act workers’ compensation review of scheme performance to 30 june 2016 · 2017-05-24 · chief...

© 2017 Finity Consulting Pty Limited

ACT Workers’ Compensation Review of Scheme Performance to 30 June 2016

Chief Minister, Treasury and Economic Development Directorate

April 2017


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 2016

An estimate of reasonable premium rates for the 2017/18 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).

Yours sincerely

Gae Robinson Tim Jeffrey

Fellows of the Institute of Actuaries of Australia


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April 2017


Part I Executive Summary ....................................................................................................................... 3

Part II Detailed Findings ........................................................................................................................... 7

1 Introduction .......................................................................................................................................... 7

2 Overview of Claims Experience ......................................................................................................... 9

3 Claim Analysis and Assumptions .................................................................................................... 19

4 Economic, Expense and Profit Assumptions ................................................................................. 31

5 Results of Hindsight Analysis .......................................................................................................... 37

6 Premium Pool for 2017/18 ................................................................................................................. 40

7 Suggested Relativities and Reasonable Premium Rates .............................................................. 44

Part III Further Information ...................................................................................................................... 47

8 Data ..................................................................................................................................................... 47

9 Compliance with Standards and Approach .................................................................................... 50

10 Reliances & Limitations .................................................................................................................... 56

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


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April 2017

Part I Executive Summary

1 Introduction & Background

The Chief Minister, Treasury and Economic Development Directorate (CMTEDD) requested that Finity

undertake an actuarial review of the performance of the ACT private sector workers’ compensation

scheme. We investigated trends in the claims experience to 30 June 2016 and estimated reasonable

premium rates for the 2017/18 policy year.

Our review includes:

Identifying major trends in the insured private sector claims experience

Developing a reasonable premium pool and average premium rate for the insured scheme for the

2017/18 policy year

Developing premium rates at the ANZSIC Class level for the 2017/18 policy year, using the

ANZSIC 2006 classification system.

We have used data extracted from the policy and claims system at the end of September 2016.

2 Key Scheme Metrics

In 2015/16 just over 16,500 policies were written, covering $8.2 billion in wages. Premiums of

$165 million were collected in the year.

Written wages increased by more than premiums in 2015/16, and written premium rates decreased from

2.09% of wages in 2014/15 to 2.02% of wages in 2015/16.

3 Claims Experience

Section 2 of our report examines the claims experience that has emerged in the last year. Section 3

details how our actuarial projections respond to this experience. The main features are summarised

below.

Claim Numbers and Frequency

The number of non-nil claims reported in 2015/16 was slightly higher than 2014/15, with around 3,290

new non-nil claim reports.

The number of new lost time claims increased slightly, with 2,038 new lost time claims in 2015/16.

Figure 1 shows our estimated ultimate non-nil and lost time claim frequencies for the Scheme.


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April 2017

Figure 1 – Estimated Ultimate Claims Frequency

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The non-nil claim frequency per $million wages was reasonably stable from 2007/08 to 2012/13. Since

then it has steadily reduced, to an estimated 0.41 claims per million wages for the 2015/16 accident year.

We have adopted a claim frequency for the 2017/18 policy year of 0.42 claims per $ million of wages, in

line with the average of the last two accident years. This is 2% lower than the claim frequency adopted

for the 2016/17 policy year in our previous review.

Our adopted claim frequency corresponds to around 3,450 claims for the 2017/18 policy year.

The frequency of claims receiving weekly benefits has also reduced in recent years. We have adopted a

lost time frequency of 0.26 claims per $ million wages for the 2017/18 policy year.

Claim Payments

Figure 2 shows total gross claim payments made over the last ten years, broken down by payment type.

Figure 2 – Gross Payments (December 2016 values)

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April 2017

Just over $123 million of claim payments were made in 2015/16, $9 million (7%) lower than payments in

the previous year.

The variation in payment levels in recent years is largely related to variation in lump sum costs, with only

small changes in statutory benefit payments. The reduction in lump sum spend in 2015/16 is due to

lower numbers of new claims receiving a lump sum benefit for the first time; the average settlement size

remains significantly higher than pre 2012/13 levels.

We have adopted an average claim size per non-nil claim of around $38,900 (net of recoveries) for the

2017/18 policy year. This is 4% higher than that selected in our previous review ($36,000, after

adjustment to December 2016 dollars), mainly due to an increase in our adopted average settlement size

for lump sum claims.

4 Non-Claim Assumptions

We have included an expense loading of 21.7% of premium ($47.6 million) in the reasonable premium

rate for 2017/18, down slightly from 22.2% of premium ($49.2 million) at the previous review. A reduction

in adopted insurer commission and policy expenses is partially offset by increases in the regulatory

funding and DIF levies.

The reasonable premium rate for 2017/18 includes an insurer margin of 13.5% of premium, consistent

with that adopted previously.

Our future wage inflation assumption has decreased from 3.25% to 3.0% per annum, while the adopted

discount rate has increased from 2.05% to 2.35% per annum.

5 Average Premium Rate for 2017/18

Our estimate of a reasonable premium pool for 2017/18 is $220 million, as shown below.

Table 1 –Total Premium Pool

Premium Rate Component $m

Risk Premium Pool 142.3

Expense Loading 47.6

Profit Loading 29.6

Total Premium Pool 219.5

Wages Estimate 8,514.0

Average Risk Premium (% wages) 1.67%

Average Premium Rate (% wages) 2.58%

The reasonable average premium rate for 2017/18 is 2.58% of wages, down from 2.70% of wages for

2016/17 – a reduction of 0.12% of wages (5% proportionate decrease).

This decrease in the reasonable rate is composed of:

Allowance for one year’s superimposed inflation – increase of 0.02%

Claim cost reductions – decrease of 0.07%

Economic assumptions – decrease of 0.05%


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April 2017

Expense loadings – decrease of 0.02%

6 ANZSIC Class Premium Rates

To derive reasonable premium rates at the ANZSIC Class level in the ACT, we have separately

considered frequency relativities and cost relativities. Appendix H includes the full schedule of

reasonable premium rates. The reasonable rates fall in the range 0.39% to 14.18% of wages.

7 Reliances and Limitations

Our reliances and limitations are an important part of this report and are detailed in Section 10.


Page 7 of 79

April 2017

Part II Detailed Findings

1 Introduction

1.1 Purpose

The Chief Minister and Treasury 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 CMTEDD on key developments in the Scheme experience. We

were required to investigate trends in the claims experience to 30 June 2016, and provide an estimate of

a reasonable premium rate for the 2017/18 policy year.

Our previous Scheme review was summarised in the report “ACT Workers’ Compensation Review of

Scheme Performance to 30 June 2015” dated 12 April 2016.

1.2 Scope

The scope of our review is limited to the insured private sector workers’ compensation scheme; it does

not include self-insured employers or the ACT public sector.

Our review 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 benefit type.

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 2017/18 policy year

Developing reasonable premium rates at the ANZSIC Class level for the 2017/18 policy year

Appendix B of this report summarises the various historical legislative reforms that have had a significant

impact on the cost of the Scheme.

1.3 Data

We have prepared this advice using data as at October 2016 sourced from CMTEDD’s Workers

Compensation Management System (WCMS) that commenced late 2015.

The last full financial year of data is for the year ending 30 June 2016, and many of the graphs and

commentary in this report are prepared using experience to 30 June 2016 only. We have also

specifically utilised the claims data for the three months to 30 September 2016 in projecting ultimate

claim numbers and in forming our lump sum assumptions.

We remain concerned about the reliability of case estimates in WCMS for older years, where it appears

case estimates have not been set to zero when claims are closed. We have therefore sourced case

estimates from summarised data provided directly by each insurer.


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April 2017

Wages and premium information for recent years appears to be of a higher quality than the data captured

on AIMS (the previous data system) for older years. However, given the immaturity of the premium and

wage information on WCMS, we have continued to rely on summarised data provided by insurers.

Further details of the data supplied and reconciliations carried out are set out in Section 8.

1.4 Structure of Report

The details of our review are set out in the following report sections:

Part II – Scheme Review and Reasonable Premium Rates

Section 2 Overview of trends in claims experience

Section 3 Our assessment of Scheme claim number and payment experience, including the

assumptions required to estimate ultimate claim costs

Section 4 Other assumptions adopted, namely economic, expense and profit assumptions

Section 5 Estimated ultimate costs for each past accident year, and comparison to insurer reserves

Section 6 Estimates of a reasonable premium pool and the average premium rate

Section 7 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

Section 9 Compliance with relevant professional standards and our approach to the analysis

Section 10 Reliances and limitations relating to this report.

Part IV – Appendices

The appendices include further detail.


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April 2017

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 3.

2.1 Numbers of Claims Reported

The following graph shows the number of non-nil claims in each year (counted in the year of first

payment).

Figure 2.1 – Non-Nil Claim Numbers

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Between 2011/12 and 2013/14 the number of non-nil claims reduced by around 5% per annum to a low

of just under 3,200. We understand that the reduction in 2013/14 may have been related to a safety

review of the Construction industry conducted in 2012/13 and subsequent improvements in WHS

practices. Since then non-nil claims have increased slightly, with almost 3,300 claims reported in

2015/16.

Key Findings

The number of non-nil claims reported increased slightly in 2015/16, with almost 3,300 new

reports.

The number of new lost time claims increased marginally, with 2,038 new lost time claims in

2015/16.

Just over $123 million was paid in 2015/16, a 7% reduction on the previous year, largely driven

by lower lump sum payments.

The number of claims receiving a first lump sum payment reduced to the lowest levels since

2009/10; however the average settlement size remains significantly higher than for settlements

prior to 2013/14.


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April 2017

Table 2.1 compares the number of non-nil claims reported in 2015/16 with the expected experience from

our previous review.

Table 2.1 – Actual vs Expected Claims Reported in 12 months to 30 June 2016

Accident

Year Actual Expected Difference Difference

Prior 12 11 1 8%

2012/13 9 9 0 -4%

2013/14 13 20 -7 -34%

2014/15 422 407 15 4%

2015/16 2,833 2,828 5 0%

Total 3,289 3,275 14 0%

Non-Nil Claims Reported

Non-nil claims reported in 2015/16 were similar to expectations.

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 2016 values.

Figure 2.2 – Gross Payments by Type: Actual Historical Values

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After peaking at just over $140 million in 2013/14, payments have reduced in both 2014/15 and 2015/16.

