from insurer to insurer
The experience of an individual employer will be taken into account by the insurer in determining
the appropriate rate to be charged; inferior risks will likely be charged additional premiums, while
superior risks may be given discounts (compared with the average)
The rates are determined on the basis of an assessment of the profitability for a single year’s
business; insurers who write business over a period of years increase or decrease rates in
response to accumulated profitability and competitive positioning
The application of minimum premiums (reflecting administration costs which are incurred
independent of the claims cost or “riskiness”).
7.3 Comparison with Insurer Relativities
The following graph compares the relativities of the 2015/16 reasonable rates with the relativities of
licensed insurers’ achieved rates for 2013/14. Each point on the graph represents one of the 17 ANZSIC
Divisions.
The 45-degree line indicates where suggested relativities equal to the achieved relativities. A point
above the 45-degree line is one where our suggested relativity is lower than the achieved relativity, and a
point below the 45-degree line is one where our suggested relativity is higher than the achieved relativity.
Figure 7.1 – Suggested vs. Achieved Relativities
0
50
100
150
200
250
300
350
400
0 50 100 150 200 250 300 350 400
Ach
ieve
d 2
013
-14
Suggested 2015-16
Mining Agriculture
Manufacturing
Transport & Storage
At the Division level, the achieved relativities tend to be close to or higher than our recommended
relativities for Divisions where the relativity is less than around 125. For Divisions where the relativity is
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more than 125 our suggested relativities tend to be higher than the achieved relativities. There are a
number of notable outliers (Mining and Agriculture, where the achieved relativity is significantly higher
than our suggested relativity; and Manufacturing and Transport & Storage, where the achieved relativity
is significantly lower than our suggested relativity) however these industries less than 5% of total wages
covered in 2013/14 and can be subject to year on year volatility in their achieved rates.
There is greater variability between recommended and achieved relativities at the ANZSIC Class level.
The following graph shows the achieved and recommended relativities for the top 50 ANZSIC Classes
(as measured by wage volume in 2013/14).
Figure 7.2 – Suggested vs. Achieved Premium Relativities – Top 50 ANZSIC Divisions
0
50
100
150
200
250
300
0 50 100 150 200 250 300
Ach
ieve
d 2
013
-14
Suggested 2015-16
Achieved 2013-14 8 Suggested 2015-16
Figure 7.2 shows a similar picture to Figure 7.1, i.e. the industry achieved relativities tend to be higher
than our suggested relativities where the relativity is less than around 125, but for industries where the
relativity is more than 125, our suggested relativities tend to be higher than the achieved relativities. This
suggests that lower risk industries tend to be over-priced relative to higher risk industries.
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Part III Further Information
8 Data
This section describes the data items we were supplied with for this investigation, the results of our
reconciliations and the data summaries produced.
8.1 Data Supplied
CMTEDD administers the ACT Workers Compensation Management System (WCMS). WCMS was
established in 2014 and contains workers’ compensation premium and claim information from all insurers
and self-insurers operating in the Scheme. As part of our review, CMTEDD supplied us with the following
information from WCMS:
Individual claim file showing the accident and report date, insurer code, current liability status, total
payments to date and estimated future payments outstanding for each claim reported or having
had a payment between 1 July 1999 and December 2014
Claim payment transaction file with payments made (by type and month) between 1 July 1999 and
December 2014
Individual policy files, with the ANZSIC Division and insurer codes for each policy written or
renewed between 1 July 1999 and December 2014.
In addition to the information provided, we also received the following summarised data from each of the
insurers:
Policies, premiums and wages written in each year
Earned premiums and wages in each year, split by ANZSIC Division
Triangulations of claims reported and claim payments to 30 September 2014
Case estimates and IBNR/ER allowances as at 30 June 2014.
We have also compiled workforce figures from information available from the Australian Bureau of
Statistics (ABS) and the Australian Public Service Employment Database (APSED), plus information on
the number of ACT public sector employees supplied by the CMTEDD.
Refer to Appendix A for a more detailed listing of the data.
8.2 Reinsurance and Other Recoveries
The data supplied for the purposes of our review did not include details of reinsurance recovery amounts.
Therefore, all data and projections contained in this review are gross of reinsurance, but net of all other
recoveries.
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8.3 Reconciliation
In preparing this advice we have relied on the claims information supplied by CMTEDD and premium,
wages and case estimate information supplied by the insurers.
We have compared the WCMS data provided for this review with the data provided for our previous
review (see Appendix C.3). The data from the two extracts matched closely.
We have also reviewed and checked the WCMS data for reasonableness and consistency. Reliance
was placed on, but not limited to, the accuracy of the information described in this report.
8.4 Data Summaries & Adjustments
Scheme Performance Analysis
In performing our claims analysis we have identified and separately considered claims which have zero
payments made to date (“nil claims”).
Further, in determining the number of claims in receipt of common law and lump sum benefits, we have
excluded from our claim number summaries those claims which received total common law or lump sum
benefits of less than $500. We found that one insurer in particular had a large number of such claims.
We have excluded these from all lump sum claim counts on the basis that the payment will most likely
reflect a small investigation or administration expense rather than an actual lump sum payment (noting
the costs of such claims continue to be included in our claim payment summaries).
Workforce Information
We have calculated an approximate private sector workforce as follows:
Total workforce in the ACT
less ACT public sector employees
less Commonwealth public sector employees.
Key findings
Claim number information on WCMS is fairly reliable and is satisfactory for the purposes of
our actuarial review.
Claim payment information on WCMS for 2001/02 and later years is of reasonable quality and
is satisfactory for the purposes of our actuarial review. Significant amounts of payments prior
to 2001/02 are missing (around 25%), primarily due to two larger insurers.
Premium and wages information on WCMS cannot be used at this time because the previous
system did not adequately capture policy adjustments in historical periods. We have instead
relied on information sourced directly from insurers.
Case estimates from WCMS are approximately $30 million (14%) higher than the estimates
provided by insurers, due mainly to discrepancies associated with two larger insurers. As
such, we have not relied on case estimates from WCMS to the extent we would like.
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We do not have a “full time equivalent” number of workers, and have therefore used the numbers of full
time workers to approximate the total ACT private sector workforce; see Appendix G.
Relativities Analysis
For the premium relativities analysis, we have:
Calculated claim frequency based on non-nil claims only
Calculated burning cost relativities using both
(i) wage-inflation adjusted payments
(ii) wage-inflation adjusted payments to date plus current case estimates (i.e. incurred costs)
Due to limitations with the case estimate information in WCMS, we have relied on payment based
cost relativities rather than the incurred cost relativities at this review.
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9 Compliance with Standards and Approach
This section describes our compliance with relevant standards and the approach used for the projection
of ultimate costs and premium rates.
9.1 Compliance with Relevant Australian Standards
The purpose of this report is to provide an overview of the performance of the Scheme, not to advise any
individual entity on the financial reporting of its workers’ compensation liabilities. Accordingly,
Professional Standard 300 “Valuations of General Insurance Claims” (PS 300) issued by the Institute of
Actuaries of Australia does not apply to this report. In the absence of any other applicable professional
standard, we have used PS 300 for guidance on our approach to the review, but our report is not
intended to comply with all requirements of PS 300.
This report has been prepared in accordance with the Institute of Actuaries of Australia’s Code of
Professional Conduct for the provision of actuarial advice.
9.2 Basis of Estimates
The estimates of future claims costs provided in this report are intended to be central estimates, which
means they are based on assumptions selected without deliberate bias towards either over-estimation or
under-estimation.
The premium rate estimates have been developed on the basis of the following principles:
Estimates of expected claims costs should be “central estimates”, incorporating allowance for both
“normal” and “superimposed” inflation
Claim costs are to be discounted to allow for the time value of money
Estimates of claims costs should take into account any amounts recoverable in respect of the
claims
Premiums should allow for the expenses of writing the business and administering claims
Premiums should include an appropriate allowance for profit.
9.3 Methodology for Actuarial Analysis
For the purpose of analysis, all data has been grouped into accident years, i.e. the year in which the
injury occurred which gave rise to the claim. Development of this data is then analysed and projected by
development year (which is a measure of the number of years since the year in which the accident
occurred, e.g. development year 2 is the year after the year in which the injury occurred). All analysis
has been carried out on a financial year basis (i.e. years ending 30 June).
In conducting our analysis of the ACT workers’ compensation experience, we have followed the same
approach as in the previous review. This involved examining claim numbers and frequency, and average
size by benefit type. The development analysis allows us to project future claim reports and costs in
respect of injuries which have already occurred, from which we can estimate the ultimate number and
cost of claims arising from each accident year. This allows analysis of the underlying trends in Scheme
experience and provides a basis for assessing a reasonable level of premium.
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Claim Numbers
In order to estimate ultimate numbers of claims we use the Chain Ladder method to estimate the number
of claims relating to accidents that occurred prior to 30 June 2014 that are yet to be reported (i.e.
“Incurred But Not Reported” or “IBNR” claims). The estimated ultimate number of claims (reported to
date plus IBNR claims) is then expressed as a claim frequency by dividing the ultimate number of claims
in each accident year by a measure of exposure.
Claim numbers were modelled by the following groups:
Non-nil claims – we analysed the ultimate number of claims that are expected to result in a
payment by the insurer, and also consider this as a frequency relative to both ultimate inflation-
adjusted wages earned in the period and full time employee numbers in the period. Further detail
on the calculation of ultimate inflation-adjusted wages can be found in Appendix G
Lost time – we analysed the numbers of claims receiving weekly benefits (“lost time”) and the
frequency of lost time claims relative to non-nil claims
Lump sums – we analysed the numbers of lump sum claims (common law, statutory impairment,
commutations and death benefits, excluding claims with total lump sum payments less than $500)
and utilisation rate (the ultimate number of lump sum claims divided by ultimate number of non-nil
claims).
Claim Duration
We examined trends in duration of weekly benefit claims by analysing the number of claims that remain
active in each development quarter. A claim received an “active” flag and was counted once if it received
a weekly payment in the quarter. We excluded from our active count any claims where total weekly
payments to date were negative or where the weekly payments made in a quarter total zero.
Average Claim Size
Claim payments were analysed and projected using the following benefit type groupings:
Weekly benefits – modelled using a Payments Per Claim Incurred (PPCI) approach, where the
claim count used is the estimated ultimate number of lost time claims. We supplemented this
primary model with a Payments Per Active Claim (PPAC) model
Medical and related benefits – modelled using a PPCI approach, where the claim count used is the
estimated ultimate number of non-nil claims
Rehabilitation benefits – modelled using a PPCI approach, where the claim count used is the
estimated ultimate number of non-nil claims
Lump sums – modelled using a Payments Per Claim Settled (PPCS) approach, where the claim
count used is the ultimate number of lump sum claims
Legal and other benefits – modelled using a PPCI approach, where the claim count used is the
estimated ultimate number of non-nil claims
Recoveries – modelled using a PPCI approach, where the claim count used is the estimated
ultimate number of non-nil claims.
An explanation of these methods can be found in Appendix D.
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From each of the above models we estimate the average payment, by payment type and development
year. The overall average claim size for each accident year is the result of adding our estimated
payments for each payment type and dividing by the projected ultimate number of claims.
9.4 Reasonable Premium Pool
The estimation of a reasonable premium pool includes allowance for claims, expenses and profit.
Diagrammatically this can be represented as follows:
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Figure 9.1 – Reasonable Premium Pool
We have assessed each element separately, and then tested the reasonableness of the estimated
premium pool resulting from the combination of all assumptions.
The estimate of the total premium pool, which includes allowances for expenses, levies and reasonable
insurer profit margins, is divided by insured wages to derive a reasonable Scheme average premium
rate. The derived rate for past years can be compared with the actual rates charged by insurers.
Claims Cost
The claims cost assumptions come from the actuarial analysis of the historical Scheme claims
experience discussed in Section 0.
Inflation and Discount
The long-tailed nature of workers’ compensation means that it is appropriate to allow for both future
inflation and the time value of money in assessing the premium rate.
For the purpose of establishing the average rates for this report we have based our assumptions on the
following:
Discount rate – expected returns on Australian government bonds over the period in which claim
payments are made
Normal economic inflation – current economic forecasts for medium term wage inflation
Superimposed inflation – analysis of recent Scheme experience, together with expectations for the
future (necessarily judgemental).
Premium
Pool
Inflation
& Discount
Commission
& Expenses
Inflation &
Discount
Claims
Cost
Claim
Frequency
Average
Size
Legislative
Amendments
Experience
Analysis
Qualitative
Input
Comm. &
Expenses
Premium
Pool
Inflation
& Discount
Commission
& Expenses
Inflation &
Discount
Insurer
Margin
Claims
Cost
Claim
Frequency
Average
Size
Legislative
Amendments
Experience
Analysis
Qualitative
Input
Comm. &
Expenses
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Commission and Expenses
We were supplied with average commission rates currently paid by each of the licensed insurers writing
workers’ compensation insurance in the ACT. Based on their market share (as measured by premium
volume), we have estimated the overall average commission paid by the Scheme as a whole.
We have allowed for other administration costs based on this information, along with expense rates
included in the insurer’s rates, and our knowledge of expense rates in other state workers’ compensation
schemes. We have also allowed for costs associated with funding the Regulatory Funding Levy, Default
Insurance Fund (the DIF levy) and Magistrates Court Levy.
Insurer margin
In determining an appropriate margin for profit for this business we have utilised a model that projects the
after tax profits of a single underwriting year’s business in each future year until the cohort of business
has completely run-off. On the basis of a series of assumptions regarding investment returns earned by
insurers, the capital required to support this business, and the return on capital required by the insurer
shareholders, we have derived an insurer margin we view as appropriate for this business.
9.5 ANZSIC 1993 Division Premium Rates
The ANZSIC 1993 codes have a “tree” structure comprising categories at four levels, namely Divisions (1
digit level), Subdivisions, Groups and Divisions (4 digit level). There are 17 Divisions within the ANZSIC
coding, each identified by an alphabetical character (A is agriculture, B is mining, etc.).
The determination of a reasonable premium rate for each ANZSIC Division proceeds from the estimate of
the total premium pool. The procedure adopted is to analyse the past claims experience and wages by
ANZSIC Division to determine cost “relativities” between Divisions. The resulting relativities are then
applied to the Scheme average premium rate to determine a set of rates for each ANZSIC Division,
which should produce the total premium pool. These rates will spread total premium costs across
ANZSIC Divisions in proportion to each industry’s contribution to the costs of the workers’ compensation
scheme.
Relativities
In considering the ACT experience by ANZSIC Class we have separately considered frequency
relativities and cost relativities (both with and without capping of large claims).