Payments for the 2015/16 year of $123 million (a 7% reduction from the previous year) are similar in total

size and benefit split to the 2012/13 year. The strongest driver of changes in payment levels is the

amount paid in respect of Common Law (including negotiated settlements).

Insurers received around $5 million in non-reinsurance recoveries in 2015/16, bringing net payments in

the year to around $119 million.


Page 11 of 79

April 2017

Figure 2.3 – Gross Payments by Type: Inflated to December 2016 values

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After adjusting for historical wage inflation, payments averaged just over $100 million until 2011/12, but

then increased significantly in 2012/13 and 2013/14. Payments dropped off in 2014/15 and 2015/16, but

2015/16 payments were still significantly higher (15%) than 2011/12 and previous years. Most of the

movement can be attributed to changes in common law payments.

The following table compares net payments in the 12 months to 30 June 2016, by payment type, to the

expected payments from our previous review.

Table 2.2 – Actual vs Expected Payments in 12 months to 30 June 2016

Payment

Type Actual Expected Difference Difference

$m $m $m %

Weekly 23.9 25.0 -1.1 -4%

Medical 16.4 16.2 0.2 1%

Rehab 5.9 7.3 -1.4 -19%

Lump sums1 58.0 61.7 -3.6 -6%

Legal 19.1 18.6 0.4 2%

Recoveries -4.8 -4.3 -0.5 11%

Total 118.5 124.5 -6.0 -5%1Includes Common Law

Total payments in 2015/16 were $6.0 million (5%) lower than expected. The strongest driver was lower

than expected lump sum payments, with fewer claims from older accident years accessing lump sum

benefits. Weekly benefit payments were also lower than expected for accidents more than two years old

(potentially driven by claimants accessing lump sum benefits earlier), while rehab costs were lower than

expected for all accident periods.

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.


Page 12 of 79

April 2017

Figure 2.4 – Lost Time Claims Reported

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Claim numbers fell by 9% in 2013/14, following a safety review of the Construction industry, and since

then the number of claims has been around 2,000 claims per annum. There were 2,038 new lost time

claims in 2015/16, up 3% from the previous year; the small increase related to an increase in exposure

rather than deterioration in claim frequency.

Table 2.3 shows the number of new lost time claims was 1% higher than expected.

Table 2.3 – Actual vs Expected Lost Time Claims Reported in 12 months to 30 June 2016

Accident

Year Actual Expected Difference Difference

Prior 5 4 1 16%

2012/13 6 7 -1 -16%

2013/14 25 28 -3 -11%

2014/15 448 422 26 6%

2015/16 1,554 1,559 -5 0%

Total 2,038 2,021 17 1%

Lost Time Claims Reported

2.4 Common Law and Other Lump Sums

Numbers of Lump Sums Paid

Injured workers may choose to pursue either:

A common law claim (damages awarded under Chapter 9 of the Act)

A negotiated settlement (claimant signs a common law release but no writ has been issued)

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; 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


Page 13 of 79

April 2017

an entitlement to receive future weekly benefits and medical costs. The number of claimants pursuing

statutory permanent impairment benefits is small relative to common law and commutations.

Figure 2.5 shows the number of claims that have received common law, negotiated settlement,

commutation, statutory impairment benefits or death benefits for the first time in each payment year

(referred to as “lump sum claims reported”). Note that around 4% of claimants receive both a common

law (including negotiated settlement) and lump sum (commutation, statutory benefit or death) payment,

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 it is counted as common law.

If a claim has no common law payment but has a negotiated settlement payment, it is a settlement.

► In the previous claims database (prior to 2013/14) there was no ability to distinguish

between common law awards and negotiated settlements; all matters have been deemed to

be negotiated settlements.

If a claim has no common law or negotiated settlement payments but has a commutation payment,

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, 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, it is counted as a death lump sum.

Figure 2.5 – Numbers of Lump Sum Claims Reported

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Figure 2.5 shows:

Almost 400 claims received a lump sum payment in 2015/16. The number of claimants receiving

either common law or negotiated settlement damages for the first time peaked in 2013/14 at 274,

and has since decreased to 236 in 2015/16. We understand that there are environmental factors

that may have impacted on the number of such claims in the last four years, including:


Page 14 of 79

April 2017

► New ACT Court Practice Directions introduced in 2013/14 that aim for finalisation within 12

months. These directions may still be working their way through the system

► ‘Court blitzes’ in 2013/14 aimed at clearing the court docket, coupled with deliberate

attempts by some insurers to proactively settle some of their more difficult matters pre-trial.

This may explain the peak observed in 2013/14, followed by a gradual decrease as the

number of lump sum claims reported returns to ‘business as usual’.

► Anecdotal evidence that there has been an increase in advertising by plaintiff law firms

The number of commutations has reduced a little from almost 180 in 2014/15 to around 160 in

2015/16.

No claims received only a statutory permanent impairment benefit in 2015/16; the average was 30-

40 for periods prior to 2012/13. This may suggest that almost all claimants who receive a

permanent impairment lump sum now also receive a lump sum benefit of another nature (common

law, negotiated settlement or commutation).

There were no new death benefit claims in 2015/16. Given the low number of death benefit claims

per year, this is not an unexpected result.

Table 2.4 shows the numbers of lump sum reported in 2015/16 compared with expectations from our previous review.

Table 2.4 – Actual vs Expected Lump Sums Reported in 12 months to 30 June 2016

Accident Year Actual Expected Difference Difference

Prior 8 12 -4 -33%

2007/08 2 5 -3 -59%

2008/09 4 7 -3 -46%

2009/10 10 13 -3 -23%

2010/11 21 27 -6 -21%

2011/12 51 57 -6 -11%

2012/13 81 99 -18 -18%

2013/14 117 117 0 0%

2014/15 88 93 -5 -5%

2015/16 11 11 0 -3%

Total 393 441 -48 -11%

The number of lump sum claims reported in 2015/16 was 11% below expectations. The lower than

expected new lump sum numbers for older accident periods suggest a reduction in the average time

taken for a claim to first access lump sum benefits.

Average Size of Lump Sums (Lump Sum Component)

Figure 2.6 shows the average size of lump sum claims (inflated to December 2016 dollars) by year of

settlement.


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April 2017

Figure 2.6 – Average Size of Lump Sum Settlements

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* 2009/10 has been adjusted to exclude a single large jockey claim

(these claims are no longer covered by the scheme)

The average size of lump sum settlements since 2013/14 has been between $140,000 and $150,000,

substantially higher than earlier years.

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 claims receiving 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 receiving common law or negotiated settlement

Those receiving a commutation benefit but no common law or settlement

Those receiving both a common law/negotiated settlement amount and a commutation.


Page 16 of 79

April 2017

Figure 2.7 – Average Size of Claims Receiving Common Law or Negotiated Settlement

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CL/Settlement LS Weekly Medical + Rehab Legal

The overall average cost of claims receiving common law payments (or negotiated settlements) peaked

in 2013/14 at around $330,000. It has since decreased, to $275,000 in 2015/16. Despite this reduction

of $55,000 in the average cost of common law claims over the last two years, the current average size is

still higher than for years prior to 2014/15. The total cost of a common law/negotiated settlement claim

over the last two years is made up as follows:

Common law component: around $175,000

Weekly benefits: about $40,000

Medical and rehabilitation costs: around $30,000

Legal costs: about $40,000.

Figure 2.8 – Average Size of Claims Receiving Commutations

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* 2009/10 has been adjusted to exclude large jockey claim


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April 2017

Figure 2.8 shows that the overall average cost of claims receiving commutations (but no common law)

was around $150,000 for years up to 2013/14. For 2014/15 and 2015/16 the average claim size has

increased to around $175,000, due to increases in the commutation size. The average claim size over

the last two years is broken down as follows:

Commutation component: around $85,000; this is about half the amount that common law claims

receive as a common law component

Weekly benefits: about $35,000



Figure 2.9 – Average Size of Claims Receiving both Common Law & Commutation

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The overall average cost for claims receiving both a common law and commutation is highly variable

from year to year, noting that there are only 10-25 such claims each year. The average size for the last

three years (at around $450,000) is significantly higher than that observed for earlier years. In the last

two years the average size of $450,000 has been made up as follows:

Common law component: around $230,000

Commutation component: about $50,000 (total common law plus commutation $280,000)

Weekly benefits: around $65,000



All cost components for these claims are at least as large as for claims who receive only a common law

or commutation payment.


Page 18 of 79

April 2017

Claim Size Distribution

Table 2.5 shows the claim size distribution of all common law and other lump sum claims recorded in

WCMS (in December 2016 values) and includes all benefit payments made on these claims (not just the

lump sum component).

Table 2.5 – Claim Size Distribution

Size of

Settlement

$Dec-16

Number of

Claims Proportion

Average

claim size in

band ($000

Dec-16)

Number of

Claims Proportion

Average

claim size in

band ($000

Dec-16)

0-50k 334 10% 31,000 894 21% 30,000

50k-100k 489 14% 77,000 1,028 24% 74,000

100k-150k 527 15% 124,000 770 18% 123,000

150k-200k 441 13% 174,000 509 12% 174,000

200k-300k 695 20% 247,000 583 14% 245,000

300k-400k 406 12% 345,000 275 6% 347,000

400k-500k 224 6% 443,000 106 2% 446,000

500k-1m 334 10% 654,000 109 3% 635,000

>1m 61 2% 1,353,000 17 0% 2,152,000

Common Law Other Lump Sums

Around 50% of common law claims settle for more than $200,000 and 12% settle for $500,000 or more.

The distribution of other lump sums is skewed to lower cost claims.


Page 19 of 79

April 2017

3 Claim Analysis and Assumptions

This section describes our findings in relation to trends in 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 Exposure

Number of Employees

Employee numbers are used as a measure of exposure in the calculation of ultimate claim frequency.

Figure 3.1 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 (provided

by CMTEDD).

Figure 3.1 – Workforce

0

20

40

60

80

100

120

140

160

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

20

15

/16

Wo

rkfo

rce

(000s)

Accident Year

Full Time Part time

Key Findings

Earned wages grew by 7% in real terms to $7.9 billion in 2015/16

We estimate there will be around 3,281 non-nil claims for the 2015/16 accident year, up 1%

from the previous year. This represents a decreased claim frequency, as wage growth

outstrips increases in claim numbers

We have adopted a non-nil claim frequency of 0.42 claims per $ million of wages for the

2017/18 policy year, 3% lower than adopted for the 2016/17 policy year. This results in a

projection of 3,450 claims

The selected average claim size per non-nil claim is around $38,900 for the 2017/18 policy

year, down 1% since our previous review, primarily due to a decrease in lump sum utilisation.


Page 20 of 79

April 2017

Total employee numbers grew by 4.0% in 2015/16, driven by an increase in the number of part time

employees (11.1% increase). In our calculation of ultimate claim frequency, we have used the number of

full time ACT private sector employees as the measure of exposure.

As these employee figures are not provided by the insurers, and are compiled from two different sources

of data, in our premium estimates we rely more heavily on frequency measured relative to wages rather

than to employee numbers.

Earned Wages

As noted, wages are also used as a measure of exposure. Figure 3.2 shows earned wages by accident

year. The wages have been increased for historical wage inflation (amounts are expressed in June 2016

values), which means that an increase here represents real growth in total wages. These figures are

estimates based on information to September 2016; wages are often revised from initial estimates to

actual figures at the end of the policy year (see Appendix G). We have also shown our estimates from

last year, adjusted for differences in inflation.

Figure 3.2 – Estimated Ultimate Earned Wages

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Ea

rne

d W

ag

es

($b

n D

ec

-16)

Accident Year Ending 30 June

Previous

Earned wages increased by 7% in real terms in 2015/16 and are estimated to be around $7.9 billion in

June 2016 values.

3.2 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 2016

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; “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.


Page 21 of 79

April 2017

Figure 3.3 – Ultimate Number of (Non-Nil) Claims

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

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

20

15

/16

Accident year

DY1 DY2 DY3+ IBNR Previous Ultimate

There are generally very few claims reported more than two years after the accident, and the number of

Incurred But Not Reported (IBNR) claims is therefore small for all but the most recent accident year.

The projected number of non-nil claims for 2015/16 is 3,281, an increase of 1.3% from 2014/15.

The estimated ultimate number of non-nil claims is divided by both earned wages and full time employee

numbers to arrive at measures of the ultimate claim frequency; see Figure 3.4.

Figure 3.4 – 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

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

17

/18 P

olY

r

Cla

ims

pe

r 100 e

ee

's

Cla

ims

pe

r $m

wa

ge

s


Freq (per $m wages) (Freq (per 100 eee's)

The non-nil claim frequency per $million wages was reasonably stable from 2007/08 to 2012/13. Since

then it has steadily reduced, to an estimated 0.41 claims per million wages for the 2015/16 accident year.

The shape of the claim frequency relative to employee numbers is similar, with the decrease in frequency

being seen a little earlier.


Page 22 of 79

April 2017

We have adopted a claim frequency for the 2017/18 policy year of 0.42 claims per $ million of wages, in

line with the average of the last two accident years. This is 2% lower than the claim frequency adopted

for the 2016/17 policy year in our previous review.

Our adopted claim frequency corresponds to around 3,450 claims for the 2017/18 policy year.

Appendix E provides further details of our claim number analysis.

3.3 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.

Figure 3.5 – Estimated Ultimate Lost Time Claims

0%

15%

30%

45%

60%

75%

0

500

1,000

1,500

2,000

2,500

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

20

15

/16

Accident year

DY1 DY2 DY3+ IBNR Lost Time %

As with non-nil claims, there are very few new lost time clams more than two years after the accident,

and therefore the number of IBNR claims is small for all but the most recent accident year.

We project around 2,030 claims for 2015/16, an increase of 2% from 2014/15 and consistent with the

experience to date.

Lost time claim numbers as a proportion of non-nil claims has been stable over the period shown,

averaging 62%. For the 2017/18 policy year, we have adopted a lost time proportion of 62%, unchanged

from the previous review.

Figure 3.6 shows the ultimate number of lost time claims expressed as a frequency.


Page 23 of 79

April 2017

Figure 3.6 – 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

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

17

/18 P

olY

r

Cla

ims

pe

r 100 e

ee

's

Cla

ims

pe

r $m

wa

ge

s


Freq (per $m wages) (Freq (per 100 eee's)

The lost time claim frequency (per $ million of wages) is projected to be 0.27 and 0.26 for 2013/14 and

2015/16 respectively. We have adopted a frequency of 0.26 for the 2017/18 policy year.

Average Weekly Benefit Payments

Figure 3.7 below shows the average weekly benefits paid per lost time claim by payment year. Our

adopted average weekly benefit payments for the 2017/18 policy year are also shown.

Figure 3.7 – Weekly Benefits per Lost Time Claim

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Paym

ent

per

Lost

Tim

e C

laim

($D

ec-1

6)

Payment Year

DY1 DY2 DY3 DY4 DY5+

In 2015/16 the average weekly benefits per lost time claim increased in development years one and two,

while reducing at longer durations.

Our selected average claim size for the 2017/18 policy year for weekly benefits is $12,323 (in December

2016 dollars) per lost time claim. This is 0.6% higher than the selected average claim size at the

previous review (inflated to December 2016 dollars), reflecting the emerging experience.


Page 24 of 79

April 2017

The adopted average weekly payment per non-nil claim (not just lost time claims) is $7,640. This is also

0.6% higher than selected in our previous review ($7,596, inflated).

The full analysis of weekly benefit average claim sizes can be found in Appendix F.

3.4 Medical and Related Payments

Figure 3.8 shows the average medical payments per non-nil claim for each past payment year and our

selected average medical claim size for the 2017/18 policy year.

Figure 3.8 – Medical Benefits per Non-Nil Claim

0

1,000

2,000

3,000

4,000

5,000

6,000

Paym

ents

per

Cla

im (

$D

ec

-16)

Payment Year


The overall average medical benefit payment has been stable over the last three years; however, there

has been a shift towards a higher proportion of payments being made at earlier durations.

The selected average claim size for the 2017/18 policy year for medical benefits is $5,180 per non-nil

claim in December 2016 dollars. This is 5% higher than that adopted in our previous review ($4,932,

inflated).

The full analysis of medical and related payment average claim sizes can be found in Appendix F.

3.5 Rehabilitation

Figure 3.9 shows the average rehabilitation benefits per non-nil claim along with our selected average

rehabilitation claim size for the 2017/18 policy year.


Page 25 of 79

April 2017

Figure 3.9 – Rehabilitation Benefits per Non-Nil Claim

0

500

1,000

1,500

2,000

2,500

Paym

ents

per

Cla

im (

$D

ec-1

6)

Payment Year


The average rehabilitation benefit per non-nil claim reduced across all development periods in 2015/16.

Our selected average claim size for the 2017/18 policy year for rehabilitation benefits is $2,189 per non-

nil claim in December 2016 dollars. This is 2% lower than our selected in our previous review ($2,235,

inflated), reflecting the reduction in spend over the past year.

The full analysis of rehabilitation benefit average claim size can be found in Appendix F.

3.6 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 lump sum utilisation rate (the ultimate number of lump sum claims as a

proportion of the ultimate number of non-nil claims).


Page 26 of 79

April 2017

Figure 3.10 – Estimated Ultimate Lump Sum Claim Numbers and Utilisation

0.0%

2.5%

5.0%

7.5%

10.0%

12.5%

15.0%

0

50

100

150

200

250

300

350

400

450

500

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

20

15

/16

20

16

/17

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 ultimate lump sum numbers have reduced for most accident years where there are significant IBNR

allowances, due to two factors:

New lump sum claims reported in 2015/16 were lower than projected at the previous review

(particularly for older accident years), which has the immediate effect of reducing the ultimate

projected lump sum claims.

We have further reduced lump sum claim numbers, in response, by reducing the allowance for

future new lump sum claims at longer durations.

We have decreased the utilisation rate adopted for 2014/15 and later years slightly, to around 13.7%

(down from 14%). This is largely a reflection of better than expected experience over the past year.

We estimate the ultimate number of lump sum claims to be just over 450 in 2015/16. For the 2017/18

policy year, we are projecting around 475 lump sum claims.

We note the considerable level of uncertainty in these projections and the large IBNR component, even

for accident years that are 3-5 years old.

Settlement Experience and Adopted Average Size of Lump Sums

Table 3.1 shows the numbers and average size (in December 2016 dollars) of lump sum claims by year

of settlement; it also shows three months’ worth of settlement experience to September 2016.

Figure 3.11 shows the information in graphical form, with the sizes broken down into costs attributable to

claims less than $250,000, claims between $250,000 and $500,000 and claims above $500,000.


Page 27 of 79

April 2017

Table 3.1 – Average Size of Common Law & Other Lump Sum Settlements

Year of

Settlement

Number

of

Claims

Average

size ($ Dec-

16) Change

Number

of

Claims

Average

size ($ Dec-

16) Change

Number

of Claims

Average

size ($ Dec-

16) Change

2006/07 204 118,257 313 75,123 477 99,349

2007/08 174 125,612 6% 235 66,081 -12% 381 98,040 -1%

2008/09 199 128,121 2% 253 65,143 -1% 426 98,769 1%

2009/10* 157 137,696 7% 212 108,798 67% 351 103,665 5%

2010/11 172 173,691 26% 228 72,493 -33% 390 117,782 14%

2011/12 184 139,196 -20% 249 66,706 -8% 413 102,228 -13%

2012/13 254 150,590 8% 242 63,239 -5% 466 113,844 11%

2013/14 284 201,216 34% 226 73,678 17% 504 146,673 29%

2014/15 290 185,292 -8% 192 80,674 9% 468 148,383 1%

2015/16 284 171,368 -8% 178 88,814 10% 455 142,812 -4%

2016/17 ** 113 121,285 -29% 73 67,781 -24% 184 102,200 -28%

* 2009/10 excludes a single large jockey claim (no longer covered)

** 2016/17 shows settlements in the three months to September 2016 only

Common Law Lump Sums Lump Sums & Common Law

Figure 3.11 – Average Size of Lump Sum Settlements

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

Ave

rag

e S

ett

lem

en

t S

ize

(D

ec-1

6 $

)

Settlement Year

0-250k 250-500k 500k+

*excludes jockey claim (no longer covered)

The average size of lump sum settlements increased significantly after 2012/13, to between $140,000

and $150,000 (in December 2016 values). Since 2013/14 there has been significantly more cost

associated with claims above $250,000; the contribution of claims under $250,000 has been reasonably

stable at $70-80,000. In setting our basis we have allowed for most of the increase associated with

claims in the $250-500,000 range to persist, but have taken a longer term view of the impact of very

largest claims (greater than $500,000).