The frequency relativity for an ANZSIC Class is calculated as follows:
Divide the number of non-nil claims reported in each accident year by the earned wages for that
year, to determine the reported claim frequency
Divide the frequency for that ANZSIC Class by the frequency for the Scheme as a whole, to
determine the relativity (the experience of the ANZSIC Class relative to the experience of the
Scheme).
The claims cost (“burning cost”) relativity for an ANZSIC Class is calculated as follows:
Divide the inflated payments for each accident year by the remuneration for that year to derive a
burning cost rate
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Divide the burning cost rate for that ANZSIC Class by the overall burning cost rate for the year to
derive the relativity.
The frequency relativities tend to be more stable than the cost relativities, simply because the latter are
affected by the volatility of the claim sizes.
To reduce this volatility we also calculated a “capped” cost relativity. This capped cost relativity was
calculated in the same fashion as the uncapped cost relativity, but with individual claims capped at
$300,000.
We have calculated the relativities for each accident year from 2004/05 to 2014/15 and the combined
relativity across all years examined. The relativities considered together give an indication of the
underlying relativity for the Class being considered.
One of the biggest difficulties with derivation of ANZSIC Class specific premium rates in the ACT is the
size of the employer base and the statistical credibility of the experience at the Class level.
To overcome this difficulty, we have grouped like ANZSIC Classes, noting that “like” in this instance
refers to the riskiness in relation to workers’ compensation claims experience. Our approach to grouping
like Classes has been based on a combination of empirical evidence, judgement about the underwriting
risks associated with similar industries, and utilising findings from assessment of other workers’
compensation schemes.
The process to select an appropriate relativity for each ANZSIC Class was to:
Start with the selected ANZSIC groupings and relativities for 2014/15 and examine the ANZSIC
Classes within each group to decide whether any needed to move to another group bearing in
mind the experience which has emerged in 2013/14
For the larger ANZSIC Classes, calculate a “default” relativity by weighting the average claim
frequency relativity and the average paid cost relativity. Judgement is then be used to determine if
the “default” relativity was appropriate for selection or whether the 2014/15 relativity remains
appropriate
For the smaller ANZSIC Classes, calculate a default relativity based on the experience for the
group rather than the individual code. Judgement is then used to determine if the default relativity
is appropriate for the group or whether the 2014/15 relativity remains appropriate
Check that the selected relativities are comparable with the relativities implied by the current
premium rates charged by ACT insurers.
Having formed assumptions regarding appropriate relativities for each ANZSIC Division, the final steps in
the process are to consider the reasonableness of the implied rates by ANZSIC Division and to test that
the reasonable rates, when applied, produce the total premium pool required.
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10 Reliances & Limitations
10.1 Data
We have relied on the accuracy and completeness of all data and other information (qualitative,
quantitative, written and verbal) provided to us by CMTEDD and private insurers for the purpose of this
report. We have not independently verified or audited the data but we have reviewed it for general
reasonableness and consistency. It should be noted that if any data or other information is inaccurate or
incomplete, we should be advised, so that our advice can be revised, if warranted.
Specific data limitations identified and the impact of these on our review are discussed further in
Appendix B.
10.2 Uncertainty
The estimates of future claims costs are intended to be a central estimate and are based on assumptions
selected without deliberate bias towards either over-estimation or under-estimation. Please note
however, that it is not possible to put a value on future claims cost with certainty. As well as difficulties
caused by limitations on the historical information, outcomes remain dependent on future events,
including legislative, social, and economic forces. Although we have prepared estimates in conformity
with what we believe to be the likely future experience, actual experience could vary considerably from
our estimates. Deviations are normal and are to be expected.
We have generally assumed that the payment of claims will proceed as in the recent past, and we have
not anticipated any extraordinary changes to the legal, social or economic environment that might affect
the cost, frequency or future reporting of claims.
In our judgement, we have employed techniques and assumptions that are appropriate, and the
conclusions presented herein are reasonable, given the information currently available. However, it
should be recognised that future claim emergence will likely deviate, perhaps materially, from our
estimates.
10.3 Distribution and Use
This report is being provided for the use of the CMTEDD for the purposes stated in Section 1.1 of this
report. It is not intended, nor necessarily suitable, for any other purpose. This report should only be
relied on by CMTEDD for the purpose for which it is intended. No other use of, or reference to, this
report may be made without the prior written consent of Finity, nor should any part of the report be
disclosed to any other person. The report should be considered as a whole.
Third parties, whether authorised or not to receive this report, should recognise that the furnishing of this
report is not a substitute for their own due diligence and should place no reliance on this report or the
data contained herein which would result in the creation of any duty or liability by Finity to the third party.
Finity has performed the work assigned and has prepared this report in conformity with its intended
utilisation by a person technically competent in the areas addressed and for the stated purposes only.
Judgements about the conclusions drawn in this report should be made only after considering the report
in its entirety, as the conclusions reached by a review of a section or sections on an isolated basis may
be incorrect.
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Part IV Appendices
A Glossary of Terms
The terms described below may have different meanings ascribed to them in other actuarial reports.
Term Definition
Accident Year The year (years ending 30 June) in which the injury occurred which gave
rise to a claim. E.g. a claim occurring on either 30 September 2008 or 30
March 2009 is said to belong to the 2008/09 accident year.
Active claim A claim which has received a weekly payment in the quarter, excluding
any claims where total weekly payments to date were negative or where
the weekly payments made in the quarter total zero.
Central Estimate An estimate of the liability which is intended to contain no deliberate bias
to either over- or under-estimation and does not include allowance for
claims handling expenses.
Claim Frequency Estimated ultimate number of claims divided by a measure of exposure
(either wages or employees).
Continuance Rate The number of claimants in receipt of weekly benefits in one quarter
divided by the number in receipt of weekly benefits in the preceding
quarter. For example, the rate for development quarter 1:2 is calculated
as the number of claimants receiving weekly benefits the second quarter
after the accident quarter, compared with the number receiving weekly
benefits in the accident quarter.
Development Year The number of years since the year in which the accident occurred, e.g.
development year 1 is the same as the year of accident, development
year 2 is the year following the accident year, etc.
Earned Premium Policy-year premiums spread over the period of cover. All premiums
shown are exclusive of GST and inclusive of brokerage/commissions.
Earned Wages Policy-year wages spread over the period of cover. All wages shown are
exclusive of superannuation, but include salary, overtime, shift and other
allowances, over-award payments, bonus, commissions, payments for
public and annual holidays (including loadings), payments for sick and
long service leave, value of board/lodging provided by employer,
reimbursement for expenses incurred by the worker due to employment,
any amount expended on behalf of the worker, directors’ fees, and fringe
benefits costs.
Loss Ratio Estimated ultimate cost (net of recoveries) divided by gross earned
premium for that year. Ultimate costs have been discounted to the mid-
point of the relevant accident year.
IBNR Incurred but Not Reported Claims – i.e. claims that have occurred at the
review date but have not yet been reported.
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Nil claims Claims which have no payments made to date. Some nil claims will
always remain nil (“report only claims”) while others will become non-nil
claims as payments are made
Outstanding Claims Costs Includes the costs of IBNR claims and allowance for further payments on
already reported claims.
PPCF Payment per Claim Finalised
PPCI Payment per Claim Incurred
PPCS Payment per Claim Settled
Premium Pool Estimated claims costs plus allowance for expenses and insurer margins.
Premium Rate Premiums divided by wages. The premium rate may be calculated on
either a written or earned basis.
Risk Premium Total expected claim costs divided by wages. Historical risk premiums
are calculated from actual past payments plus our estimate of
outstanding claims.
Superimposed Inflation The tendency for claims costs to increase at a higher rate than normal
economic inflation (i.e. wage inflation).
Ultimate Claim Numbers The total expected number of claims for an accident year. This will
include all claims reported to the review date together with any IBNR
claims for the accident year.
Ultimate Claims Costs The total expected claim costs for an accident year. This includes all
amounts paid to the review date (net of recoveries) plus outstanding
claims costs.
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B Scheme Background
This section covers the background to the workers’ compensation scheme in the ACT, including the
impacts of the major legislative amendments.
B.1 Introduction
The ACT workers’ compensation scheme (Scheme) is a privately underwritten scheme, operating under
the Workers’ Compensation Act 1951 (the Act). CMTEDD is responsible for the administration of the Act.
Under the Act, employers are required to take out a workers’ compensation insurance policy with an
approved insurer (approved by the Minister) or be granted an exemption to self-insure these risks by the
Minister. There are currently seven licensed insurers providing workers’ compensation insurance in the
ACT:
QBE (including the run-off of Mercantile Mutual Insurance)
Allianz
IAG (including the run-off of CGU, FAI, HIH, NZI and VACC)
Suncorp (written through the GIO licence and including the run-off of Vero)
Zurich
Guild
Catholic Churches Insurance (CCI).
B.1.1 The Default Insurance Fund
The Default Insurance Fund (DIF) is a body established under the Act to cover the cost of claims for
compensation where the employer is uninsured, bankrupt or insolvent. The DIF is funded by a levy on
premiums, and on notional premiums in the case of self-insurers. We have excluded the cost of claims
covered by the DIF from the analysis of claim performance of the Scheme and have included an
allowance for the DIF levy in determining the reasonable premium pool.
B.2 Compensation Types
Under the Act, a worker is entitled to compensation as described below.
B.2.1 Weekly Benefits
Compensation is provided to a worker who is incapacitated for work as a result of an injury or disease
arising out of, or in the course of, the worker’s employment. Weekly payments may continue for the
duration of the incapacity, or to age 65. The level of the weekly payment (“the replacement ratio”) varies
by duration of incapacity as shown in Table B.1 below.
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Table B.1 – Weekly Benefit Entitlements
Weeks on Benefit Total Incapacity Partial Incapacity
0-26 weeks100% of average pre-incapacity weekly
earnings.
100% of the difference between average pre-
incapacity weekly earnings and average
weekly amounts the worker is being paid or
could earn in reasonably available suitable
employment.
26 weeks +
* 100% of average pre-incapacity weekly
earnings, if average pre-incapacity weekly
earnings are less than the pre-incapacity floor
(i.e. the federal minimum wage immediately
before the incapacity); or
* Maximum of either 65% of average pre-
incapacity weekly earnings and the statutory
floor.
A percentage of the difference between
average pre-incapacity weekly earnings
(subject to the minimum statutory floor and
maximum statutory ceiling of 150% of AWE)
and average weekly amounts the worker is
being paid or could earn in reasonably
available suitable employment, with this
percentage varying depending on the weekly
hours worked relative to pre-incapacity hours
of the employer.
The weekly benefits described above have been in place since 1 July 2002.
B.2.2 Medical and Rehabilitation Benefits
The Act provides for compensation to the injured worker for costs associated with medical treatment
(including hospital), rehabilitation services, alterations to the worker’s place of residence, wages lost by
the worker whilst attending treatment, transport to/from treatment, accommodation (including meals)
while at treatment, repair/replacement of damaged clothing, etc. The total amount of medical costs
relating to repair or replacement of contact lenses, crutches, prosthesis, spectacles, artificial aids and for
loss or damage to a worker’s clothing is capped at $500 (currently around CPI indexed to approximately
$700).
B.2.3 Death Benefits
Dependants are entitled to lump sum compensation on the death of the worker, capped at $150,000 (CPI
indexed to approximately $210,000). In addition, dependants may be entitled to receive weekly
payments of $50 per week (CPI indexed to $70 per week) and funeral expenses of $4,000 (CPI indexed
to just under $5,600).
B.2.4 Impairment Lump Sums
Workers who suffer a permanent impairment from a work-related injury or disease are entitled to receive
a maximum lump sum payment of $100,000 (CPI indexed to approximately $140,000) for a single injury
or $150,000 (CPI indexed to approximately $210,000) for multiple injuries. The level of the lump sum
payment varies between 2% and 100% of the maximum amount for a total loss as shown in Schedule 1
of the Act. For partial losses, the claimant is entitled to a proportionate reduction on the Schedule 1
amount. In most cases, a claim for an impairment lump sum cannot be made earlier than two years after
the injury. Weekly benefits may continue to be payable despite payment of a lump sum benefit, subject
to negotiation between the injured worker and employer or insurer.
B.2.5 Redemptions of Statutory Entitlements
In certain circumstances, subject to negotiation between the injured worker and the employer or insurer,
claimants may commute their statutory benefits. The redemption may include amounts for the worker’s
entitlement to weekly benefits, medical and other expenses. Throughout the report we refer to the
redemption of statutory entitlements as “commutations”.
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B.2.6 Common Law
A worker may be entitled to seek compensation damages under common law where the work-related
injury or disease was caused or contributed to by the negligence of a third party. Damages awarded are
reduced by the amount of compensation already paid to the worker. Access to common law and the
maximum amount of compensation available are unlimited under the Act.
Common law payments may include either damages awarded at court or negotiated lump sum
settlements (i.e. a lump sum payment accompanied by a common law release).
B.2.7 Legal Costs
An injured worker may also seek reimbursement for the costs of legal and other expenses incurred as a
result of pursuing common law damages or negotiating a settlement of their statutory entitlement.
B.3 Journey Claims
Workers are covered for injuries arising out of journeys both to and from work and undertaken for work
purposes.
B.4 Employer Excess
The level of employer excess is not prescribed under the Act, but can be negotiated between the
employer and the insurer.
B.5 Legislative Reform
This section summarises the legislative reforms that have had a significant impact on our review. The
reader is referred to the relevant legislation for full details of the changes.
B.5.1 2002 Amendments
The Workers’ Compensation Amendment Act 2001 came into effect on 1 July 2002, and applies to
injuries where the accident occurred on or after this date.
The amendments from the previous legislation may be summarised as follows:
Weekly benefits
► Benefits cease upon return to work or pension age (previously death)
► Benefits depend on average pre-injury earnings including overtime (previously did not
include overtime or allowances)
► Benefits for incapacity post 26 weeks drop to 65% of pre-injury earnings (previously based
on a statutory rate) subject to a minimum of a statutory floor
► Benefits for partial incapacity subject to a minimum of a statutory floor (the federal minimum
wage) and statutory ceiling (150% of AWE) (previously based on a statutory amount).
Lump sums
► Introduction of 6% threshold for access to compensation for hearing loss
► Expanded the Table of Maims
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► Increased maximum impairment, death and funeral benefits
► Introduction of a two year waiting period before a worker could claim for permanent
impairment benefits.
Medical benefits
► Increased maximum amount for specified medical costs.
Common Law
► Reduced statute of limitations for common law to 3 years (previously 6 years).
Other
► Definition of worker expanded to include volunteers
► Definition of employment-related diseases tightened
► Definition of journey claims tightened
► Increased focus on injury management processes, including the strengthening of
requirements for employers to provide suitable return to work
► Encouraged early notification of claims.
B.5.2 Civil Law (Wrongs) Act 2002
The amendments introduced as part of the Civil Law (Wrongs) Act 2002 came into force in late 2002 and
resulted in changes to legal proceedings in the ACT. In September 2003, the legislation was amended to
exclude workers’ compensation claims from the Wrongs Act.
B.5.3 2006 Amendments
The Workers’ Compensation Act 2006 and Workers’ Compensation Amendment Act 2006 (No 2) became
effective 1 July 2006 and resulted in the:
Establishment of the Default Insurance Fund
Change in definition of maximum duration of weekly compensation to 65 years of age
Categorisation of some ‘carers’ as workers
Encouragement of early reporting of injury
Specific mention of rehabilitation costs.
B.5.4 2009 Amendments
The Workers’ Compensation Amendment Act 2009 introduced a range of amendments that:
Allowed the appointment of a rehabilitation service provider in the event that an injured worker had
been unable to return to work in their pre-injury hours and duties within 4 weeks
Introduced new offences and penalties for non-compliance by employers.
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B.5.5 2011 Amendments
The Workers’ Compensation Amendment Regulation 2011 came into effect on 1 September 2011 and
introduced amendments requiring compliance audits of Approved Insurers and Self-Insurers.
B.5.6 2013 Amendments – Regulatory Levy
The Workers Compensation Amendment Bill 2013, passed in October 2013, amends the Act to enable
funding of Work Health and Safety regulatory costs via an insurer levy.
B.5.7 2014 Amendments – Cross Border Arrangements
The Workers Compensation (Cross-border Workers) Amendment Bill 2014 was in October 2014, to align
cross-border state of connection with updated national guidelines. These amendments provide guidance
in the event of dispute regarding relevant jurisdiction and connection to employment in the ACT.
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C Data
This section summarises the data provided to us for this review and documents the reconciliations
performed.
C.1 WCMS Data
The WCMS data provided to us by CMTEDD is detailed below.
C.1.1 Claim File
We received an individual claim file listing all claims reported or having had a payment between 1 July
1999 and December 2014, which included the following variables:
1. Claim ID (WCMS assigned)
2. Claim number (insurer assigned)
3. Policy number
4. Coverage ID and reference (unique identifiers to link to the coverage file)
5. Accident date
6. Report date, the date claim was notified to the insurer by the employer
7. Lodgement date, the date claim was lodged with employer
8. ANZSIC 1993 and 2006
9. Type of injury (“Injury”)
10. Mechanism of injury (“Mechanism”)
11. Part of body injured (“Body Location”)
12. Agency causing the injury (“Agency”)
13. Worker details (date of birth, gender, duty status, employment status, hours worked, pre-injury
earnings)
14. Whole Person Impairment (WPI) percentage
15. Claim finalised date
16. Date reopened
17. Claim status
18. Total estimated payments
19. Total estimate lost time.
C.1.2 Payment Transaction File
We received a claim payment transaction file with payments made (by payment type and month)
between 1 July 1999 and December 2014, which included the following variables:
1. Payment ID (WCMS assigned)
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2. Payment reference (insurer assigned)
3. Claim ID and reference (unique identifiers to link to the claim file)
4. Insurer number and name
5. Date of transaction
6. Service date
7. Payment type
8. Payment amount
9. Payment Source (i.e. employer or insurer)
10. Time Lost in Minutes.
C.1.3 Case Estimate File
We received an individual claim file listing all claims reported or having had a payment between 1 July
1999 and December 2014, which included the following variables:
1. Claim ID (WCMS assigned)
2. Claim number (insurer assigned)
3. Insurer Name
4. Total estimated payments
5. Total payments to date
6. Total outstanding amounts
C.1.4 Policy File
We received an individual policy file for all policies written or renewed between 1 July 1999 and
December 2014, which contained the following variables:
1. Policy ID (WCMS assigned)
2. Policy number (insurer assigned)
2. Insurer number and name
3. Employer ABN
4. Employer name
5. Employer postcode.
C.1.5 Coverage File
We received an individual premium file for all policies exposed from 1 July 1988 that included the
variables listed below:
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1. Policy ID (WCMS assigned)
2. Policy number (insurer assigned)
3. Cover ID (WCMS assigned)
4. Coverage reference (insurer assigned)
5. Insurer number and name
6. Employer ABN
7. ANZSIC 1993 and ANZSIC 2006
8. Start date of period of cover (“Effective Date”)
9. End date of period of cover (“Expiry Date”)
10. Number of workers (“Estimated Workers” and “Actual Workers”)
11. Wages in dollars (“Estimated Wages” and “Actual Wages”)
12. Premiums charged (“Initial Deposit”, “Adjusted Amount” and “Actual Final”)
13. Lapse reason code
14. Coverage type (e.g. new policy, adjustment, renewal, etc)
15. Policy type (e.g. normal, burning cost, minimum premium).
C.2 Information Provided by Insurers
Each of the insurers of workers’ compensation in the ACT provided us with summarised premium, wages
and claims information, including:
Written policies for policy years ending 30 June 2004 to 30 June 2014, separately for burner and
all other policies
Written wages for policy years ending 30 June 2004 to 30 June 2014. Insurers provided both initial
(i.e. that initially estimated at the start of the policy period) and final adjusted written wages,
separately for burner and all other policies
Written premium for policy years ending 30 June 2004 to 30 June 2014. Insurers provided both
initial and adjusted written premiums, separately for burner and all other policies
Earned wages for accident years ending 30 June 2004 to 30 June 2014, and by ANZSIC Division.
Insurers provided adjusted earned wages
Earned premium for accident years ending 30 June 2004 to 30 June 2014, and by ANZSIC
Division. Insurers provided adjusted earned premiums.
Numbers of claims reported, subdivided by accident year and report year
Claim payments made, subdivided by accident year and payment year
Case estimates and IBNR/ER allowances as at 30 June 2014, subdivided by accident year.
In order to improve the comparability and consistency of the information supplied by insurers, the data
required adjustment in some cases so that:
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Premiums include brokerage and commissions
Wages exclude superannuation.
We compared the premium and wages information supplied for this review with that supplied for the
previous review and found some increases in wages and premiums recorded for more recent policy
years. This reflects expected development on policies as information is updated with final wages
estimates and changes to burner policies reflect emerging claims experience. The differences were not
unexpected.
We compared the claim number, claim payment and case estimate information supplied by the insurers
to that on WCMS. The reconciliations are detailed in Appendix C.3 below. Our findings were:
There are some significant differences between WCMS claim number data and insurer records
arising from differences in recording and reporting of nil claims and notifications for one insurer.
This is not expected to impact our analysis as our average payment models are based on the
number of non-nil claims.
There were some substantial differences in the case estimate information between WCMS and
insurer data, relating primarily to two larger insurers. There were also some less material
differences relating to two smaller insurers.
We have utilised WCMS case estimate information for all insurers.
C.3 Data Reconciliations
We compared the WCMS data provided for this review with the data provided for our previous review.
The following table summarises the comparison of claim reports and claim payments to 30 June 2013
from the two data sources.
Table C.1 – Reconciliation to Previous Data
Accident
Year
Current
Dataset
Previous
Dataset Difference
%
Difference
Current
Dataset
Previous
Dataset Difference
%
Difference
2003/04 3,592 3,618 -26 -1% 75.9 75.9 0.0 0%
2004/05 3,627 3,659 -32 -1% 84.4 84.4 0.0 0%
2005/06 3,538 3,556 -18 -1% 82.9 82.9 0.0 0%
2006/07 3,681 3,701 -20 -1% 77.7 77.7 0.0 0%
2007/08 3,484 3,484 0 0% 68.6 68.6 0.0 0%
2008/09 3,318 3,308 10 0% 80.5 80.5 0.0 0%
2009/10 3,424 3,418 6 0% 83.8 83.8 0.0 0%
2010/11 3,602 3,589 13 0% 75.2 75.2 0.1 0%
2011/12 3,578 3,554 24 1% 47.0 47.0 0.0 0%
2012/13 3,140 3,139 1 0% 20.8 20.6 0.2 1%
Total 34,984 35,026 -42 0% 696.9 696.6 0.3 0%
Claim Numbers Claim Payments ($m)
The data from the two sources matched closely.
We also received summaries of claim and policy data from the insurers operating in the Scheme in
response to our request to confirm the validity of the WCMS data.
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Table C.2 shows a reconciliation of the number of claims on the WCMS database to those supplied by
insurers.
Table C.2 – Claim Numbers Reported - WCMS vs. Insurer Data
Accident
Year
WCMS
Data
Insurer
Data Difference
%
Difference
2003/04 4,050 4,879 -829 -17%
2004/05 4,073 5,105 -1,032 -20%
2005/06 3,972 3,982 -10 0%
2006/07 4,416 4,419 -3 0%
2007/08 4,219 4,223 -4 0%
2008/09 4,404 4,409 -5 0%
2009/10 4,738 4,739 -1 0%
2010/11 4,927 4,933 -6 0%
2011/12 5,016 5,044 -28 -1%
2012/13 4,848 4,872 -24 0%
2013/14 4,573 4,610 -37 -1%
The differences between the WCMS data and insurer data are significant in the 2003/04 and 2004/05,
but this relates to one insurer that had an abnormally high number of nil claims recorded on their
databases against these years, while the WCMS database did not include these nil claims. As such, our
view is that the number of claims on the WCMS database reconciles satisfactorily to the insurer data.
Table C.3 shows a reconciliation of claim payments in WCMS to that supplied by insurers.
Table C.3 – Claim Payments - WCMS vs. Insurer Data
Accident
Year
WCMS
Data
Insurer
Data Difference Difference
$000 $000 $000 %
2003/04 59,497 57,227 2,271 4%
2004/05 67,269 66,997 272 0%
2005/06 73,115 73,413 -297 0%
2006/07 80,269 79,331 937 1%
2007/08 75,093 75,604 -511 -1%
2008/09 73,512 72,126 1,386 2%
2009/10 89,176 89,642 -466 -1%
2010/11 97,072 96,594 479 0%
2011/12 101,393 99,400 1,993 2%
2012/13 122,377 118,099 4,278 4%
2013/14 139,110 131,284 7,826 6%
Differences in payments between the insurer data and WCMS database between 2004/05 to 2013/14
years are minimal. As such, our view is that the claim payment data on the WCMS database reconciles
satisfactorily to the insurer data.
Table C.4 shows a reconciliation of case estimates in WCMS to that supplied by insurers.
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Table C.4 – Case Estimates - WCMS vs. Insurer Data
Accident
Year
WCMS
Data
Insurer
Data Difference Difference
$000 $000 $000 %
Prior 8,858 2,870 5,989 209%
2004/05 1,673 251 1,423 568%
2005/06 2,772 657 2,115 322%
2006/07 3,128 1,374 1,755 128%
2007/08 3,050 881 2,169 246%
2008/09 7,955 2,113 5,842 277%
2009/10 26,497 15,551 10,946 70%
2010/11 29,530 20,660 8,870 43%
2011/12 42,612 30,211 12,401 41%
2012/13 54,491 59,587 -5,096 -9%
2013/14 39,480 58,174 -18,694 -32%
The case estimates from WCMS are overstated relative to insurer data by approximately $30 million. As
discussed previously, the differences relate to two larger insurers.
As a result of the reconciliation differences observed in older years, we do not rely on case estimates in
our analysis of ultimate claim size or costs, and use case estimates supplied directly by insurers instead
of that in WCMS when comparing to our projected central estimates.
Table C.5 shows a reconciliation of the WCMS wages data to that supplied by insurers.
Table C.5 – Wages & Premiums - WCMS vs. Insurer Data Wages Premiums Premium Rate
Policy
Year
WCMS
Data
Insurer
Data Difference Difference
WCMS
Data
Insurer
Data Difference Difference
WCMS
Data
Insurer
Data Difference Difference
$m $m $m % $m $m $m %
2004/05 3,925 4,258 -334 -8% 151 149 3 2% 3.86% 3.49% 0.37% 11%
2005/06 4,219 4,566 -347 -8% 159 153 6 4% 3.77% 3.35% 0.43% 13%
2006/07 4,850 5,224 -375 -7% 158 151 7 5% 3.27% 2.89% 0.38% 13%
2007/08 5,259 5,773 -514 -9% 152 151 0 0% 2.88% 2.62% 0.27% 10%
2008/09 5,692 5,672 20 0% 146 139 6 5% 2.56% 2.46% 0.10% 4%
2009/10 5,739 5,977 -238 -4% 150 146 4 3% 2.62% 2.45% 0.17% 7%
2010/11 6,170 6,527 -357 -5% 157 151 6 4% 2.54% 2.31% 0.23% 10%
2011/12 6,664 6,928 -264 -4% 169 162 6 4% 2.53% 2.34% 0.19% 8%
2012/13 7,002 7,010 -8 0% 162 163 -1 0% 2.31% 2.32% -0.01% 0%
2013/14 6,818 7,007 -190 -3% 152 164 -12 -7% 2.23% 2.34% -0.11% -5%
The WCMS wages data is slightly lower than insurer data, while the WCMS premium information is
slightly higher than the insurer data. As a result the premium rates implied within WIMS are different to
that submitted by insurers. For this reason, pending further investigation into the reasons for these
differences, our analysis relies on the wages and premium information submitted by insurers rather than
that from WCMS.
C.4 Coding of Data on WCMS
C.4.1 Common Law, Commutations and Impairment Benefits
Discussions with the CMTEDD have revealed historical differences in coding practices of common law,
commutation and impairment benefit payments. Specific examples include:
For claims where a common law action is commenced and is subsequently settled out of court,
some insurers code the payments as common law while others code the payment as a
commutation
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Some insurers are negotiating commutations with the claimant and having the claimant sign a
common law deed of release. These are being coded as common law rather than commutations
Some insurers are coding what are essentially impairment benefit payments as commutations.
As a result of these differences in practices, we have grouped all common law, commutation and
impairment benefit payments together in undertaking this review.
C.4.2 GST and ITCs
We understand that all claim payments made in the post-GST environment are reported inclusive of GST
for all insurers. However, practices vary in relation to the treatment of ITC recoveries – some insurers
net them off in payments captured on WCMS while others do not. We understand that the WCMS data
specification is in the process of being amended to offer greater clarity to insurers on the treatment of
ITCs. However, historical information will not be amended.
As we have analysed payment data net of ITC recoveries, we have had to adjust the data for those
insurers who have not netted off the ITC recoveries. Given that the majority of workers’ compensation
payments do not attract GST, we have only netted off estimated ITC amounts from legal and
investigation costs for these insurers. Some elements of medical and rehabilitation payments will also
attract GST (e.g. home modifications, vocational rehabilitation services) and hence should have ITC
recoveries netted off. However we do not know what proportion of medical and rehabilitation payments
attract GST, and have therefore not adjusted these payments. We believe this is immaterial in the
context of our review.