We have adopted an average settlement size of $142,000 (in December 2016 values) for lump sum

claims in the 2017/18 policy year, which is 7% higher than our previous selection of $133,000 (inflated to

December 2016 values). We test the sensitivity to this assumption in Section 6.5.

The average lump sum size for the 2017/18 year for all non-nil claims (not just lump sum claims) is

$19,500. This is 5% higher than in the previous review ($18,600, inflated).

The full analysis of average claim size for lump sum benefits can be found in Appendix F.


Page 28 of 79

April 2017

3.7 Legal and Investigation

Figure 3.12 shows legal and investigation costs per non-nil claim, along with our adopted average size

for the 2017/18 policy year.

Figure 3.12 – Legal and Investigation Costs per Non-Nil Claim

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Paym

ents

per

Cla

im (

$D

ec-1

6)

Payment Year


Average legal and investigation costs have slightly increased in aggregate in 2015/16.

Our selected average claim size for the 2017/18 policy year for legal and investigation costs is $5,751 per

non-nil claim (December 2016 dollars). This is 4% higher than the average claim size adopted in the

previous review ($5,531, inflated).

The full analysis of the average claim size for legal and investigation costs can be found in Appendix F.

3.8 Recoveries

Figure 3.13 shows the amount recovered by insurers per non-nil claim along with our selection for the

2017/18 policy year. Recoveries include recoveries from other insurers (sharing), employers (excess)

and other sources.


Page 29 of 79

April 2017

Figure 3.13 – Recoveries per Non-Nil Claim

0

500

1,000

1,500

2,000

2,500

Paym

ents

per

Cla

im (

$D

ec-1

6)

Payment Year


Recoveries vary significantly from year to year. Our selected average size for the 2017/18 policy year for

recoveries is $1,339 per non-nil claim (December 2016 dollars), up 10% from the previous review

($1,218, inflated).

The full analysis of the average size of recoveries can be found in Appendix F.

3.9 Overall Average Claim Size

Figure 3.14 summarises the adopted gross average claim sizes for each past accident year, and our

selection for the 2017/18 policy year.

Figure 3.14 – 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

45,000

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

20

15

/16

Sele

cted

Pre

vio

us

Ave

rag

e C

laim

Siz

e ($D

ec

-16)

Accident Year

Weekly Medical Rehab Legal Lumpsum (incl Common Law)

Our selected gross average claim size per non-nil claim for the 2017/18 policy year is around $40,200;

after allowing for recoveries, this reduces to about $38,900. This is 3% higher than that selected in our


Page 30 of 79

April 2017

previous review ($37,600, inflated), which mainly reflects the sustained higher average lump sum

settlement size.

3.10 Payment Pattern

Our valuation methods incorporate assumptions about the pattern of payments by development year.

Our payment pattern analysis is done by payment type. The adopted payment pattern for all payment

types combined is shown in Figure 3.15. Full details of each of the selected payment patterns can be

found in Appendix F.

Figure 3.15– 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

The majority of payments are made within the first few years after the accident, with 85% of payments

being made within five years.

3.11 Summary of Assumptions for 2017/18 Policy Year

Table 3.2 summarises the adopted claim number and average claim size assumptions for estimating

reasonable premium rates for the 2017/18 policy year.

Table 3.2 Claim Assumptions for 2017/18 Policy Year

Payment Type Number basis

Claim

Frequency

(per $m)1

Ultimate

Claim

Numbers

Average

Claim Size

($Dec-16)

Average

Claim Size

per Non-Nil

($Dec-16)

Weekly benefits Lost time claims 0.26 2,139 12,323 7,640

Medical Non-Nil claims 0.42 3,450 5,180 5,180

Rehabilitation Non-Nil claims 0.42 3,450 2,189 2,189

Lump Sums Lump Sum claims 0.06 475 141,631 19,478

Legal & Investigation Non-Nil claims 0.42 3,450 5,751 5,751

Recoveries Non-Nil claims 0.42 3,450 -1,339 -1,339

Total Non-Nil claims 0.42 3,450 38,9001Per $ million of wages in Jun-16 $


Page 31 of 79

April 2017

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 adopted in our estimates of a reasonable premium for the

2017/18 policy year, along with the assumptions adopted in our previous review.

Table 4.1– Summary of Economic, Expense and Profit Assumptions

Assumption Selected Previous

Discount Rate (p.a.) - valuation assumption 1.70% 2.40%

Discount Rate (p.a.) - premium rate assumption 2.35% 2.05%

Wage Inflation (p.a.) 3.00% 3.25%

Economic growth (p.a.) 0.50% 0.50%

Superimposed Inflation (p.a.)1 0.50% 0.50%

Expenses (% of premium) 21.7% 22.2%

Insurer margin (% of premium) 13.5% 13.5%1 Average across all payment types

4.2 Discount Rate

Discounted claims costs are used to estimate outstanding claims liabilities and insurer profitability. We

have calculated the discount rate based on yields available on Commonwealth Government bonds at 30

June 2016 (the ‘valuation’ date) corresponding to the duration of the ACT workers’ compensation claims.

The discount rate adopted for this review is 1.7% per annum, down 0.7% per annum from our previous

assumption of 2.4% per annum. The yields available on Commonwealth bonds have reduced since 30

June 2015.

We also allow for the time value of money when estimating a reasonable premium rate for 2017/18. For

this purpose we have used a risk free rate based on forward rates implied by yields available on

Commonwealth Government bonds as at 28 February 2017. 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 adopted for the 2017/18 policy year is 2.35% per annum, an increase of 0.3% from the

rate used for 2016/17 premiums. When estimating historical risk premiums, we have used this discount

rate so that comparisons made between historical years and the 2017/18 policy year are on a consistent

basis.

To discount past payments 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 2016.

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, since the workers’ compensation benefits are income-related) and

superimposed inflation.


Page 32 of 79

April 2017

Wage inflation

Figure 4.1 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 (wage inflation in the period)

and the orange bars show the wage inflation rate adopted at our previous review.

Figure 4.1– AWE Inflation

-10%

-5%

0%

5%

10%

15%

20%

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

AW

E I

nfl

ati

on

Ra

te

Year Ending December

Expected Actual

AWE inflation was lower than expected for the 2016 calendar year.

Independent forecasts for wage inflation over the next few years are in the range 2.5% to 3.0% per

annum, with the lower end of the forecasts for shorter durations and the higher end for longer durations.

We have adopted a uniform assumption of 3.0% per annum for all future periods relevant to the 2017/18

underwriting year, a decrease of 0.25% from that adopted for the 2016/17 policy year.

The implied gap between the discount rate and inflation rate of -0.65% per annum (2.4% per annum

discount rate less 3.0% per annum inflation rate), compares to -1.2% for the 2016/17 policy year.

Superimposed Inflation

Superimposed inflation is the tendency for payments to increase at a higher rate than normal economic

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 incorporated a superimposed inflation assumption of 0.5% per annum across all benefit types,

consistent with the previous review.


Page 33 of 79

April 2017

We believe our assumption takes a balanced view of the likely rates of future superimposed inflation, but

we 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 2017/18, based on market forecasts (including budgetary forecasts)

available to us at the time of this review.

4.5 Expenses

Commission/Brokerage

Table 4.2 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’s

premium rate filings for 2014/15 to 2016/17.

Table 4.2 – Commission Rates

Insurer 2014/15 2015/16 2015/16 2016/17

AAL 2.8% 2.8% 3.8% 3.6%

IAG 3.6% 3.4% 3.6% 3.3%

QBE 3.8% 4.0% 3.8% 4.0%

SUN 3.4% 3.0% 3.3% 2.9%

ZUR 4.6% 4.5% 7.5% 5.2%

CCI 0.0% 0.0% 0.0% 0.0%

GUI 0.0% 0.0% 0.0% 0.3%

Average 1 3.3% 3.2% 3.5% 3.3%

Achieved Filed

1 Weighted average based on premium volume.

The overall average commission/brokerage paid in 2015/16 of 3.2% of premiums is slightly down from

the previous year and from the average commission/brokerage rate assumed in the insurers’ filed rates.

Consistent with the achieved rates, we have allowed for commission/brokerage of 3.2% of premium in

our estimated reasonable premium pool for 2017/18 (down from 3.3% at the previous review).

Administration Expenses

Table 4.3 shows the expense rates included in the insurers’ filed rates over the last three policy years;

these rates exclude statutory levies.


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April 2017

Table 4.3 – Administration Expense Rates

Insurer 2014/15 2015/16 2016/17

AAL 8.7% 9.9% 3.6%

QBE 18.8% 16.3% 16.2%

SUN 15.2% 14.8% 11.4%

IAG 7.2% 6.1% 8.5%

CCI 37.8% 37.8% 30.0%

GUI 28.1% 26.2% 19.4%

ZUR 14.8% 14.4% 21.2%

Average 13.6% 12.9% 11.2%1 Weighted average based on premium volume.

We have adopted an allowance equal to 12.5% of premium, down from 15% at our previous review. This

assumption considered the expense rates included in the insurers’ filed rates, as well as expense levels

in the other privately underwritten workers’ compensation schemes.

We note that the treatment of statutory levies is not consistent between insurers in the filed rates. Some

are implicit within their overall expense loadings, while some are separately identified. There is therefore

some uncertainty around the actual level of administration expenses.

Statutory Charges and Levies

Our recommended premium rates also include the following levies for 2017/18:

Magistrates Court Levy of 0.3% of premium, based on the expected collection during 2017/18 as

advised by CMTEDD. This is in line with the 2016/17 year.

Default Insurance Fund (DIF) levy of 2.9% of premium (increased from 1.4%), as advised by

CMTEDD

Regulatory Funding Levy of 2.79% of premium (up from 2.25% of premium)

► This produces an estimated collected amount of $6.120 million ($6.321 million including self-

insurers)

► While the target levy collection for 2017/18 is $7.128 million, the annual increase in the levy

is capped at 0.015% of wages (excluding GST for insurers) resulting in a maximum

allowable levy collection of $6.321 million

► The shortfall between target and allowed levy collections is expected to be funded out of

ACT government consolidated revenues.

Total Expense Loading

Table 4.4 below shows the total expense loading we have adopted, by its component parts.