C.4.3 Incident notifications
We understand that some insurers are submitting incident notifications as well as claim records to
WCMS, and that the treatment of this varies by insurers.
By looking at the numbers of non-nil claims, we should effectively capture the true number of actual
claims involving workers compensation claim payments and the differences in reporting of notifications is
therefore not expected to have a material impact on our analysis.
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D Valuation Approach
D.1 Chain Ladder Method
The chain ladder method estimates the ultimate number of claims incurred in each accident year by
analysing past claim reporting patterns and estimating a pattern for the future.
The chain ladder method can be applied to any cumulative data triangle that summarises the experience
by accident year and development period.
Chain ladder ratios are calculated from the data triangle by taking, for each accident period:
Cumulative Number of Claims reported to Development Period t
Cumulative Number of Claims reported to Development Period (t – 1)
Ratios for projection are selected taking into account the observed ratios in recent periods and changes
expected in the future. The ratios generated are then applied to the most recent cumulative claim figures
(separately for each accident period) to project reported claims to ultimate.
D.2 Payments Per Claim Incurred
The Payments Per Claim Incurred (PPCI) method models the claim process by assuming that the
payments in respect of a group of claims will develop in a predictable pattern over a period of years. This
pattern is defined by:
An average claim size
The proportion of claim payments that will be made in each development year.
The PPCI method proceeds as follows:
(i) Estimate the ultimate number of claims incurred in each accident year by using the Chain Ladder
method.
(ii) Inflate past claim payments, subdivided by accident and payment years, to the monetary values of
the latest accident year using an appropriate measure of past inflation.
(iii) For each accident year divide the inflation adjusted claim payments [derived in (ii)] by the
estimated ultimate number of claims incurred [calculated in (i)] to obtain an historical PPCI pattern
of payments.
(iv) Taking into account the result for (iii) and expectations for the future, select the average claims
size together with the proportion of the payments made in each development year.
(v) Using an assumed future rate of claim inflation calculate projected future payments for each
accident year by multiplying together:
(a) The estimated ultimate number of claims incurred
(b) The average claim size in current dollars
(c) The proportion of payments by development year
(d) The assumed inflation factor.
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The present value of liabilities is calculated by discounting projected payments to the valuation date at
the assumed discount rate.
D.3 Payments Per Claim Settled
This method models the claims process by assuming that the payments in respect of a group of claims
will develop in a predictable pattern over a period of years. This pattern is often expressed as the
payments per claim settled together with the proportion of claims which will be settled in each
development year.
There can sometimes be a timing mismatch between the date a claim first receives a lump sum payment
and the date of final payment, and we note that a small amount of common law and lump sum claims do
involve multiple common law or lump sum payments. We therefore define date of settlement to be the
date of last payment. We note that the method may be susceptible to changes in data due to re-
openings and payment of further benefits, but this is not expected to materially alter the results of our
analysis providing the rate of such re-openings remains stable over time.
In order to use this method, we need to make assumptions about:
The number of claims incurred in each accident year
The average payment per claim settled in the monetary values of the latest accident year (not
necessarily the same average cost for all accident years)
The proportion of claims settled in each development period, before allowance for claim inflation
Rates of future claim inflation and investment earnings.
Future payments are projected by multiplying together:
The number of claims outstanding
The payment per claim settled in current dollars
The proportion of claims settled by development period
The proportion of future settlements paid by development period
The inflation index based on projected rates of claims inflation.
The present value of liabilities is then calculated by discounting projected payments to the valuation date
at the assumed discount rate.
D.4 Continuance model
The continuance model is in effect a Payments Per Active Claim (“PPAC”) model which assumes that the
payments in respect of a group of claims will develop in a predictable pattern over a period of years. This
pattern is defined by:
An average claim size
The proportion of claims will remain active and receiving benefits in each development year.
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The PPAC method proceeds as follows:
(i) Estimate the ultimate number of active claims incurred in each accident year by using the Chain
Ladder method, taking into account the number of claims active in the most recent period and
assumed continuance rates in future.
(ii) Inflate past claim payments, subdivided by accident and payment years, to the monetary values of
the latest accident year using an appropriate measure of past inflation.
(iii) For each accident year divide the inflation adjusted claim payments [derived in (ii)] by the
estimated ultimate number of active claims [calculated in (i)] to obtain an historical pattern of
average weekly benefits per continuing claim.
(iv) Taking into account the result for (iii) and expectations for the future, select the average claims
size together with the proportion of the payments made in each development year.
(v) Using an assumed future rate of claim inflation, calculate projected future payments for each
accident year by multiplying together:
(a) The estimated ultimate number of active claims incurred
(b) The average claim size in current dollars
(c) The proportion of payments by development year
(d) The assumed inflation factor.
The implied payments were then converted into PPCIs for comparison with the PPCI model.
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E Claim Number Analysis
ACT Workers' Compensation Scheme Review
All Claims
Excludes Nil Claims
Chain Ladder Model
E1.1 Cumulative Number of Claims (excluding nil claims)Accident Development Quarter (delay to first payment) Reported
Quarter 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 to date
Dec-07 494 792 830 840 843 844 844 845 847 847 849 850 850 850 851 853 853 853 853 853 854 854 854 854 854 854 855 855 855 855
Mar-08 476 807 837 847 857 858 861 861 864 865 869 871 872 872 873 874 874 874 873 873 873 873 873 873 873 873 873 873 873
Jun-08 520 790 815 831 838 843 847 848 848 850 853 855 854 853 853 854 854 854 854 854 855 855 855 855 855 855 855 855
Sep-08 514 792 825 837 840 845 849 852 856 857 857 857 858 858 858 858 858 858 860 860 860 860 861 861 861 861 861
Dec-08 461 704 747 758 766 768 773 775 777 777 778 778 778 778 778 779 779 779 779 779 779 779 780 779 780 780
Mar-09 463 784 824 836 839 841 842 844 844 844 844 844 848 848 848 848 848 848 848 848 848 848 848 849 849
Jun-09 485 776 803 815 820 824 828 828 828 829 829 830 831 832 832 832 832 833 834 834 834 834 834 834
Sep-09 492 782 825 839 843 846 848 849 851 852 852 853 853 853 853 853 853 853 854 854 854 854 854
Dec-09 463 720 756 767 772 776 779 779 779 779 779 780 780 780 780 780 781 782 783 783 783 783
Mar-10 504 856 882 895 903 909 910 911 912 913 913 914 914 914 914 914 914 914 915 915 915
Jun-10 545 826 854 862 869 873 873 876 877 879 879 879 879 880 880 881 881 882 882 882
Sep-10 578 885 926 939 943 946 949 951 952 953 957 958 959 959 960 960 960 960 960
Dec-10 553 817 844 857 863 865 866 868 869 871 871 872 873 874 874 874 875 875
Mar-11 507 799 834 840 844 849 853 856 857 860 860 861 863 866 868 868 868
Jun-11 580 870 887 897 902 902 903 905 906 908 908 908 911 911 911 911
Sep-11 537 881 919 928 935 935 938 938 939 942 944 944 944 945 945
Dec-11 532 816 860 875 880 883 886 887 891 893 893 894 894 894
Mar-12 461 801 837 847 853 858 866 869 869 870 870 870 870
Jun-12 545 830 859 862 869 869 870 872 874 875 877 877
Sep-12 537 792 824 840 841 844 844 846 849 849 849
Dec-12 485 738 784 794 804 805 807 809 810 810
Mar-13 489 811 847 855 862 867 867 869 869
Jun-13 493 784 818 821 829 831 833 833
Sep-13 499 780 811 823 828 828 828
Dec-13 424 652 687 701 703 703
Mar-14 429 727 751 757 757
Jun-14 476 760 783 783
Sep-14 535 767 767
E1.2 Chain Ladder FactorsAccident Development Quarter (delay to first payment)
Quarter 1:2 2:3 3:4 4:5 5:6 6:7 7:8 8:9 9:10 10:11 11:12 12:13 13:14 14:15 15:16 16:17 17:18 18:19 19:20 20:21 21:22 22:23 23:24 24:25 25:26 26:27 27:28 28:29 29:30
Dec-07 1.6032 1.0480 1.0120 1.0036 1.0012 1.0000 1.0012 1.0024 1.0000 1.0024 1.0012 1.0000 1.0000 1.0012 1.0024 1.0000 1.0000 1.0000 1.0000 1.0012 1.0000 1.0000 1.0000 1.0000 1.0000 1.0012 1.0000 1.0000
Mar-08 1.6954 1.0372 1.0119 1.0118 1.0012 1.0035 1.0000 1.0035 1.0012 1.0046 1.0023 1.0011 1.0000 1.0011 1.0011 1.0000 1.0000 0.9989 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
Jun-08 1.5192 1.0316 1.0196 1.0084 1.0060 1.0047 1.0012 1.0000 1.0024 1.0035 1.0023 0.9988 0.9988 1.0000 1.0012 1.0000 1.0000 1.0000 1.0000 1.0012 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
Sep-08 1.5409 1.0417 1.0145 1.0036 1.0060 1.0047 1.0035 1.0047 1.0012 1.0000 1.0000 1.0012 1.0000 1.0000 1.0000 1.0000 1.0000 1.0023 1.0000 1.0000 1.0000 1.0012 1.0000 1.0000 1.0000
Dec-08 1.5271 1.0611 1.0147 1.0106 1.0026 1.0065 1.0026 1.0026 1.0000 1.0013 1.0000 1.0000 1.0000 1.0000 1.0013 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0013 0.9987 1.0013
Mar-09 1.6933 1.0510 1.0146 1.0036 1.0024 1.0012 1.0024 1.0000 1.0000 1.0000 1.0000 1.0047 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0012
Jun-09 1.6000 1.0348 1.0149 1.0061 1.0049 1.0049 1.0000 1.0000 1.0012 1.0000 1.0012 1.0012 1.0012 1.0000 1.0000 1.0000 1.0012 1.0012 1.0000 1.0000 1.0000 1.0000
Sep-09 1.5894 1.0550 1.0170 1.0048 1.0036 1.0024 1.0012 1.0024 1.0012 1.0000 1.0012 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0012 1.0000 1.0000 1.0000
Dec-09 1.5551 1.0500 1.0146 1.0065 1.0052 1.0039 1.0000 1.0000 1.0000 1.0000 1.0013 1.0000 1.0000 1.0000 1.0000 1.0013 1.0013 1.0013 1.0000 1.0000
Mar-10 1.6984 1.0304 1.0147 1.0089 1.0066 1.0011 1.0011 1.0011 1.0011 1.0000 1.0011 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0011 1.0000
Jun-10 1.5156 1.0339 1.0094 1.0081 1.0046 1.0000 1.0034 1.0011 1.0023 1.0000 1.0000 1.0000 1.0011 1.0000 1.0011 1.0000 1.0011 1.0000
Sep-10 1.5311 1.0463 1.0140 1.0043 1.0032 1.0032 1.0021 1.0011 1.0011 1.0042 1.0010 1.0010 1.0000 1.0010 1.0000 1.0000 1.0000
Dec-10 1.4774 1.0330 1.0154 1.0070 1.0023 1.0012 1.0023 1.0012 1.0023 1.0000 1.0011 1.0011 1.0011 1.0000 1.0000 1.0011
Mar-11 1.5759 1.0438 1.0072 1.0048 1.0059 1.0047 1.0035 1.0012 1.0035 1.0000 1.0012 1.0023 1.0035 1.0023 1.0000
Jun-11 1.5000 1.0195 1.0113 1.0056 1.0000 1.0011 1.0022 1.0011 1.0022 1.0000 1.0000 1.0033 1.0000 1.0000
Sep-11 1.6406 1.0431 1.0098 1.0075 1.0000 1.0032 1.0000 1.0011 1.0032 1.0021 1.0000 1.0000 1.0011
Dec-11 1.5338 1.0539 1.0174 1.0057 1.0034 1.0034 1.0011 1.0045 1.0022 1.0000 1.0011 1.0000
Mar-12 1.7375 1.0449 1.0119 1.0071 1.0059 1.0093 1.0035 1.0000 1.0012 1.0000 1.0000
Jun-12 1.5229 1.0349 1.0035 1.0081 1.0000 1.0012 1.0023 1.0023 1.0011 1.0023
Sep-12 1.4749 1.0404 1.0194 1.0012 1.0036 1.0000 1.0024 1.0035 1.0000
Dec-12 1.5216 1.0623 1.0128 1.0126 1.0012 1.0025 1.0025 1.0012
Mar-13 1.6585 1.0444 1.0094 1.0082 1.0058 1.0000 1.0023
Jun-13 1.5903 1.0434 1.0037 1.0097 1.0024 1.0024
Sep-13 1.5631 1.0397 1.0148 1.0061 1.0000
Dec-13 1.5377 1.0537 1.0204 1.0029
Mar-14 1.6946 1.0330 1.0080
Jun-14 1.5966 1.0303
Sep-14 1.4336
E1.3 Selected Chain Ladder FactorsDevelopment Quarter (delay to first payment)
1:2 2:3 3:4 4:5 5:6 6:7 7:8 8:9 9:10 10:11 11:12 12:13 13:14 14:15 15:16 16:17 17:18 18:19 19:20 20:21 21:22 22:23 23:24 24:25 25:26 26:27 27:28 Tail
Dec-14 Selected 1.5700 1.0450 1.0125 1.0090 1.0035 1.0035 1.0015 1.0015 1.0015 1.0015 1.0015 1.0010 1.0005 1.0004 1.0003 1.0002 1.0002 1.0002 1.0002 1.0002 1.0002 1.0001 1.0001 1.0001 1.0001 1.0001 1.0001 1.0005
E1.4 Incremental Projected Number of ClaimsAccident Development Quarter (delay to first payment) Ultimate
Quarter 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Tail Claims
Dec-07 494 298 38 10 3 1 0 1 2 0 2 1 0 0 1 2 0 0 0 0 1 0 0 0 0 0 1 0 0 0 0 855
Mar-08 476 331 30 10 10 1 3 0 3 1 4 2 1 0 1 1 0 0 -1 0 0 0 0 0 0 0 0 0 0 0 0 874
Jun-08 520 270 25 16 7 5 4 1 0 2 3 2 -1 -1 0 1 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 856
Sep-08 514 278 33 12 3 5 4 3 4 1 0 0 1 0 0 0 0 0 2 0 0 0 1 0 0 0 0 0 0 0 0 862
Dec-08 461 243 43 11 8 2 5 2 2 0 1 0 0 0 0 1 0 0 0 0 0 0 1 -1 1 0 0 0 0 0 0 781
Mar-09 463 321 40 12 3 2 1 2 0 0 0 0 4 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 850
Jun-09 485 291 27 12 5 4 4 0 0 1 0 1 1 1 0 0 0 1 1 0 0 0 0 0 0 0 0 0 0 0 0 835
Sep-09 492 290 43 14 4 3 2 1 2 1 0 1 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 855
Dec-09 463 257 36 11 5 4 3 0 0 0 0 1 0 0 0 0 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 784
Mar-10 504 352 26 13 8 6 1 1 1 1 0 1 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 917
Jun-10 545 281 28 8 7 4 0 3 1 2 0 0 0 1 0 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 884
Sep-10 578 307 41 13 4 3 3 2 1 1 4 1 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 962
Dec-10 553 264 27 13 6 2 1 2 1 2 0 1 1 1 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 877
Mar-11 507 292 35 6 4 5 4 3 1 3 0 1 2 3 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 870
Jun-11 580 290 17 10 5 0 1 2 1 2 0 0 3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 914
Sep-11 537 344 38 9 7 0 3 0 1 3 2 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 948
Dec-11 532 284 44 15 5 3 3 1 4 2 0 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 898
Mar-12 461 340 36 10 6 5 8 3 0 1 0 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 875
Jun-12 545 285 29 3 7 0 1 2 2 1 2 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 882
Sep-12 537 255 32 16 1 3 0 2 3 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 857
Dec-12 485 253 46 10 10 1 2 2 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 817
Mar-13 489 322 36 8 7 5 0 2 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 878
Jun-13 493 291 34 3 8 2 3 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 844
Sep-13 499 281 31 12 5 3 3 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 844
Dec-13 424 228 35 14 6 2 2 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 721
Mar-14 429 298 24 9 7 3 3 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 782
Jun-14 476 284 34 10 7 3 3 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 827
Sep-14 535 305 38 11 8 3 3 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 914
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ACT Workers' Compensation Scheme Review
Lost Time Claims
Excludes Nil Claims
Chain Ladder Model
E2.1 Cumulative Number of ClaimsAccident Development Year (of first Weekly Benefit Payment) Reported
Year 1 2 3 4 5 6 7 8 to date
2006/07 1,633 2,155 2,197 2,207 2,209 2,209 2,209 2,209 2,209
2007/08 1,687 2,124 2,153 2,157 2,161 2,161 2,161 2,161
2008/09 1,593 2,082 2,109 2,116 2,117 2,117 2,117
2009/10 1,641 2,128 2,160 2,166 2,166 2,166
2010/11 1,701 2,157 2,191 2,197 2,197
2011/12 1,714 2,196 2,221 2,221
2012/13 1,668 2,123 2,123
2013/14 1,522 1,522
E2.2 Chain Ladder FactorsAccident Development Year (of first Weekly Benefit Payment)
Year 1:2 2:3 3:4 4:5 5:6 6:7 7:8
2006/07 1.3197 1.0195 1.0046 1.0009 1.0000 1.0000 1.0000
2007/08 1.2590 1.0137 1.0019 1.0019 1.0000 1.0000
2008/09 1.3070 1.0130 1.0033 1.0005 1.0000
2009/10 1.2968 1.0150 1.0028 1.0000
2010/11 1.2681 1.0158 1.0027
2011/12 1.2812 1.0114
2012/13 1.2728
2013/14
E2.3 Selected Chain Ladder FactorsDevelopment Year (of first Weekly Benefit Payment)
1:2 2:3 3:4 4:5 5:6 6:7 Tail
Dec-14 Selected 1.3200 1.0155 1.0033 1.0015 1.0005 1.0003 1.0003
E2.4 Incremental Projected Number of ClaimsAccident Development Year (of first Weekly Benefit Payment) Ultimate
Year 1 2 3 4 5 6 7 8 Tail Claims
2006/07 1,633 522 42 10 2 0 0 0 0 2,209
2007/08 1,687 437 29 4 4 0 0 0 0 2,162
2008/09 1,593 489 27 7 1 0 1 0 0 2,118
2009/10 1,641 487 32 6 0 1 1 0 0 2,168
2010/11 1,701 456 34 6 3 1 1 0 0 2,203
2011/12 1,714 482 25 7 3 1 1 0 0 2,234
2012/13 1,668 455 33 7 3 1 1 0 0 2,169
2013/14 1,522 487 31 7 3 1 1 0 0 2,052
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ACT Workers' Compensation Scheme Review
Claim Number Summary
E3.1 Ultimate Number of ClaimsAccident
Year Reported IBNR Ultimate Reported IBNR Ultimate
2006/07 3,693 1 3,694 2,209 0 2,209
2007/08 3,495 2 3,497 2,161 1 2,162
2008/09 3,324 3 3,327 2,117 1 2,118
2009/10 3,434 5 3,439 2,167 1 2,168
2010/11 3,614 9 3,623 2,198 5 2,203
2011/12 3,586 17 3,603 2,224 10 2,234
2012/13 3,361 35 3,396 2,146 23 2,169
2013/14 3,071 102 3,173 1,852 200 2,052
All Claims (excl Nils) Lost Time Claims
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ACT Workers' Compensation Scheme Review
Common Law & Lump Sum
Excludes Nil Claims
Chain Ladder Model
E4.1 Cumulative Number of ClaimsAccident Development Year (of first Common Law Payment) Reported
Year 1 2 3 4 5 6 7 to date
2006/07 10 82 201 282 330 353 372 381 381
2007/08 12 79 189 262 301 331 347 347
2008/09 12 83 200 300 350 384 384
2009/10 12 93 243 345 396 396
2010/11 13 90 245 347 347
2011/12 14 106 234 234
2012/13 9 120 120
2013/14 13 13
E4.2 Chain Ladder FactorsAccident Development Year (of first Common Law Payment)
Year 1:2 2:3 3:4 4:5 5:6 6:7 7:8
2006/07 8.2000 2.4512 1.4030 1.1702 1.0697 1.0538 1.0242
2007/08 6.5833 2.3924 1.3862 1.1489 1.0997 1.0483
2008/09 6.9167 2.4096 1.5000 1.1667 1.0971
2009/10 7.7500 2.6129 1.4198 1.1478
2010/11 6.9231 2.7222 1.4163
2011/12 7.5714 2.2075
2012/13 13.3333
2013/14
E4.3 Selected Chain Ladder FactorsDevelopment Year (of first Common Law Payment)
1:2 2:3 3:4 4:5 5:6 6:7 Tail
Dec-14 Selected 8.5000 2.3000 1.4200 1.1450 1.0750 1.0400 1.0720
E4.4 Incremental Projected Number of ClaimsAccident Development Year (of first Common Law Payment) Ultimate
Year 1 2 3 4 5 6 7 8 Tail Claims
2006/07 10 72 119 81 48 23 19 9 18 399
2007/08 12 67 110 73 39 30 16 8 17 372
2008/09 12 71 117 100 50 34 15 9 20 428
2009/10 12 81 150 102 51 30 17 10 22 475
2010/11 13 77 155 102 50 30 17 10 22 476
2011/12 14 92 128 105 49 29 17 10 21 465
2012/13 9 111 126 103 51 30 17 10 22 479
2013/14 13 83 125 93 46 27 15 9 20 432
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Chief Minister, Treasury and Economic Development Directorate
April 2015 N:\ACTWC14\SCHEME REVIEW\REPORT\R_2014_ACT SCHEME PERFORMANCE_PUBLIC RELEASE_FINAL.DOCX
F Claim Size Analysis
ACT Workers' Compensation Scheme Review
Weekly Benefits
PPCI Model
F1.1 Incremental Inflated Payments ($000 Dec-14)Accident Development Year (of Payment) Acc Yr Pay Yr
Year 1 2 3 4 5 6 7 8 Total Total
2006/07 7,821 8,757 3,187 1,318 824 357 241 134 22,638 7,821
2007/08 8,256 7,911 2,745 1,309 826 155 108 21,309 17,013
2008/09 8,591 9,537 3,588 1,604 922 290 24,532 19,689
2009/10 8,749 9,142 3,717 2,208 1,117 24,933 22,348
2010/11 9,839 10,074 4,402 2,373 26,688 24,702
2011/12 9,215 9,702 4,054 22,971 25,792
2012/13 8,906 10,430 19,335 26,536
2013/14 8,025 8,025 26,530
F1.2 Inflated Payment Per Claim IncurredAccident Development Year (of Payment)
Year 1 2 3 4 5 6 7 8
2006/07 3,540 3,964 1,442 597 373 161 109 60
2007/08 3,819 3,660 1,270 606 382 72 50
2008/09 4,056 4,502 1,694 757 435 137
2009/10 4,035 4,216 1,714 1,018 515
2010/11 4,467 4,573 1,999 1,077
2011/12 4,125 4,343 1,815
2012/13 4,107 4,809
2013/14 3,910
F1.3 Selected Payments per Claim IncurredDevelopment Year (of Payment)
1 2 3 4 5 6 7 8 Tail
Dec-14 Selected 4,050 4,600 1,850 1,000 475 140 85 60 72
F1.4 Actual & Projected Payments Inflated to Payment Date ($000)Accident Development Year (of Payment) Ultimate
Year 1 2 3 4 5 6 7 8 Tail Costs Outstanding
2006/07 5,859 6,633 2,572 1,128 750 341 247 131 171 17,834 171
2007/08 6,349 6,385 2,347 1,192 786 160 107 130 174 17,628 303
2008/09 6,929 8,133 3,261 1,544 946 284 180 132 177 21,586 488
2009/10 7,685 8,297 3,553 2,267 1,099 304 191 140 188 23,724 822
2010/11 9,037 9,617 4,528 2,331 1,046 320 202 148 198 27,427 1,913
2011/12 8,989 9,948 3,979 2,234 1,101 337 212 155 208 27,164 4,247
2012/13 9,220 10,257 4,012 2,250 1,109 339 214 156 209 27,766 8,289
2013/14 7,832 9,440 3,939 2,209 1,089 333 210 154 206 25,411 17,579
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ACT Workers' Compensation Scheme Review
Medical & Related Costs (excl. rehab)
PPCI Model
F2.1 Incremental Inflated Payments ($000 Dec-14)Accident Development Year (of Payment) Acc Yr Pay Yr
Year 1 2 3 4 5 6 7 8 Total Total
2006/07 6,710 6,360 1,996 785 341 106 60 42 16,401 6,710
2007/08 6,407 5,146 1,439 587 374 13 -89 13,877 12,767
2008/09 6,326 6,091 1,846 467 201 55 14,986 13,468
2009/10 6,752 6,148 1,989 737 508 16,134 15,066
2010/11 7,509 6,369 1,858 570 16,305 16,431
2011/12 7,092 5,536 1,626 14,254 16,396
2012/13 7,187 7,039 14,226 15,592
2013/14 6,411 6,411 16,162
F2.2 Inflated Payment PerClaim IncurredAccident Development Year (of Payment)
Year 1 2 3 4 5 6 7 8
2006/07 1,817 1,722 540 212 92 29 16 12
2007/08 1,832 1,472 412 168 107 4 -25
2008/09 1,901 1,831 555 140 61 17
2009/10 1,963 1,788 578 214 148
2010/11 2,073 1,758 513 157
2011/12 1,968 1,536 451
2012/13 2,116 2,072
2013/14 2,020
F2.3 Selected Payments per Claim IncurredDevelopment Year (of Payment)
1 2 3 4 5 6 7 8 Tail
Dec-14 Selected 2,050 1,800 480 180 105 30 15 11 27
F2.4 Actual & Projected Payments Inflated to Payment Date ($000)Accident Development Year (of Payment) Ultimate
Year 1 2 3 4 5 6 7 8 Tail Costs Outstanding
2006/07 5,040 4,813 1,611 665 310 102 61 41 108 12,752 108
2007/08 4,915 4,153 1,222 534 360 13 -87 37 106 11,253 144
2008/09 5,103 5,157 1,676 444 207 55 50 36 105 12,833 191
2009/10 5,917 5,568 1,894 757 500 103 54 39 113 14,945 308
2010/11 6,888 6,072 1,906 561 380 113 58 43 123 16,145 717
2011/12 6,884 5,668 1,602 649 393 116 60 44 127 15,543 1,389
2012/13 7,431 6,936 1,630 634 384 114 59 43 124 17,355 2,988
2013/14 6,262 5,712 1,580 615 372 110 57 42 120 14,871 8,609
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ACT Workers' Compensation Scheme Review
Rehabilitation
PPCI Model
F3.1 Incremental Inflated Payments ($000 Dec-14)Accident Development Year (of Payment) Acc Yr Pay Yr
Year 1 2 3 4 5 6 7 8 Total Total
2006/07 2,936 2,664 792 273 96 33 6 -110 6,689 2,936
2007/08 2,445 2,376 648 145 32 -10 5 5,641 5,108
2008/09 2,404 2,640 666 167 68 28 5,972 5,572
2009/10 2,549 2,810 769 356 139 6,623 6,109
2010/11 3,050 3,409 940 404 7,802 6,766
2011/12 2,917 3,159 875 6,951 7,327