Page 35 of 79

April 2017

Table 4.4 – Adopted Expense Loadings

Estimated

Amount ($m)

Commission & Brokerage 3.2% 7.0

Administration 12.5% 27.4

Statutory Charges & Levies

Magistrates Levy 0.3% 0.7

DIF Levy 2.9% 6.4

Regulatory Funding Levy 2.8% 6.1

Total Expense Loading 21.7% 47.6

Loading

(% premium)

Our total expense loading is 21.7% of premium, down slightly from 22.2% adopted for our previous

review.

4.6 Insurer Margin

In determining an appropriate insurer margin for profit, we have used a model that projects the after-tax

profits of the 2017/18 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 2.35% 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 incorporate a 12.5% risk margin

The capital held will be 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, using these assumptions, an appropriate insurer margin for this

business is 12% to 15% of premium for an insurer holding capital at 1.5 to 2.0 times the APRA minimum.

In determining a reasonable premium pool for the 2017/18 policy year, we have adopted an insurer

margin of 13.5% of premium (middle of the range). This is consistent with the previous review.

This adopted margin of 13.5% compares to an average margin (weighted by premium volume) of 12.8%

of premium adopted in the insurer filed rates for 2016/17.

4.7 Overall Loading

We have relied on the insurers’ filed rates for deriving our loading assumptions for the 2017/18 premium

pool; however (as noted above), the treatment and split of individual expense components is not always

consistent or completely transparent between insurers. In Figure 4.2 we compare the overall loadings

implied by insurers’ filed rates with what we have assumed for the 2017/18 premium pool.


Page 36 of 79

April 2017

Figure 4.2 – Total Premium Loadings

0%

5%

10%

15%

20%

25%

30%

35%

40%

2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18

Tota

l P

rem

ium

Loadin

gs

Our adopted total premium loading of 35.2% compares to an implied loading of 31.5% in insurers’ filed

rates for 2016/17. The difference of 3.7% is made up as follows:

Profit loading: 0.7% higher

DIF levy: increase of 1.5%

Regulatory Funding Levy: increase of 0.5%

A longer view on the level of administration and commission levels, making up the remaining 1%.


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April 2017

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 valuation methods which are discussed in Section

9, the claim assumptions detailed in Section 3, 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 2016 and what we estimate to be outstanding at that date. The ultimate costs are

inflated to the time of payment and are undiscounted.

Table 5.1 – Estimated Ultimate Cost

Accident

Financial

Year

Paid to

30-Jun-16

Estimated

Outstanding

Estimated

Ultimate

Claims

Cost1

Change

Year-on-

Year

$m $m $m %

2003/04 76.2 1.4 77.6

2004/05 86.0 1.2 87.2 12%

2005/06 87.4 1.5 88.9 2%

2006/07 80.9 1.9 82.7 -7%

2007/08 76.8 2.5 79.2 -4%

2008/09 94.4 4.1 98.5 24%

2009/10 113.6 6.8 120.4 22%

2010/11 120.1 11.9 132.0 10%

2011/12 107.3 19.7 127.0 -4%

2012/13 97.6 34.7 132.3 4%

2013/14 66.7 52.5 119.3 -10%

2014/15 48.0 82.2 130.1 9%

2015/16 21.5 114.1 135.6 4%1 Net of recoveries, inflated and undiscounted

Because the ultimate costs shown are inflated but undiscounted, if there were no trends in claim

numbers, average claim sizes or superimposed inflation, we would expect each year to be higher than

the previous by the rate of wage inflation.

The movements from year to year in ultimate costs has been variable. Across the whole period, growth

in ultimate costs has averaged 5% per annum – slightly higher than wage inflation on average, due to

Key Findings

For 2015/16, we estimate that ultimate costs will be 4% higher than 2014/15, reflecting the 1%

increase in ultimate claim numbers and the 3% increase in average size.

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 1.59%

of wages for the 2015/16 accident year.


Page 38 of 79

April 2017

superimposed inflation. For 2015/16, we estimate that ultimate costs will be 4% higher than 2014/15,

reflecting the 1% increase in ultimate claim numbers and the 3% increase in average size.

5.2 Comparison to Insurer Central Estimates

Table 5.2 compares our estimated outstanding claims cost (inflated to date of payment and discounted to

30 June 2016) and the central estimate of insurer reserves (i.e. case estimates plus IBNR/ER reserves)

at 30 June 2016.

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 8 2 3 5 -4 -44%

2008/09 4 1 1 2 -2 -50%

2009/10 7 1 2 3 -4 -59%

2010/11 11 6 4 10 -1 -13%

2011/12 19 10 6 16 -3 -16%

2012/13 34 26 9 35 1 4%

2013/14 51 36 18 54 4 7%

2014/15 79 52 30 82 3 3%

2015/16 109 61 43 104 -5 -5%

Total 322 194 116 310 -12 -4%

Our central estimate of the outstanding claims liability is $322 million. Insurer case estimates plus

IBNR/ER reserves of $310 million are therefore $12 million (4%) lower than our central estimate.

The insurer estimates are considerably lower (in percentage terms) than the Finity estimates for 2009/10

and earlier accident years, although the amounts involved are small. The insurer and Finity estimates

are close in aggregate for all years after 2009/10, with differences in individual accident years largely

offsetting each other.

Insurers are 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 (around $30 million to $40

million overall). 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 depend on the insurer’s own reserving practices.

5.3 Scheme Risk Premiums

Table 5.3 and Figure 5.1 show our estimate of the historical risk premium rates. Historical risk premiums

are calculated from actual past payments plus our latest estimates 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.


Page 39 of 79

April 2017

Table 5.3 – Risk Premiums

Accident

Financial

Year

Estimated

Ultimate

Claims Cost1

Earned

Ultimate

Wages2

Cost as a % of

Earned Wages

$m $m %

2006/07 71.0 4,882 1.45%

2007/08 68.1 5,407 1.26%

2008/09 86.2 5,677 1.52%

2009/10 106.7 5,741 1.86%

2010/11 118.2 6,224 1.90%

2011/12 114.6 6,694 1.71%

2012/13 121.4 6,833 1.78%

2013/14 110.6 6,977 1.58%

2014/15 121.2 7,350 1.65%

2015/16 126.5 7,970 1.59%1 Net of recoveries, inflated and discounted to beginning of accident year2Disounted to beginning of accident year

Figure 5.1 – Risk Premiums

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

1.8%

2.0%

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

20

15

/16R

isk P

rem

ium

as

% o

f w

ag

es

Accident Year

After four relatively high years between 2009/10 and 2012/13, the estimated risk premium is fairly

consistent at around 1.6% for the last three years.


Page 40 of 79

April 2017

6 Premium Pool for 2017/18

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 3.0% per annum between 2015/16 and 2017/18 and employment growth of 0.5% per annum.

We project written wages of around $8.5 billion in the 2017/18 policy year, as shown in Figure 6.1.

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

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

20

15

/16

20

17

/18

Pro

jecte

d

Wri

tte

n W

ag

es

(ori

gin

al

va

lue

s)

Year

Previous

Written wages in 2015/16 were similar to our previous projection; lower than expected wage inflation was

offset by higher employee growth. With these two balancing out, the wages covered for the 2017/18

policy year are similar to previous expectations.

Key Findings

We estimate a reasonable premium rate for the 2017/18 policy year to be 2.58% of wages. This

compares with 2.70% estimated for the 2016/17 policy year, a decrease of 0.12% (5% proportionate

reduction) which is composed of:

Allowance for one year’s superimposed inflation

Claims costs assumptions – a decrease of 0.07%

Economic assumptions – a decrease of 0.05%

Expense assumptions – a decrease of 0.02%.


Page 41 of 79

April 2017

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.

Hence the key dates we have assumed for the 2017/18 policy year are:

15 September 2017 – average renewal date, and average premium receipt date

15 March 2018 – average accident date, and average date of first year’s claim payments

15 March 2018 – average date of second year’s claim payments, etc.

As we have selected our average claim size in December 2016 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 inflation, etc. All payments are then discounted back to

the average date of renewal, 15 September 2017.

6.3 Reasonable Premium Pool

The total scheme risk premium for 2017/18 represents the total expected claim costs, and is derived as

the adopted number of non-nil claims times the adopted average claim size (see Section 3.11), plus

allowance for inflation and discounting (Sections 4.2 and 4.3). This results in a risk premium of $142.3

million, or 1.67% of wages. This is higher than Table 5.3 as actual wage inflation in 2015/16 was low –

claims costs increase in line with our future inflation assumptions, but actual wages didn’t.

When expenses (Section 4.5) and insurer profit margins (Section 4.6) are added to the risk premium, our

estimate of a reasonable premium pool for 2017/18 is $219.5 million. Table 6.1 shows the breakdown

into the component parts.

Table 6.1 – Total Premium Pool

Premium Rate Component $m

Risk Premium Pool 142.3

Expense Loading 47.6

Profit Loading 29.6

Total Premium Pool 219.5

Wages Estimate 8,514.0

Average Risk Premium (% wages) 1.67%

Average Premium Rate (% wages) 2.58%

The estimated reasonable average premium rate for the 2017/18 policy year is 2.58% of wages. This

compares to our estimated reasonable premium rate for the 2016/17 policy year of 2.70% of wages.

6.4 Comparison with 2016/17 Premium Rate

The reasonable premium rate has decreased by 0.12% of wages (a 5% proportionate reduction). The

following table shows a reconciliation of the movement in the reasonable premium rate.


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April 2017

Table 6.2 – Movement in Reasonable Premium Rate

Average

Premium

Rate

Increase/

(Decrease)

(% of Wages)

Suggested rate for 2016/17 2.70%

Expected rate for 2017/18 2.72% 0.02%

Change in frequency assumption 2.67% -0.05%

Change in claim assumptions 2.65% -0.02%

Change in economic assumptions 2.60% -0.05%

Change in expense loadings 2.58% -0.02%

Change in insurer margin 2.58% 0.00%

Total Change 2.58% -0.12%

Allowing for one year’s superimposed inflation increases the reasonable rate from 2.70% to 2.72%.

Other changes in the reasonable rate are:

Claims cost assumptions – decrease of 0.07%

► Claim frequency continued to reduce in 2015/16, and future claim frequency assumptions

have been revised accordingly, reducing the reasonable rate by 0.05%

► The proportion of claims accessing lump sum benefits has been reduced, in line with

experience over the year, reducing the reasonable rate by 0.02%

Economic assumptions – decrease of 0.05%

► Adopted inflation rate has been reduced from 3.25% to 3.0% reflecting economic conditions,

reducing the reasonable rate by 0.02%

► Yields on Commonwealth government bonds have increased, reducing the reasonable rate

by 0.02%

Expense loadings – decrease of 0.02%

► Commission and expense loadings have been reduced

► This was largely offset by increases in the regulatory funding and DIF levies.

Other changes had very minor impacts on the premium rate.

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

key 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.


Page 43 of 79

April 2017

Table 6.3 – Sensitivity Analysis

Scenario

Best

Estimate

Value

Sensitivity

Assumption

Premium

Rate Difference

Percentage

Difference

Base Case 2.58%

Claim frequency up 10% 0.420 0.462 2.84% 0.26% 10%

Average claim size up 10% 38,900 42,789 2.84% 0.26% 10%

Lump sum numbers up 10% 475 522 2.71% 0.13% 5%

Lump sum average size up 10% 141,631 148,713 2.71% 0.13% 5%

Discount rate up 1% p.a. 2.35% 3.35% 2.50% -0.08% -3%

Superimposed inflation at 2% p.a. 0.5% 2.0% 2.72% 0.15% 6%

Expense loadings up 1% 21.7% 22.7% 2.62% 0.04% 2%

Insurer margins up 1% 13.5% 14.5% 2.62% 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 we adopted a superimposed inflation 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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April 2017

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 Class 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 and wages and premium data sourced directly from insurers. This may

lead to some discrepancies with the classification of information by ANZSIC Class and/or year between

the two data sources.

7.2 Reasonable Premium Rates

The following example (for ANZSIC Code 7000 – Computer System Design and Related Services) shows

how we have applied the selected relativities shown above to determine the ANZSIC premium rates:

1. Average risk premium for Scheme = 1.67% (see Section 6.3)

2. Suggested relativity for ANZSIC 7000 = 15 (see Appendix H)

3. Average risk premium for ANZSIC 7000 = 0.25%

[1.67% * 15/100]

4. Average premium rate for ANZSIC 7000 = 0.39%

[(0.25%)/(1 – 21.7 % – 13.5%) * 1.00 which is

(average risk premium for ANZSIC 7000)/(1 – expenses as % of premium – insurer margin) *

scaling factor].

The scaling factor is applied to ensure that the overall average premium rate is achieved (its value is 1.00

at this review). 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 14.18%.


Page 45 of 79

April 2017

The experience across the range of ANZSIC Classes shows considerable variation, with our reasonable

rates falling in the range 0.39% to 14.18%.

The rates shown in Appendix H are indicative of the average rates that we consider to be appropriate for

the employers at ANZSIC Class level, consistent with a target average rate of 2.58% 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 may 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 2017/18 reasonable rates with the relativities of

licensed insurers’ achieved rates for 2015/16. Each point on the graph represents one of the 17 ANZSIC

Divisions.

The 45-degree line indicates where suggested relativities are equal to the achieved relativities. A point

above the 45-degree line indicates our suggested relativity is lower than the achieved relativity, and for

points below the line 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

450

0 100 200 300 400 500

Ach

ieve

d 2

015-1

6

Suggested 2017-18

Mining

Agriculture

Transport

Utilities

At the Division level, the achieved relativities tend to be close to our recommended relativities. There are

four notable outliers (Agriculture, where the achieved relativity is significantly higher than our suggested


Page 46 of 79

April 2017

relativity; and Mining, Transport & Storage and Utilities, where the achieved relativity is significantly lower

than our suggested relativity); these industries account for less than 5% of total wages covered in

2015/16 and can be subject to year on year volatility in their achieved rates.

There is greater variability between recommended and achieved relativities at ANZSIC Class level. The

following graph shows the achieved and recommended relativities for the top 50 ANZSIC Classes (as

measured by wage volume in 2015/16).

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

015-1

6

Suggested 2017-18

Where the relativity is lower, the industry achieved relativities tend to be higher than our suggested

relativities. This suggests that lower risk industries are cross-subsidising higher risk industries.


Page 47 of 79

April 2017

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 2015 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 October 2016

Claim payment transaction file with payments made (by type and month) between 1 July 1999 and

October 2016

Individual policy files, with the ANZSIC Division and insurer codes for each policy written or

renewed between 1 July 1999 and October 2016.

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 2016

Case estimates and IBNR/ER allowances as at 30 June 2016.

We have also compiled workforce figures from information available from the Australian Bureau of

Statistics (ABS) and the Australian Public Service Employment Database (APSED), as well as

information on the number of ACT public sector employees supplied by 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 any reinsurance recoveries, but

net of all other recoveries.


Page 48 of 79

April 2017

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 reasonably well for payments and

non-nil claim numbers but not for case estimates.

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 receiving common law and lump sum benefits, we have

excluded from 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

lump sum claim counts on the basis that the payment will most likely reflect a small investigation or

administration expense rather than a lump sum payment; 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

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 payments prior to 2001/02

are missing (around 25%), primarily due to two large 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% higher than the estimates provided by

insurers, with WCMS showing higher case estimates for older accident years and lower case

estimates for more recent accident years. We have not relied on case estimates from

WCMS.


Page 49 of 79

April 2017

Less Commonwealth public sector employees.

We do not have a ‘full time equivalent’ number of workers, and have 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

► Wage-inflation adjusted payments

► Wage-inflation adjusted payments to date plus current case estimates (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.


Page 50 of 79

April 2017

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 review 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 review. In the absence of any other applicable professional

standard, we have used PS 300 for guidance on our approach to the review, but our review and report

are 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

Claims costs are to be discounted to allow for the time value of money

Estimates of claims costs should take into account any amounts recoverable

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 by accident years – the year of occurrence of the

injury which gave rise to the claim. Development of this data is then analysed and projected by

development year – a measure of the number of years since the accident occurred, e.g. development

year 2 is the year after the accident year. All analysis has been carried out on a financial year basis

(years ending 30 June).

In conducting our analysis of the Scheme 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 that are yet to be reported (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 estimated 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 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 totalled 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


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


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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April 2017

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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April 2017

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 3.

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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April 2017

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 shares (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 insurer 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 the Regulatory Funding Levy, Default Insurance Fund (DIF) Levy

and Magistrates Court Levy.

Insurer Margin

In determining an appropriate margin for profit, we have used 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 2006 Division Premium Rates

The ANZSIC 2006 codes have a ‘tree’ structure comprising categories at four levels, namely Divisions (1

digit level), Subdivisions, Groups and Classes (4 digit level). There are 19 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 past claims experience is analysed to determine claims 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 add to 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. In this analysis individual claim claims costs are capped at $300,000, to

reduce the volatility due to claims size variation.

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 frequency relativity.

The claims 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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April 2017

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, because the latter are affected

by the volatility of claim sizes (even with cost capping).

We have calculated the relativities for each accident year from 2006/07 to 2016/17 and the combined

relativity across all years. The relativities considered together give an indication of the underlying

relativity for the Class.

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 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 findings from assessment of other workers’ compensation

schemes.

The process to select an appropriate relativity for each ANZSIC Class is to:

Start with the selected ANZSIC groupings and relativities for 2016/17 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 2015/16

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 used to determine

whether the default relativity is appropriate or whether last year’s relativity remains appropriate

For the smaller ANZSIC Classes, calculate default relativity based on the experience for the group

rather than the individual code. Judgement is then used to determine whether the default relativity

is appropriate for the group or whether last year’s 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 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.

The Chief Minister and Treasury Directorate

April 2017

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.


April 2017

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.


April 2017

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 Church 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.


April 2017

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

$720).

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 $217,000). 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 $5,800).

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 $145,000) for a single injury

or $150,000 (CPI indexed to approximately $217,000) 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”.


April 2017

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


April 2017

► 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.


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.


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.


April 2017


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 2015 Amendments – Cross Border Arrangements

The Workers Compensation (Cross-border Workers) Amendment Bill 2015 aligned cross-border state of

connection to employment with updated national guidelines. These amendments provide guidance in the

event of dispute regarding relevant jurisdiction and connection to employment in the ACT.


April 2017

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 September 2016, 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 September 2016, which included the following variables:

1. Payment ID (WCMS assigned)


April 2017

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 September 2016, 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

September 2016, which contained the following variables:

1. Policy ID (WCMS assigned)

2. Policy number (insurer assigned)


4. Employer ABN

5. Employer name

6. 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:

1. Policy ID (WCMS assigned)

2. Policy number (insurer assigned)


April 2017

3. Cover ID (WCMS assigned)

4. Coverage reference (insurer assigned)


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 2016, separately for burner and

all other policies

Written wages for policy years ending 30 June 2004 to 30 June 2016. 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 2016. 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 2016, and by ANZSIC Division.

Insurers provided adjusted earned wages

Earned premium for accident years ending 30 June 2004 to 30 June 2016, 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 2016, 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:

Premiums include brokerage and commissions (for Allianz)

Wages exclude superannuation (for Guild).


April 2017

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 one insurer. There were also some less material differences

relating to three additional insurers.

We have utilised case estimate information directly from the 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 2015

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

2005/06 3,536 3,548 -12 0% 87.3 87.3 0.0 0%

2006/07 3,678 3,693 -15 0% 80.7 80.7 0.0 0%

2007/08 3,484 3,496 -12 0% 76.0 76.0 0.0 0%

2008/09 3,322 3,325 -3 0% 94.4 94.5 0.0 0%

2009/10 3,431 3,435 -4 0% 109.4 109.4 0.0 0%

2010/11 3,624 3,621 3 0% 113.3 113.3 0.0 0%

2011/12 3,612 3,595 17 0% 92.9 92.9 0.0 0%

2012/13 3,382 3,371 11 0% 77.2 77.5 -0.3 0%

2013/14 3,131 3,130 1 0% 44.9 45.3 -0.5 -1%

2014/15 3,017 2,982 35 1% 20.2 20.2 0.0 0%

Total 34,217 34,196 21 0% 796.3 797.1 -0.9 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.

Table C.2 shows a reconciliation of the number of non-nil claims on the WCMS database to those

supplied by insurers.