2012/13 2,813 3,111 5,924 7,332
2013/14 3,136 3,136 7,587
F3.2 Inflated Payment PerClaim IncurredAccident Development Year (of Payment)
Year 1 2 3 4 5 6 7 8
2006/07 795 721 214 74 26 9 2 -30
2007/08 699 679 185 42 9 -3 1
2008/09 723 793 200 50 21 8
2009/10 741 817 224 104 40
2010/11 842 941 259 111
2011/12 810 877 243
2012/13 828 916
2013/14 988
F3.3 Selected Payments per Claim IncurredDevelopment Year (of Payment)
1 2 3 4 5 6 7 8 Tail
Dec-14 Selected 910 900 250 110 25 8 4 3 3
F3.4 Actual & Projected Payments Inflated to Payment Date ($000)Accident Development Year (of Payment) Ultimate
Year 1 2 3 4 5 6 7 8 Tail Costs Outstanding
2006/07 2,205 2,013 639 232 87 32 6 -107 11 5,119 11
2007/08 1,878 1,918 551 132 30 -10 5 10 11 4,525 22
2008/09 1,939 2,248 604 159 70 28 13 10 11 5,083 35
2009/10 2,239 2,547 737 366 137 28 14 11 12 6,090 65
2010/11 2,802 3,250 964 397 91 30 16 12 13 7,573 161
2011/12 2,846 3,236 860 396 93 31 16 13 13 7,505 563
2012/13 2,910 3,065 849 388 91 30 16 12 13 7,374 1,399
2013/14 3,060 2,856 823 376 89 29 15 12 12 7,273 4,213
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ACT Workers' Compensation Scheme Review
Legal & Investigation Costs
PPCI Model
F4.1 Incremental Inflated Payments ($000 Dec-14)Accident Development Year (of Payment) Acc Yr Pay Yr
Year 1 2 3 4 5 6 7 8 Total Total
2006/07 1,280 3,412 3,720 2,786 1,853 1,443 916 353 15,764 1,280
2007/08 1,170 2,864 3,332 2,355 1,123 1,105 969 12,918 4,581
2008/09 1,205 3,144 3,541 2,723 1,616 1,610 13,840 7,789
2009/10 1,108 3,389 4,335 3,192 2,147 14,170 10,370
2010/11 1,454 3,632 4,895 3,823 13,804 12,592
2011/12 1,267 2,943 4,414 8,624 14,523
2012/13 1,180 3,844 5,024 15,847
2013/14 1,360 1,360 18,522
F4.2 Inflated Payment PerClaim IncurredAccident Development Year (of Payment)
Year 1 2 3 4 5 6 7 8
2006/07 347 924 1,007 754 502 391 248 96
2007/08 335 819 953 673 321 316 277
2008/09 362 945 1,064 818 486 484
2009/10 322 985 1,260 928 624
2010/11 401 1,003 1,351 1,055
2011/12 352 817 1,225
2012/13 347 1,132
2013/14 429
F4.3 Selected Payments per Claim IncurredDevelopment Year (of Payment)
1 2 3 4 5 6 7 8 Tail
Dec-14 Selected 360 960 1,290 990 550 400 260 150 313
F4.4 Actual & Projected Payments Inflated to Payment Date ($000)Accident Development Year (of Payment) Ultimate
Year 1 2 3 4 5 6 7 8 Tail Costs Outstanding
2006/07 960 2,603 3,002 2,387 1,689 1,398 943 345 1,255 14,583 1,255
2007/08 899 2,310 2,881 2,146 1,070 1,135 947 525 1,233 13,146 1,757
2008/09 972 2,710 3,232 2,605 1,665 1,584 865 518 1,217 15,367 2,600
2009/10 974 3,093 4,158 3,283 2,111 1,376 928 555 1,305 17,784 4,164
2010/11 1,337 3,495 5,043 3,756 1,992 1,503 1,014 607 1,426 20,173 6,543
2011/12 1,237 3,030 4,327 3,567 2,056 1,551 1,046 626 1,472 18,914 10,319
2012/13 1,223 3,769 4,381 3,488 2,011 1,517 1,023 612 1,439 19,465 14,472
2013/14 1,328 3,046 4,247 3,382 1,949 1,471 992 594 1,395 18,405 17,076
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ACT Workers' Compensation Scheme Review
Recoveries
PPCI Model
F5.1 Incremental Inflated Payments ($000 Dec-14)Accident Development Year (of Payment) Acc Yr Pay Yr
Year 1 2 3 4 5 6 7 8 Total Total
2006/07 -88 -600 -2,513 -863 -321 -46 -387 -115 -4,933 -88
2007/08 -113 -528 -839 -203 -903 -370 -42 -2,998 -713
2008/09 -162 -483 -306 -659 -113 -677 -2,399 -3,202
2009/10 -67 -403 -581 -1,039 -463 -2,552 -2,251
2010/11 -186 -507 -737 -1,114 -2,545 -1,419
2011/12 -129 -670 -807 -1,606 -2,826
2012/13 -192 -428 -620 -3,508
2013/14 -68 -68 -3,714
F5.2 Inflated Payment PerClaim IncurredAccident Development Year (of Payment)
Year 1 2 3 4 5 6 7 8
2006/07 -24 -162 -680 -234 -87 -12 -105 -31
2007/08 -32 -151 -240 -58 -258 -106 -12
2008/09 -49 -145 -92 -198 -34 -204
2009/10 -19 -117 -169 -302 -134
2010/11 -51 -140 -203 -308
2011/12 -36 -186 -224
2012/13 -57 -126
2013/14 -21
F5.3 Selected Payments per Claim IncurredDevelopment Year (of Payment)
1 2 3 4 5 6 7 8 Tail
Dec-14 Selected -40 -150 -215 -275 -130 -110 -55 -55 -51
F5.4 Actual & Projected Payments Inflated to Payment Date ($000)Accident Development Year (of Payment) Ultimate
Year 1 2 3 4 5 6 7 8 Tail Costs Outstanding
2006/07 -66 -461 -2,023 -736 -289 -45 -397 -111 -364 -4,492 -364
2007/08 -88 -426 -725 -185 -901 -381 -41 -192 -192 -3,131 -385
2008/09 -131 -417 -278 -635 -115 -663 -183 -190 -190 -2,800 -563
2009/10 -59 -367 -565 -1,072 -453 -378 -196 -204 -204 -3,498 -982
2010/11 -172 -486 -758 -1,090 -528 -413 -214 -223 -222 -4,107 -1,601
2011/12 -127 -692 -790 -991 -486 -427 -221 -230 -230 -4,193 -2,584
2012/13 -200 -418 -730 -969 -475 -417 -216 -225 -225 -3,875 -3,257
2013/14 -67 -476 -708 -939 -461 -404 -210 -218 -218 -3,700 -3,634
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ACT Workers' Compensation Scheme Review
Common Law & Lump Sum
Excludes Nil Claims
PPCS Model
F6.1 Incremental Number of Claims Settled as Lump Sum or Common LawAccident Development Year (of Last LS_CL Payment) Settled
Year 1 2 3 4 5 6 7 8 to date
2006/07 4 63 115 82 53 30 20 11 378
2007/08 10 65 96 76 43 30 24 344
2008/09 12 55 108 97 55 52 379
2009/10 6 61 139 111 64 381
2010/11 9 57 147 113 326
2011/12 10 76 126 212
2012/13 4 88 92
2013/14 8 8
F6.2 Lump Sum/Common Law Proportion Settled (% of Ultimate Lump Sums/Common Law)Accident Development Year (of Last LS_CL Payment)
Year 1 2 3 4 5 6 7 8
2006/07 1.0% 15.8% 28.8% 20.5% 13.3% 7.5% 5.0% 2.8%
2007/08 2.7% 17.5% 25.8% 20.4% 11.6% 8.1% 6.5%
2008/09 2.8% 12.8% 25.2% 22.7% 12.8% 12.1%
2009/10 1.3% 12.9% 29.3% 23.4% 13.5%
2010/11 1.9% 12.0% 30.9% 23.7%
2011/12 2.1% 16.3% 27.1%
2012/13 0.8% 18.4%
2013/14 1.9%
F6.3 Selected Proportion SettledDevelopment Year (of Last LS_CL Payment)
1 2 3 4 5 6 7 8 Tail
Dec-14 Selected 1.70% 15.00% 27.50% 23.00% 12.50% 8.20% 4.50% 3.00% 4.60%
F6.4 Incremental Projected Number of Claims Settled as Lump Sum or Common LawAccident Development Year (of Last LS_CL Payment) Ultimate
Year 1 2 3 4 5 6 7 8 Tail Finalised
2006/07 4 63 115 82 53 30 20 11 21 399
2007/08 10 65 96 76 43 30 24 11 17 372
2008/09 12 55 108 97 55 52 18 12 19 428
2009/10 6 61 139 111 64 38 21 14 21 475
2010/11 9 57 147 113 57 38 21 14 21 476
2011/12 10 76 126 104 57 37 20 14 21 465
2012/13 4 88 128 107 58 38 21 14 21 479
2013/14 8 65 119 99 54 35 19 13 20 432
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ACT Workers' Compensation Scheme Review
Common Law & Lump Sum
Excludes Nil Claims
PPCS Model
F6.5 Incremental Inflated Payments ($000 Dec-14)Accident Development Year (of Last LS_CL Payment) Acc Yr Pay Yr
Year 1 2 3 4 5 6 7 8 Total Total
2006/07 194 5,886 10,269 9,083 6,386 3,849 2,577 2,575 40,819 194
2007/08 322 3,927 8,295 9,791 4,563 3,500 5,716 36,113 6,208
2008/09 372 3,858 11,297 10,028 7,263 11,438 44,256 14,568
2009/10 60 4,674 14,002 13,317 9,403 41,456 21,296
2010/11 253 3,417 16,187 18,192 38,048 32,400
2011/12 329 5,012 14,585 19,926 36,188
2012/13 179 6,341 6,520 48,034
2013/14 267 267 68,517
F6.6 Inflated Payments per Claim Settled in $Dec-14 ($000)Accident Development Year (of Last LS_CL Payment)
Year 1 2 3 4 5 6 7 8
2006/07 49 93 89 111 120 128 129 234
2007/08 32 60 86 129 106 117 238
2008/09 31 70 105 103 132 220
2009/10 10 77 101 120 147
2010/11 28 60 110 161
2011/12 33 66 116
2012/13 45 72
2013/14 33
F6.7 Selected Payments per Claim Settled in $Dec-14 ($000)Development Year (of Last LS_CL Payment)
1 2 3 4 5 6 7 8 Tail
Dec-14 Selected 33.0 68.0 110.0 120.0 120.0 180.0 180.0 180.0 180.0
F6.8 Actual & Projected Payments Inflated to Payment Date ($000)Accident Development Year (of Payment) Ultimate
Year 1 2 3 4 5 6 7 8 Tail Costs Outstanding
2006/07 406 4,806 8,833 7,357 5,852 3,406 2,684 3,224 2,847 39,417 2,847
2007/08 254 3,183 7,520 8,810 4,418 3,807 5,398 1,855 3,132 38,376 4,987
2008/09 300 4,394 9,747 10,088 7,970 10,372 2,728 2,265 3,824 51,688 8,817
2009/10 90 4,584 13,746 14,147 9,217 6,703 3,161 2,624 4,431 58,702 16,919
2010/11 277 4,068 17,379 17,351 8,001 6,522 3,076 2,553 4,311 63,538 24,463
2011/12 546 5,468 14,606 13,144 7,955 6,485 3,058 2,538 4,287 58,087 37,466
2012/13 213 6,783 14,507 13,894 8,409 6,855 3,233 2,683 4,531 61,107 54,111
2013/14 301 4,918 13,964 13,373 8,093 6,598 3,111 2,582 4,361 57,301 57,000
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ACT Workers' Compensation Scheme Review
All Payments
F7.1 Actual & Projected Payments Inflated to Payment Date ($000)Accident Development Year (of Payment) Acc Yr
Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Tail Ultimate
2006/07 14,403 20,408 14,634 11,033 8,400 5,236 3,545 3,525 1,485 515 448 355 373 213 173 149 85 81 74 71 6 0 0 0 0 0 0 0 0 0 85,212
2007/08 14,207 17,522 13,795 12,628 5,762 4,725 6,329 2,364 1,780 534 468 378 397 222 183 160 91 87 80 78 5 0 0 0 0 0 0 0 0 0 81,796
2008/09 15,112 22,225 18,243 14,206 10,743 11,660 3,654 2,771 2,096 586 524 437 458 246 209 187 105 102 96 94 5 0 0 0 0 0 0 0 0 0 103,757
2009/10 16,845 23,722 23,523 19,748 12,611 8,135 4,152 3,166 2,399 655 589 497 520 276 237 213 119 116 110 108 6 0 0 0 0 0 0 0 0 0 117,746
2010/11 20,169 26,017 29,062 23,305 10,982 8,075 4,151 3,140 2,375 672 598 496 520 282 238 212 119 115 108 106 6 0 0 0 0 0 0 0 0 0 130,749
2011/12 20,377 26,658 24,585 18,999 11,112 8,093 4,172 3,147 2,378 681 605 499 523 285 240 212 120 116 108 105 7 0 0 0 0 0 0 0 0 0 123,020
2012/13 20,797 30,393 24,650 19,685 11,528 8,438 4,328 3,282 2,483 694 620 517 542 291 248 221 124 120 113 111 6 0 0 0 0 0 0 0 0 0 129,192
2013/14 18,717 25,497 23,846 19,015 11,131 8,136 4,176 3,166 2,394 671 599 499 523 282 239 213 120 116 109 107 6 0 0 0 0 0 0 0 0 0 119,561
F7.2 Actual & Projected Payments Inflated to Payment Date & Discounted to Middle of Accident Year ($000)Accident Development Year (of Payment) Acc Yr
Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Tail Ultimate
2006/07 14,403 19,106 13,106 9,531 6,933 4,142 2,719 2,637 1,085 366 309 238 243 134 106 89 49 46 41 38 3 0 0 0 0 0 0 0 0 0 75,321
2007/08 14,207 16,762 12,730 11,133 4,868 3,871 5,057 1,845 1,349 393 335 263 268 145 117 99 54 51 46 43 3 0 0 0 0 0 0 0 0 0 73,638
2008/09 15,112 21,438 16,812 12,547 9,200 9,739 2,980 2,196 1,613 438 380 308 314 164 135 117 64 60 55 52 3 0 0 0 0 0 0 0 0 0 93,730
2009/10 16,845 22,665 21,539 17,533 10,921 6,879 3,410 2,526 1,860 493 430 353 359 185 154 135 73 69 64 61 3 0 0 0 0 0 0 0 0 0 106,556
2010/11 20,169 24,934 27,005 21,123 9,721 6,942 3,466 2,547 1,872 514 445 358 365 192 158 136 74 70 64 61 4 0 0 0 0 0 0 0 0 0 120,218
2011/12 20,377 25,848 23,251 17,547 9,968 7,053 3,531 2,587 1,899 528 456 365 372 197 161 138 76 71 65 61 4 0 0 0 0 0 0 0 0 0 114,553
2012/13 20,797 29,644 23,479 18,213 10,360 7,366 3,670 2,704 1,987 540 468 379 386 202 167 144 79 74 68 64 4 0 0 0 0 0 0 0 0 0 120,793
2013/14 18,717 24,899 22,620 17,520 9,962 7,074 3,526 2,597 1,907 519 450 364 371 194 160 139 76 71 65 62 3 0 0 0 0 0 0 0 0 0 111,297
N:\ACTWC14\Scheme Review\Report\Appendices 2014_09.xlsm - F7
28/04/2015 - 3:29 PM Page 8 of 8
Chief Minister, Treasury and Economic Development Directorate
April 2015 N:\ACTWC14\SCHEME REVIEW\REPORT\R_2014_ACT SCHEME PERFORMANCE_PUBLIC RELEASE_FINAL.DOCX
G Workforce, Wages and Premiums
G.1 Workforce
We have compiled workforce figures from information available from the Australian Bureau of Statistics
(ABS) and the Australian Public Service Employment Database (APSED), plus information on the
number of ACT public sector employees supplied by the CMTEDD.
We have calculated an approximate private sector workforce as:
Total full time workforce in the ACT
Less full time Commonwealth public sector employees
Less full time ACT public sector employees.
This is shown in Table G.1 below.
Table G.1 – Calculation of ACT Private Sector Workforce (Full Time Employees)
Accident
Year ABS
Commonwealth
Government
Public Servants
ACT
Government
Public
Servants
ACT Private
Sector
Workforce
2004/05 136,212 39,783 13,084 83,345
2005/06 144,125 43,522 12,699 87,904
2006/07 146,122 47,289 12,258 86,575
2007/08 146,910 49,461 12,844 84,605
2008/09 147,755 50,739 13,646 83,370
2009/10 150,447 51,958 13,869 84,620
2010/11 153,930 53,594 14,317 86,019
2011/12 156,193 56,313 14,897 84,983
2012/13 155,404 54,612 15,424 85,368
2013/14 157,115 49,887 16,088 91,140
G.2 Earned Wages
Recorded wages can change over time as employers update their initial estimate over the course of the
policy period. In order to arrive at an estimate of the ultimate earned wages we examined the
development of reported wages for older policy years and as a result selected a multiplier to gross up the
reported wages for the more recent policy years to ultimate. This is shown in Table G.2 below.
Chief Minister, Treasury and Economic Development Directorate
April 2015 N:\ACTWC14\SCHEME REVIEW\REPORT\R_2014_ACT SCHEME PERFORMANCE_PUBLIC RELEASE_FINAL.DOCX
Table G.2 – Earned Wages Data
Accident
Year Reported
Gross-up
Factor
Estimated
Ultimate Inflated Ultimate1
$m $m $m
2004/05 4,143.0 1.000 4,143.0 6,136.0
2005/06 4,365.0 1.000 4,365.0 6,184.9
2006/07 4,879.2 1.000 4,879.2 6,494.7
2007/08 5,410.9 1.000 5,410.9 7,100.5
2008/09 5,665.3 1.000 5,665.3 7,006.2
2009/10 5,733.8 1.000 5,733.8 6,601.4
2010/11 6,218.4 1.001 6,224.6 6,798.2
2011/12 6,686.8 1.002 6,700.2 7,055.0
2012/13 6,818.0 1.004 6,845.3 6,656.6
2013/14 6,983.8 1.009 7,046.9 7,270.21 In 31 December 2014 values
G.3 Earned Premium
Table G.3 shows the reported earned premium amounts by calendar year. As for wages, they have been
inflated and grossed-up to ultimate estimates by analysing the development of reported premiums for
older policy years.
Table G.3 – Earned Premium Data
Accident
Year Reported
Gross-up
Factor
Estimated
Ultimate Inflated Ultimate1
$m $m $m
2003/04
2004/05 145.8 1.000 145.8 216.0
2005/06 152.7 1.000 152.7 216.4
2006/07 153.6 1.000 153.6 204.5
2007/08 148.8 1.000 148.8 195.2
2008/09 140.0 1.000 140.0 173.1
2009/10 145.8 1.000 145.8 167.9
2010/11 150.0 1.000 150.0 163.9
2011/12 158.9 1.003 159.4 167.8
2012/13 161.0 1.013 163.1 158.6
2013/14 164.4 1.018 167.3 172.61 In 31 December 2014 values
G.4 Historical Premium Rates
Table G.4 shows the calculation of the historical premium rate. The earned premiums and wages have
both been grossed up to ultimate as discussed above, and are expressed in December 2014 values.
Chief Minister, Treasury and Economic Development Directorate
April 2015 N:\ACTWC14\SCHEME REVIEW\REPORT\R_2014_ACT SCHEME PERFORMANCE_PUBLIC RELEASE_FINAL.DOCX
Table G.4 – Calculation of Premium Rate
Accident
Year
Gross Earned
Premium
Gross Earned
Wages
Premium to
Wages
$m $m
2004/05 145.8 4,143.0 3.52%
2005/06 152.7 4,365.0 3.50%
2006/07 153.6 4,879.2 3.15%
2007/08 148.8 5,410.9 2.75%
2008/09 140.0 5,665.3 2.47%
2009/10 145.8 5,733.8 2.54%
2010/11 150.0 6,224.6 2.41%
2011/12 159.4 6,700.2 2.38%
2012/13 163.1 6,845.3 2.38%
2013/14 167.3 7,046.9 2.37%
Chief Minister, Treasury and Economic Development Directorate
April 2015 N:\ACTWC14\SCHEME REVIEW\REPORT\R_2014_ACT SCHEME PERFORMANCE_PUBLIC RELEASE_FINAL.DOCX
H Recommended Rates by ANZSIC Division
H.1 Premium Rates by ANZSIC Class
ANZSIC Description Rel. Group
Estimated
Wages for
2015/16 ($m)
Claim Freq
Rel - last 3
years
Capped
Claim Cost
Rel - last 5
years
2015/16
Selected
Relativity
2015/16
Suggested
Premium
Rate
0111 Plant Nurseries 1 1.9 123 75 200 5.22%
0123 Sheep-Beef Cattle Farming 5 0.7 190 123 350 9.13%
0124 Sheep Farming 5 0.2 323 2,375 350 9.13%
0125 Beef Cattle Farming 5 0.1 0 0 350 9.13%
0142 Poultry Farming (Eggs) 6 3.0 53 201 250 6.52%
0219 Services to Agriculture n.e.c. 8 1.0 1,178 137 260 6.78%
0301 Forestry 10 0.1 0 0 550 14.35%
0302 Logging 10 0.7 692 1,646 550 14.35%
0303 Services to Forestry 11 0.6 224 348 350 9.13%
1411 Gravel and Sand Quarrying 14 0.9 260 289 250 6.52%
1419 Construction Material Mining n.e.c. 13 4.2 355 250 250 6.52%
2129 Dairy Product Manufacturing n.e.c 17 6.9 80 25 250 6.52%
2161 Bread Manufacturing 18 0.2 573 170 250 6.52%
2162 Cake and Pastry Manufacturing 18 0.2 0 0 250 6.52%
2163 Biscuit Manufacturing 18 0.1 0 0 250 6.52%
2179 Food Manufacturing n.e.c. 18 0.3 144 52 250 6.52%
2181 Soft Drink, Cordial and Syrup Manufacturing 18 0.6 309 243 250 6.52%
2183 Wine Manufacturing 18 0.6 145 18 250 6.52%
2221 Made-Up Textile Product Manufacturing 23 0.9 495 465 140 3.65%
2249 Clothing Manufacturing n.e.c. 24 1.4 0 0 180 4.70%
2311 Log Sawmilling 25 1.2 563 162 400 10.44%
2313 Timber Resawing and Dressing 27 0.5 452 51 270 7.04%
2322 Fabricated Wood Manufacturing 28 0.1 0 0 300 7.83%
2323 Wooden Structural Component Manufacturing 28 11.4 261 305 300 7.83%
2329 Wood Product Manufacturing n.e.c 29 0.6 134 249 190 4.96%
2412 Printing 30 45.6 89 91 90 2.35%
2413 Services to Printing 30 0.9 0 13 90 2.35%
2421 Newspaper Printing or Publishing 30 11.1 13 65 90 2.35%
2422 Other Periodical Publishing 30 2.0 0 13 90 2.35%
2423 Book and Other Publishing 30 2.2 34 42 90 2.35%
2520 Petroleum and Coal Product Manufacturing n.e.c. 31 0.5 144 132 300 7.83%
2531 Fertiliser Manufacturing 31 0.1 0 0 300 7.83%
2543 Medicinal and Pharmaceutical Product Manufacturing 40 2.4 60 33 60 1.57%
2547 Ink Manufacturing 28 0.1 0 0 300 7.83%
2562 Plastic Extruded Product Manufacturing 28 0.2 0 0 300 7.83%
2610 Glass and Glass Product Manufacturing 35 0.9 992 1,016 500 13.05%
2629 Ceramic Product Manufacturing n.e.c. 33 0.1 0 0 140 3.65%
2632 Plaster Product Manufacturing 33 0.2 0 0 140 3.65%
2633 Concrete Slurry Manufacturing 33 1.0 29 16 140 3.65%
2635 Concrete Product Manufacturing n.e.c. 36 1.3 0 26 170 4.44%
2640 Non-Metallic Mineral Product Manufacturing n.e.c. 36 2.3 101 174 170 4.44%
2741 Structural Steel Fabricating 31 3.9 362 119 300 7.83%
2742 Architectural Aluminium Product Manufacturing 31 18.2 149 279 300 7.83%
2749 Structural Metal Product Manufacturing n.e.c. 31 3.0 263 201 300 7.83%
2759 Sheet Metal Product Manufacturing n.e.c. 37 3.5 140 195 200 5.22%
2762 Spring and Wire Product Manufacturing 31 0.4 1,354 481 300 7.83%
2764 Metal Coating and Finishing 31 0.3 255 49 300 7.83%
2769 Fabricated Metal Product Manufacturing n.e.c. 31 6.4 295 348 300 7.83%
2824 Aircraft Manufacturing 39 1.9 49 12 150 3.91%
2831 Photographic and Optical Good Manufacturing 40 0.1 0 0 60 1.57%
2832 Medical and Surgical Equipment Manufacturing 40 0.5 0 0 60 1.57%
2839 Professional and Scientific Equipment Manufacturing n.e.c. 40 0.5 0 0 60 1.57%
2841 Computer and Business Machine Manufacturing 40 0.9 411 485 60 1.57%
2842 Telecommunication, Broadcasting and Transceiving Equipment Manufacturing 40 2.5 31 27 60 1.57%
2849 Electronic Equipment Manufacturing n.e.c. 40 1.5 0 9 60 1.57%
2852 Electric Cable and Wire Manufacturing 29 0.2 0 0 190 4.96%
2854 Electric Light and Sign Manufacturing 29 0.5 0 0 190 4.96%
2859 Electrical and Equipment Manufacturing n.e.c. 29 1.8 0 335 190 4.96%
2862 Mining and Construction Machinery Manufacturing 39 0.4 251 12 150 3.91%
2865 Lifting and Material Handling Equipment Manufacturing 37 8.6 168 62 200 5.22%
2866 Pump and Compressor Manufacturing 33 0.2 538 541 140 3.65%
2867 Commercial Space Heating and Cooling Equipment Manufacturing 33 1.5 264 116 140 3.65%
2869 Industrial Machinery and Equipment Manufacturing n.e.c. 33 5.1 58 15 140 3.65%
2911 Prefabricated Metal Building Manufacturing 41 0.3 0 0 450 11.74%
2919 Prefabricated Building Manufacturing n.e.c. 41 0.6 121 190 450 11.74%
2921 Wooden Furniture and Upholstered Seat Manufacturing 29 14.3 228 177 190 4.96%
2922 Sheet Metal Furniture Manufacturing 41 0.5 139 110 450 11.74%
2923 Mattress Manufacturing (Except Rubber) 33 0.7 0 0 140 3.65%
2929 Furniture Manufacturing n.e.c. 33 19.9 140 218 140 3.65%
2941 Jewellery and Silverware Manufacturing 40 0.4 0 0 60 1.57%
2949 Manufacturing n.e.c. 28 0.5 0 0 300 7.83%
3610 Electricity Supply 57 31.0 290 139 150 3.91%
3620 Gas Supply 43 41.1 28 60 90 2.35%
3701 Water Supply 42 66.2 45 22 60 1.57%
3702 Sewerage and Drainage Services 42 2.2 60 37 60 1.57%
4111 House Construction 44 42.8 169 129 170 4.44%
4112 Residential Building Construction n.e.c. 44 20.9 121 203 170 4.44%
4113 Non-Residential Building Construction 44 82.9 107 214 170 4.44%
4121 Road and Bridge Construction 45 32.3 385 324 360 9.39%
4122 Non-Building Construction n.e.c. 44 41.7 261 166 170 4.44%
4210 Site Preparation Services 46 56.2 198 336 300 7.83%
4221 Concreting Services 49 24.4 115 484 500 13.05%
4222 Bricklaying Services 49 12.6 263 296 500 13.05%
4223 Roofing Services 49 11.6 343 411 500 13.05%
4224 Structural Steel Erection Services 49 12.3 391 599 500 13.05%
H.1 Premium Rates by ANZSIC Class
ANZSIC Description Rel. Group
Estimated
Wages for
2015/16 ($m)
Claim Freq
Rel - last 3
years
Capped
Claim Cost
Rel - last 5
years
2015/16
Selected
Relativity
2015/16
Suggested
Premium
Rate
4231 Plumbing Services 47 56.9 222 285 230 6.00%
4232 Electrical Services 48 112.1 157 101 120 3.13%
4233 Air Conditioning and Heating Services 47 57.8 154 215 230 6.00%
4234 Fire and Security System Services 48 34.2 157 113 120 3.13%
4241 Plastering and Ceiling Services 124 15.9 190 275 270 7.04%
4242 Carpentry Services 124 53.3 208 288 270 7.04%
4243 Tiling and Carpeting Services 124 14.3 156 269 270 7.04%
4244 Painting and Decorating Services 124 22.7 158 293 270 7.04%
4245 Glazing Services 124 5.7 272 439 270 7.04%
4251 Landscaping Services 50 31.4 305 342 350 9.13%
4259 Construction Services n.e.c. 31 32.2 152 428 300 7.83%
4512 Cereal Grain Wholesaling 51 0.2 405 13 100 2.61%
4519 Farm Produce and Supplies Wholesaling n.e.c. 51 0.7 178 788 100 2.61%
4521 Petroleum Product Wholesaling 43 3.0 83 15 90 2.35%
4522 Metal and Mineral Wholesaling 23 7.7 151 303 140 3.65%
4523 Chemical Wholesaling 43 3.3 79 26 90 2.35%
4531 Timber Wholesaling 23 2.3 258 252 140 3.65%
4539 Building Supplies Wholesaling n.e.c. 23 17.5 141 151 140 3.65%
4611 Farm and Construction Machinery Wholesaling 52 0.6 0 0 130 3.39%
4612 Professional Equipment Wholesaling 53 6.5 44 39 50 1.30%
4613 Computer Wholesaling 82 52.2 23 43 15 0.39%
4614 Business Machine Wholesaling n.e.c. 53 14.1 74 67 50 1.30%
4615 Electrical and Electronic Equipment Wholesaling n.e.c. 53 39.0 58 65 50 1.30%
4619 Machinery and Equipment Wholesaling n.e.c. 54 10.6 153 82 120 3.13%
4621 Car Wholesaling 52 0.1 0 0 130 3.39%
4622 Commercial Vehicle Wholesaling 52 0.2 0 0 130 3.39%
4623 Motor Vehicle New Part Dealing 52 14.1 167 113 130 3.39%
4624 Motor Vehicle Dismantling and Used Part Dealing 52 0.1 0 0 130 3.39%
4711 Meat Wholesaling 56 1.6 95 322 300 7.83%