April 2017

Table C.2 – Non-nil Claim Numbers Reported - WCMS vs Insurer Data

Accident

Year

WCMS

Data

Insurer

Data Difference

%

Difference

2005/06 3,536 3,400 136 4%

2006/07 3,678 3,514 164 5%

2007/08 3,485 3,349 136 4%

2008/09 3,323 3,176 147 5%

2009/10 3,431 3,280 151 5%

2010/11 3,625 3,502 123 4%

2011/12 3,617 3,479 138 4%

2012/13 3,388 3,258 130 4%

2013/14 3,150 3,025 125 4%

2014/15 3,235 3,135 100 3%

2015/16 3,045 2,956 89 3%

All analysis relies only on non-nil claims; hence we have shown this comparison here. The differences

here are larger than last year; however this is due to CCI not completing the required table (the

differences for years prior to 2014/15 are in line with the numbers submitted by CCI at the previous

review).

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

Payment

Year

WCMS

Data

Insurer

Data Difference Difference

$000 $000 $000 %

2005/06 73,115 72,799 316 0%

2006/07 80,269 80,066 203 0%

2007/08 75,093 74,797 296 0%

2008/09 73,512 72,844 668 1%

2009/10 89,178 89,745 -567 -1%

2010/11 97,094 96,487 607 1%

2011/12 101,402 101,019 382 0%

2012/13 122,400 118,850 3,549 3%

2013/14 138,992 135,312 3,681 3%

2014/15 124,910 126,982 -2,072 -2%

2015/16 118,411 123,624 -5,213 -4%

Differences in payments between the insurer data and WCMS database between 2004/05 to 2015/164

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.


April 2017

Table C.4 – Case Estimates - WCMS vs Insurer Data

Accident

Year

WCMS

Data

Insurer


$000 $000 $000 %

Prior 12,454 1,986 10,468 527%

2006/07 3,444 403 3,041 754%

2007/08 3,016 455 2,560 562%

2008/09 6,879 1,390 5,489 395%

2009/10 13,767 983 12,784 1300%

2010/11 18,767 4,015 14,752 367%

2011/12 22,219 6,368 15,851 249%

2012/13 28,150 23,116 5,035 22%

2013/14 27,135 31,471 -4,336 -14%

2014/15 42,086 47,187 -5,101 -11%

2015/16 53,324 60,469 -7,144 -12%

The case estimates from WCMS are overstated relative to insurer data by approximately $50 million;

however, this is not uniform with older years being significantly overstated in the WCMS data, while more

recent years are understated. For more recent years, differences in the timing of the WCMS data versus

the date insurers supplied case estimates could explain some of the discrepancies, however for older

periods it appears that some claims are not having their case estimates reduced to nil when they are

closed.

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


WCMS

Data

Insurer


WCMS

Data

Insurer


$m $m $m % $m $m $m % % % % %

2004/05 4,024 4,265 -241 -6% 151 148 3 2%

2005/06 4,323 4,599 -276 -6% 159 153 6 4% 3.68% 3.33% 0.35% 10%

2006/07 4,973 5,238 -265 -5% 159 151 8 5% 3.19% 2.88% 0.31% 11%

2007/08 5,384 5,789 -405 -7% 152 151 1 0% 2.81% 2.61% 0.21% 8%

2008/09 5,596 5,668 -72 -1% 146 140 5 4% 2.60% 2.48% 0.13% 5%

2009/10 5,751 6,059 -309 -5% 150 148 3 2% 2.62% 2.44% 0.18% 7%

2010/11 6,285 6,521 -235 -4% 157 152 5 3% 2.49% 2.33% 0.16% 7%

2011/12 6,769 6,827 -58 -1% 166 161 5 3% 2.45% 2.36% 0.09% 4%

2012/13 6,981 6,980 1 0% 164 163 1 0% 2.34% 2.34% 0.01% 0%

2013/14 7,152 7,016 137 2% 158 162 -4 -3% 2.21% 2.31% -0.10% -4%

2014/15 7,509 7,832 -322 -4% 159 161 -1 -1% 2.12% 2.05% 0.07% 4%

2015/16 8,311 8,266 45 1% 169 167 2 1% 2.03% 2.02% 0.01% 0%

The reconciliation between the data captured on WCMS and sourced directly from the insurers has

improved in recent years, with only a small discrepancy for 2015/16. Despite the high level of

reconciliation for the recent years at an overall level, at an individual insurer level there remain large

differences between the two sources. 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.


April 2017

C.4 Coding of Data on WCMS

C.4.1 Common Law, Commutations and Impairment Benefits

Discussions with 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

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 our 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.


April 2017

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.


April 2017

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.

The PPAC method proceeds as follows:


April 2017

(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.


April 2017

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 16 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 to date

Sep-09 492 782 825 839 843 846 848 849 851 852 852 853 853 853 853 853 853 853 854 854 854 855 855 855 855 855 855 855 855 855

Dec-09 463 720 756 767 772 776 779 779 779 779 779 780 780 780 780 780 781 782 783 783 783 783 783 783 783 783 783 783 783

Mar-10 504 856 882 895 903 909 910 911 912 913 913 914 914 914 914 914 914 914 915 915 915 915 915 915 915 915 915 915

Jun-10 545 826 854 862 869 873 873 876 877 879 879 879 879 880 880 881 881 882 882 882 882 882 882 882 882 882 0

Sep-10 578 885 926 939 943 946 949 951 952 953 957 958 959 959 960 960 960 961 962 962 963 963 963 963 963 963

Dec-10 553 817 844 857 863 865 866 868 869 871 871 872 873 874 874 874 876 876 877 877 877 877 877 877 877

Mar-11 507 799 834 840 844 849 853 856 857 860 860 861 863 866 868 868 868 868 868 868 868 868 868 868

Jun-11 580 870 887 897 902 902 903 905 906 908 908 908 911 911 913 913 913 913 913 913 914 914 914

Sep-11 537 881 919 928 935 935 938 938 939 942 944 944 944 945 946 946 946 946 947 947 947 947

Dec-11 532 816 860 875 880 883 886 887 891 893 893 894 894 894 895 896 897 898 898 898 898

Mar-12 461 801 837 847 853 858 866 869 869 870 870 870 873 874 874 874 874 874 874 874

Jun-12 545 830 859 862 869 869 870 872 874 875 878 878 879 879 879 880 881 881 881

Sep-12 537 792 824 840 841 844 844 846 849 852 852 853 853 853 854 854 854 854

Dec-12 485 738 784 794 804 805 807 809 810 810 810 810 810 811 813 813 813

Mar-13 489 811 847 855 862 866 866 869 871 871 871 872 872 873 873 873

Jun-13 492 782 815 818 825 827 830 831 834 836 836 836 837 838 838

Sep-13 500 780 812 824 829 832 833 833 834 833 834 834 836 836

Dec-13 426 649 683 697 702 705 709 708 708 708 709 709 709

Mar-14 420 713 737 746 750 756 756 758 757 758 760 760

Jun-14 474 757 794 803 809 811 812 816 819 819 819

Sep-14 535 807 832 848 854 855 858 862 863 863

Dec-14 449 697 728 734 738 741 742 743 743

Mar-15 390 741 771 782 790 797 801 801

Jun-15 458 737 771 790 796 797 797

Sep-15 489 748 771 784 788 788

Dec-15 485 726 769 780 780

Mar-16 426 744 771 771

Jun-16 536 805 805

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 1 1 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

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 1.0012 1.0000 1.0000 1.0000 1.0000 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 1.0000 1.0000 1.0000 1.0000 1.0000 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 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000

Sep-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 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 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 1.0010 1.0010 1.0000 1.0010 1.0000 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 1.0023 1.0000 1.0011 1.0000 1.0000 1.0000 1.0000 1.0000

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 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 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 1.0022 1.0000 1.0000 1.0000 1.0000 1.0000 1.0011 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 1.0011 1.0000 1.0000 1.0000 1.0011 1.0000 1.0000

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 1.0000 1.0011 1.0011 1.0011 1.0011 1.0000 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 1.0034 1.0011 1.0000 1.0000 1.0000 1.0000 1.0000

Jun-12 1.5229 1.0349 1.0035 1.0081 1.0000 1.0012 1.0023 1.0023 1.0011 1.0034 1.0000 1.0011 1.0000 1.0000 1.0011 1.0011 1.0000

Sep-12 1.4749 1.0404 1.0194 1.0012 1.0036 1.0000 1.0024 1.0035 1.0035 1.0000 1.0012 1.0000 1.0000 1.0012 1.0000 1.0000

Dec-12 1.5216 1.0623 1.0128 1.0126 1.0012 1.0025 1.0025 1.0012 1.0000 1.0000 1.0000 1.0000 1.0012 1.0025 1.0000

Mar-13 1.6585 1.0444 1.0094 1.0082 1.0046 1.0000 1.0035 1.0023 1.0000 1.0000 1.0011 1.0000 1.0011 1.0000

Jun-13 1.5894 1.0422 1.0037 1.0086 1.0024 1.0036 1.0012 1.0036 1.0024 1.0000 1.0000 1.0012 1.0012

Sep-13 1.5600 1.0410 1.0148 1.0061 1.0036 1.0012 1.0000 1.0012 0.9988 1.0012 1.0000 1.0024

Dec-13 1.5235 1.0524 1.0205 1.0072 1.0043 1.0057 0.9986 1.0000 1.0000 1.0014 1.0000

Mar-14 1.6976 1.0337 1.0122 1.0054 1.0080 1.0000 1.0026 0.9987 1.0013 1.0026

Jun-14 1.5970 1.0489 1.0113 1.0075 1.0025 1.0012 1.0049 1.0037 1.0000

Sep-14 1.5523 1.0445 1.0082 1.0054 1.0041 1.0013 1.0013 0.0000

Dec-14 1.5523 1.0445 1.0082 1.0054 1.0041 1.0013 1.0013

Mar-15 1.9000 1.0405 1.0143 1.0102 1.0089 1.0050

Jun-15 1.6092 1.0461 1.0246 1.0076 1.0013

Sep-15 1.5297 1.0307 1.0169 1.0051

Dec-15 1.4969 1.0592 1.0143

Mar-16 1.7465 1.0363

Jun-16 1.5019

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 1 1 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

Sep-16 Selected 1.5800 1.0420 1.0160 1.0080 1.0053 1.0025 1.0020 1.0017 1.0018 1.0010 1.0010 1.0009 1.0005 1.0006 1.0003 1.0003 1.0003 1.0003 1.0003 1.0003 1.0003 1.0003 1.0003 1.0000 1.0000 1.0000 1.0000 1.0000

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 16 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Tail Claims

Sep-09 492 290 43 14 4 3 2 1 2 1 0 1 0 0 0 0 0 0 1 0 0 1 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 0 783