4712 Poultry and Smallgood Wholesaling 56 1.2 375 553 300 7.83%
4713 Dairy Produce Wholesaling 56 0.3 266 1,226 300 7.83%
4714 Fish Wholesaling 56 0.1 0 0 300 7.83%
4715 Fruit and Vegetable Wholesaling 56 1.8 113 25 300 7.83%
4716 Confectionery and Soft Drink Wholesaling 52 5.0 48 142 130 3.39%
4717 Liquor Wholesaling 52 6.6 125 36 130 3.39%
4718 Tobacco Product Wholesaling 52 0.4 0 0 130 3.39%
4719 Grocery Wholesaling n.e.c. 56 14.5 208 199 300 7.83%
4721 Textile Product Wholesaling 52 0.3 0 0 130 3.39%
4722 Clothing Wholesaling 52 2.3 164 22 130 3.39%
4731 Household Appliance Wholesaling 23 1.2 0 0 140 3.65%
4732 Furniture Wholesaling 52 0.3 259 17 130 3.39%
4733 Floor Covering Wholesaling 52 1.1 62 14 130 3.39%
4739 Household Good Wholesaling n.e.c. 52 6.6 464 233 130 3.39%
4793 Toy and Sporting Good Wholesaling 52 0.2 0 0 130 3.39%
4794 Book and Magazine Wholesaling 52 1.0 83 26 130 3.39%
4795 Paper Product Wholesaling 23 4.9 102 200 140 3.65%
4796 Pharmaceutical and Toiletry Wholesaling 52 9.8 110 131 130 3.39%
4799 Wholesaling n.e.c. 23 1.1 59 1,040 140 3.65%
5110 Supermarket and Grocery Stores 125 121.1 291 246 280 7.31%
5121 Fresh Meat, Fish and Poultry Retailing 59 7.7 249 126 110 2.87%
5122 Fruit and Vegetable Retailing 60 5.8 26 104 110 2.87%
5123 Liquor Retailing 60 3.7 21 3 110 2.87%
5124 Bread and Cake Retailing 60 16.1 77 87 110 2.87%
5125 Takeaway Food Retailing 59 57.3 136 76 110 2.87%
5126 Milk Vending 59 1.1 113 197 110 2.87%
5129 Specialised Food Retailing n.e.c. 60 7.0 85 64 110 2.87%
5210 Department Stores 126 18.2 142 115 220 5.74%
5221 Clothing Retailing 126 51.9 217 208 220 5.74%
5222 Footwear Retailing 58 8.9 42 96 150 3.91%
5223 Fabric and Other Soft Good Retailing 61 6.1 195 245 210 5.48%
5231 Furniture Retailing 55 25.9 112 170 150 3.91%
5232 Floor Covering Retailing 55 7.2 186 175 150 3.91%
5233 Domestic Hardware and Houseware Retailing 61 43.3 226 258 210 5.48%
5234 Domestic Appliance Retailing 62 27.4 82 53 60 1.57%
5235 Recorded Music Retailing 62 9.8 47 67 60 1.57%
5241 Sport and Camping Equipment Retailing 62 18.4 50 26 60 1.57%
5242 Toy and Game Retailing 62 4.0 188 400 60 1.57%
5243 Newspaper, Book and Stationery Retailing 62 14.3 78 43 60 1.57%
5244 Photographic Equipment Retailing 62 0.9 0 0 60 1.57%
5245 Marine Equipment Retailing 62 0.1 0 0 60 1.57%
5251 Pharmaceutical, Cosmetic and Toiletry Retailing 62 44.0 83 33 60 1.57%
5252 Antique and Used Good Retailing 62 1.3 0 4 60 1.57%
5253 Garden Equipment Retailing 61 6.6 194 78 210 5.48%
5254 Flower Retailing 55 3.8 261 147 150 3.91%
5255 Watch and Jewellery Retailing 62 13.3 61 107 60 1.57%
5259 Retailing n.e.c. 61 50.1 200 244 210 5.48%
5261 Household Equipment Repair Services (Electrical) 55 6.1 164 132 150 3.91%
5269 Household Equipment Repair Services n.e.c. 55 5.6 94 10 150 3.91%
5311 Car Retailing 65 92.2 84 97 110 2.87%
5312 Motor Cycle Dealing 65 5.5 168 115 110 2.87%
5313 Trailer and Caravan Dealing 65 0.2 298 119 110 2.87%
5321 Automotive Fuel Retailing 55 8.2 121 120 150 3.91%
5322 Automotive Electrical Services 55 2.9 39 22 150 3.91%
5323 Smash Repairing 65 22.6 115 145 110 2.87%
5324 Tyre Retailing 65 6.9 191 260 110 2.87%
H.1 Premium Rates by ANZSIC Class
ANZSIC Description Rel. Group
Estimated
Wages for
2015/16 ($m)
Claim Freq
Rel - last 3
years
Capped
Claim Cost
Rel - last 5
years
2015/16
Selected
Relativity
2015/16
Suggested
Premium
Rate
5329 Automotive Repair and Services n.e.c. 65 41.0 124 122 110 2.87%
5710 Accommodation 67 95.2 195 171 170 4.44%
5720 Pubs, Taverns and Bars 68 17.2 128 99 120 3.13%
5730 Cafes and Restaurants 68 203.4 130 120 120 3.13%
5740 Clubs (Hospitality) 67 75.1 170 161 170 4.44%
6110 Road Freight Transport 70 28.1 266 577 500 13.05%
6121 Long Distance Bus Transport 70 5.5 320 558 500 13.05%
6122 Short Distance Bus Transport (Including Tramway) 71 2.0 0 172 250 6.52%
6123 Taxi and Other Road Passenger Transport 71 5.2 185 319 250 6.52%
6402 Scheduled Domestic Air Transport 74 36.8 138 109 120 3.13%
6403 Non-Scheduled Air and Space Transport 74 0.1 0 135 120 3.13%
6509 Transport n.e.c. 75 3.8 291 606 210 5.48%
6611 Parking Services 74 0.9 185 722 120 3.13%
6619 Services to Road Transport n.e.c. 75 2.6 126 4 210 5.48%
6629 Services to Water Transport n.e.c. 77 1.7 47 2 130 3.39%
6630 Services to Air Transport 78 10.0 74 109 180 4.70%
6641 Travel Agency Services 62 19.2 36 28 60 1.57%
6642 Road Freight Forwarding 79 1.1 157 442 200 5.22%
6643 Freight Forwarding (Except Road) 79 0.2 0 0 200 5.22%
6644 Customs Agency Services 80 0.1 0 0 30 0.78%
6649 Services to Transport n.e.c. 79 3.0 254 188 200 5.22%
6709 Storage n.e.c. 81 7.6 145 520 220 5.74%
7111 Postal Services 62 14.7 56 121 60 1.57%
7112 Courier Services 71 11.8 433 259 250 6.52%
7120 Telecommunication Services 84 40.6 53 65 30 0.78%
7321 Banks 84 11.0 47 61 30 0.78%
7322 Building Societies 84 1.6 0 7 30 0.78%
7323 Credit Unions 85 8.1 101 85 90 2.35%
7329 Deposit Taking Financiers n.e.c. 84 0.3 0 0 30 0.78%
7330 Other Financiers 84 0.6 0 0 30 0.78%
7340 Financial Asset Investors 84 1.4 0 0 30 0.78%
7411 Life Insurance 84 0.3 0 0 30 0.78%
7412 Superannuation Funds 84 5.4 0 14 30 0.78%
7421 Health Insurance 84 1.5 94 3 30 0.78%
7422 General Insurance 85 19.2 125 93 90 2.35%
7511 Financial Asset Broking Services 83 13.8 35 16 15 0.39%
7519 Services to Finance and Investment n.e.c. 83 58.1 18 6 15 0.39%
7520 Services to Insurance 84 21.5 29 35 30 0.78%
7711 Residential Property Operators 84 2.4 103 24 30 0.78%
7712 Commercial Property Operators and Developers 84 43.0 63 44 30 0.78%
7720 Real Estate Agents 84 124.7 26 21 30 0.78%
7741 Motor Vehicle Hiring 88 4.9 219 201 200 5.22%
7742 Other Transport Equipment Leasing 88 0.2 0 0 200 5.22%
7743 Plant Hiring or Leasing 88 14.0 159 240 200 5.22%
7810 Scientific Research 84 44.8 48 27 30 0.78%
7821 Architectural Services 83 38.0 19 14 15 0.39%
7822 Surveying Services 84 17.4 32 54 30 0.78%
7823 Consulting Engineering Services 83 158.8 22 21 15 0.39%
7829 Technical Services n.e.c. 84 26.2 73 33 30 0.78%
7831 Data Processing Services 84 14.7 24 9 30 0.78%
7832 Information Storage and Retrieval Services 84 9.7 10 3 30 0.78%
7833 Computer Maintenance Services 84 21.6 27 59 30 0.78%
7834 Computer Consultancy Services 83 1,304.5 10 10 15 0.39%
7841 Legal Services 84 110.5 42 34 30 0.78%
7842 Accounting Services 83 181.6 12 16 15 0.39%
7851 Advertising Services 80 14.4 20 40 30 0.78%
7852 Commercial Art and Display Services 80 13.9 51 29 30 0.78%
7853 Market Research Services 80 15.9 14 31 30 0.78%
7854 Business Administrative Services 128 133.5 90 38 50 1.30%
7855 Business Management Services 80 393.4 29 26 30 0.78%
7861 Employment Placement Services 90 49.2 139 104 170 4.44%
7862 Contract Staff Services 90 10.7 188 354 170 4.44%
7863 Secretarial Services 80 10.9 0 33 30 0.78%
7864 Security and Investigative Services (Except Police) 91 72.7 114 164 150 3.91%
7865 Pest Control Services 92 4.7 192 94 350 9.13%
7866 Cleaning Services 93 99.0 146 294 280 7.31%
7869 Business Services n.e.c. 94 47.9 77 80 60 1.57%
8111 Central Government Administration 95 0.4 0 0 110 2.87%
8113 Local Government Administration 95 1.9 43 300 110 2.87%
8130 Foreign Government Representation 95 34.3 107 102 110 2.87%
8410 Preschool Education 97 3.1 315 80 120 3.13%
8421 Primary Education 97 4.5 230 358 120 3.13%
8422 Secondary Education 99 172.2 104 58 60 1.57%
8423 Combined Primary and Secondary Education 99 112.7 109 53 60 1.57%
8431 Higher Education 100 18.7 35 25 40 1.04%
8432 Technical and Further Education 100 14.2 102 34 40 1.04%
8440 Other Education 99 44.6 113 58 60 1.57%
8611 Hospitals (Except Psychiatric Hospitals) 101 74.4 106 108 90 2.35%
8613 Nursing Homes 127 93.5 273 225 250 6.52%
8621 General Practice Medical Services 103 79.3 35 35 35 0.91%
8622 Specialist Medical Services 103 87.7 32 43 35 0.91%
8623 Dental Services 103 50.5 85 36 35 0.91%
8631 Pathology Services 104 32.8 132 115 110 2.87%
8632 Optometry and Optical Dispensing 105 17.2 31 12 20 0.52%
8633 Ambulance Services 101 1.4 136 18 90 2.35%
H.1 Premium Rates by ANZSIC Class
ANZSIC Description Rel. Group
Estimated
Wages for
2015/16 ($m)
Claim Freq
Rel - last 3
years
Capped
Claim Cost
Rel - last 5
years
2015/16
Selected
Relativity
2015/16
Suggested
Premium
Rate
8634 Community Health Centres 106 12.8 88 94 140 3.65%
8635 Physiotherapy Services 103 20.5 17 21 35 0.91%
8636 Chiropractic Services 103 6.9 57 21 35 0.91%
8639 Health Services n.e.c. 106 36.6 81 76 140 3.65%
8640 Veterinary Services 107 17.8 307 102 100 2.61%
8710 Child Care Services 89 110.7 334 163 160 4.17%
8721 Accommodation for the Aged 102 35.1 302 242 200 5.22%
8722 Residential Care Services n.e.c. 102 55.9 201 193 200 5.22%
8729 Non-Residential Care Services n.e.c. 132 77.9 274 274 280 7.31%
9111 Film and Video Production 108 1.1 46 110 40 1.04%
9112 Film and Video Distribution 108 0.2 0 0 40 1.04%
9113 Motion Picture Exhibition 108 5.1 160 73 40 1.04%
9121 Radio Services 108 15.5 26 11 40 1.04%
9122 Television Services 108 24.5 50 32 40 1.04%
9220 Museums 110 4.1 80 15 20 0.52%
9231 Zoological and Botanic Gardens 111 1.3 354 215 200 5.22%
9239 Recreational Parks and Gardens 111 0.1 553 32 200 5.22%
9241 Music and Theatre Productions 112 1.8 166 405 160 4.17%
9242 Creative Arts 112 0.5 0 0 160 4.17%
9252 Performing Arts Venues 112 5.7 288 53 160 4.17%
9259 Services to the Arts n.e.c. 112 3.0 314 674 160 4.17%
9311 Horse and Dog Racing 113 2.8 353 177 450 11.74%
9312 Sports Grounds and Facilities n.e.c. 114 37.7 101 120 100 2.61%
9319 Sports and Services to Sports n.e.c. 133 32.6 67 26 70 1.83%
9321 Lotteries 84 0.4 0 0 30 0.78%
9322 Casinos 115 10.2 107 133 160 4.17%
9329 Gambling Services n.e.c. 115 2.7 108 28 160 4.17%
9330 Other Recreation Services 111 4.6 111 81 200 5.22%
9511 Video Hire Outlets 108 1.2 0 0 40 1.04%
9519 Personal and Household Goods Hiring n.e.c. 129 5.6 177 144 140 3.65%
9521 Laundries and Dry-Cleaners 116 4.1 69 367 230 6.00%
9522 Photographic Film Processing 129 0.7 100 0 140 3.65%
9523 Photographic Studios 129 1.4 0 0 140 3.65%
9524 Funeral Directors, Crematoria and Cemeteries 129 2.7 137 33 140 3.65%
9525 Gardening Services 117 16.0 370 302 400 10.44%
9526 Hairdressing and Beauty Salons 118 43.4 69 106 90 2.35%
9529 Personal Services n.e.c. 112 3.6 45 84 160 4.17%
9610 Religious Organisations 119 26.0 75 34 50 1.30%
9621 Business and Professional Associations 80 192.6 40 28 30 0.78%
9622 Labour Associations 80 8.7 44 87 30 0.78%
9629 Interest Groups n.e.c. 120 41.8 140 105 140 3.65%
9633 Fire Brigade Services 91 1.6 50 0 150 3.91%
9634 Waste Disposal Services 122 15.0 354 326 320 8.35%
9700 Private Households Employing Staff 112 0.8 0 0 160 4.17%
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