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 0 915

Sep-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 0 882

Sep-10 578 307 41 13 4 3 3 2 1 1 4 1 1 0 1 0 0 1 1 0 1 0 0 0 0 0 0 0 0 0 0 963

Dec-10 553 264 27 13 6 2 1 2 1 2 0 1 1 1 0 0 2 0 1 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 0 868

Jun-11 580 290 17 10 5 0 1 2 1 2 0 0 3 0 2 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 915

Sep-11 537 344 38 9 7 0 3 0 1 3 2 0 0 1 1 0 0 0 1 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 0 0 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 899

Mar-12 461 340 36 10 6 5 8 3 0 1 0 0 3 1 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 3 0 1 0 0 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 883

Sep-12 537 255 32 16 1 3 0 2 3 3 0 1 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 856

Dec-12 485 253 46 10 10 1 2 2 1 0 0 0 0 1 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 815

Mar-13 489 322 36 8 7 4 0 3 2 0 0 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 875

Jun-13 492 290 33 3 7 2 3 1 3 2 0 0 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 841

Sep-13 500 280 32 12 5 3 1 0 1 -1 1 0 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 839

Dec-13 426 223 34 14 5 3 4 -1 0 0 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 712

Mar-14 420 293 24 9 4 6 0 2 -1 1 2 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 764

Jun-14 474 283 37 9 6 2 1 4 3 0 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 824

Sep-14 535 272 25 16 6 1 3 4 1 2 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 870

Dec-14 449 248 31 6 4 3 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 751

Mar-15 390 351 30 11 8 7 4 2 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 811

Jun-15 458 279 34 19 6 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 0 809

Sep-15 489 259 23 13 4 4 2 2 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 804

Dec-15 485 241 43 11 6 4 2 2 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 802

Mar-16 426 318 27 12 6 4 2 2 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 805

Jun-16 536 269 34 13 7 5 2 2 1 2 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 876

M:\ACTWC16\Scheme Review\Report\Appendices 2016.xlsm - E1

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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

2008/09 1,593 2,082 2,109 2,116 2,117 2,117 2,117 2,117 2,117

2009/10 1,641 2,128 2,160 2,166 2,166 2,168 2,169 2,169

2010/11 1,701 2,157 2,191 2,197 2,199 2,199 2,199

2011/12 1,714 2,196 2,221 2,229 2,233 2,233

2012/13 1,667 2,119 2,152 2,158 2,158

2013/14 1,505 1,925 1,950 1,950

2014/15 1,507 1,955 1,955

2015/16 1,554 1,554

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

2008/09 1.3070 1.0130 1.0033 1.0005 1.0000 1.0000 1.0000

2009/10 1.2968 1.0150 1.0028 1.0000 1.0009 1.0005

2010/11 1.2681 1.0158 1.0027 1.0009 1.0000

2012/13 1.2812 1.0114 1.0036 1.0018

2012/13 1.2711 1.0156 1.0028

2013/14 1.2791 1.0130

2014/15 1.2973

2015/16

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-16 Selected 1.2820 1.0145 1.0033 1.0010 1.0005 1.0001 1.0000

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

2008/09 1,593 489 27 7 1 0 0 0 0 2,117

2009/10 1,641 487 32 6 0 2 1 0 0 2,169

2010/11 1,701 456 34 6 2 0 0 0 0 2,199

2012/13 1,714 482 25 8 4 1 0 0 0 2,234

2012/13 1,667 452 33 6 2 1 0 0 0 2,161

2013/14 1,505 420 25 6 2 1 0 0 0 1,960

2014/15 1,507 448 28 7 2 1 0 0 0 1,993

2015/16 1,554 438 29 7 2 1 0 0 0 2,031


28/04/2017 - 10:46 AM Page 1 of 1


Claim Number Summary

E3.1 Ultimate Number of ClaimsAccident

Year Reported IBNR Ultimate Reported IBNR Ultimate

2008/09 3,326 0 3,326 2,117 0 2,117

2009/10 3,435 0 3,435 2,169 0 2,169

2010/11 3,622 1 3,623 2,199 0 2,199

2011/12 3,600 9 3,605 2,233 2 2,234

2012/13 3,378 9 3,387 2,159 2 2,161

2013/14 3,124 16 3,140 1,952 8 1,960

2014/15 3,204 36 3,240 1,970 23 1,993

2015/16 3,144 144 3,288 1,877 154 2,031

All Claims (excl Nils) Lost Time Claims


28/04/2017 - 10:47 AM Page 1 of 1


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

2008/09 12 83 200 300 350 384 389 393 393

2009/10 12 94 244 346 397 417 427 427

2010/11 13 90 245 349 408 429 429

2011/12 14 106 234 333 384 0

2012/13 9 119 260 341 341

2013/14 10 104 221 221

2014/15 9 97 97

2015/16 11 11

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

2008/09 6.9167 2.4096 1.5000 1.1667 1.0971 1.0130 1.0103

2009/10 7.8333 2.5957 1.4180 1.1474 1.0504 1.0240

2010/11 6.9231 2.7222 1.4245 1.1691 1.0515

2012/13 7.5714 2.2075 1.4231 1.1532

2012/13 13.2222 2.1849 1.3115

2013/14 10.4000 2.1250

2014/15 10.7778

2015/16

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-16 Selected 10.5000 2.1900 1.3700 1.1600 1.0700 1.0340 1.0573

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

2008/09 12 71 117 100 50 34 5 4 14 407

2009/10 12 82 150 102 51 20 10 9 16 451

2010/11 13 77 155 104 59 21 15 9 17 469

2012/13 14 92 128 99 51 27 14 8 16 449

2012/13 9 110 141 81 55 28 14 9 16 463

2013/14 10 94 117 90 53 27 14 9 16 430

2014/15 9 88 135 92 54 28 14 9 16 444

2015/16 11 100 132 90 53 27 14 9 16 451


28/04/2017 - 10:47 AM Page 1 of 1


April 2017

F Claim Size Analysis


Weekly Benefits

PPCI Model

F1.1 Incremental Inflated Payments ($000 Dec-16)Accident Development Year (of Payment) Acc Yr Pay Yr

Year 1 2 3 4 5 6 7 8 Total Total

2008/09 8,643 9,595 3,610 1,615 927 291 104 0 24,785 8,643

2009/10 8,802 9,197 3,741 2,220 1,123 747 308 26,138 18,396

2010/11 9,898 10,138 4,427 2,385 910 328 28,087 22,706

2011/12 9,278 9,754 4,077 1,886 484 24,497 24,450

2012/13 8,957 10,398 3,861 1,281 24,497 26,928

2013/14 8,007 8,443 2,909 19,359 26,066

2014/15 8,146 9,409 17,554 23,492

2015/16 9,534 9,534 23,769

F1.2 Inflated Payment Per Claim IncurredAccident Development Year (of Payment)

Year 1 2 3 4 5 6 7 8

2008/09 4,083 4,532 1,705 763 438 138 49 0

2009/10 4,058 4,240 1,725 1,024 518 344 142

2010/11 4,501 4,610 2,013 1,085 414 149

2012/13 4,153 4,365 1,825 844 217

2012/13 4,144 4,811 1,786 593

2013/14 4,086 4,308 1,484

2014/15 4,087 4,721

2015/16 4,694

F1.3 Selected Payments per Claim IncurredDevelopment Year (of Payment)

1 2 3 4 5 6 7 8 Tail

Dec-16 Selected 4,250 4,550 1,800 950 400 200 60 50 63

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

2008/09 6,929 8,133 3,261 1,544 946 284 102 0 139 21,339 139

2009/10 7,685 8,297 3,553 2,267 1,099 733 304 108 147 24,194 256

2010/11 9,037 9,617 4,528 2,331 893 324 132 114 154 27,131 400

2012/13 8,989 9,948 3,979 1,850 478 447 139 120 162 26,113 868

2012/13 9,220 10,172 3,786 1,266 865 447 139 120 162 26,177 1,733

2013/14 7,772 8,278 2,874 1,862 811 420 130 112 152 22,411 3,488

2014/15 8,009 9,298 3,588 1,960 854 442 137 118 161 24,566 7,259

2015/16 9,393 9,241 3,784 2,067 901 466 145 125 169 26,290 16,898

M:\ACTWC16\Scheme Review\Report\Appendices 2016.xlsm - F1

28/04/2017 - 10:47 AM Page 1 of 1


Medical & Related Costs (excl. rehab)

PPCI Model



2008/09 6,364 6,127 1,857 470 202 90 38 35 15,184 6,364

2009/10 6,795 6,190 2,005 744 514 227 39 16,513 12,922

2010/11 7,571 6,412 1,868 686 325 78 16,940 15,618

2011/12 7,141 5,568 1,755 591 250 16,929 16,127

2012/13 7,240 7,320 1,805 564 16,929 17,374

2013/14 6,420 5,902 1,253 13,574 16,835

2014/15 7,724 6,529 14,253 16,584

2015/16 7,834 7,834 16,331


Year 1 2 3 4 5 6 7 8

2008/09 1,914 1,842 558 141 61 27 11 11

2009/10 1,978 1,802 584 216 150 66 11

2010/11 2,090 1,770 516 189 90 21

2012/13 1,981 1,545 487 164 69

2012/13 2,138 2,161 533 166

2013/14 2,044 1,879 399

2014/15 2,384 2,015

2015/16 2,383


1 2 3 4 5 6 7 8 Tail

Dec-16 Selected 2,350 1,950 515 180 100 40 14 10 21



2008/09 5,103 5,157 1,676 444 207 88 37 35 76 12,823 76

2009/10 5,919 5,572 1,898 759 504 223 39 34 81 15,029 116

2010/11 6,904 6,075 1,906 671 319 77 51 37 89 16,129 177

2012/13 6,886 5,671 1,719 579 247 144 52 39 92 15,429 327

2012/13 7,444 7,171 1,769 557 339 140 51 38 89 17,598 656

2013/14 6,236 5,784 1,239 565 325 135 49 36 85 14,453 1,195

2014/15 7,593 6,454 1,669 604 347 144 52 38 91 16,992 2,945

2015/16 7,720 6,411 1,752 634 365 151 55 40 96 17,224 9,504


28/04/2017 - 10:48 AM Page 1 of 1


Rehabilitation

PPCI Model



2008/09 2,419 2,655 670 168 69 28 10 3 6,022 2,419

2009/10 2,565 2,827 774 358 140 40 7 6,711 5,220

2010/11 3,068 3,430 945 408 115 36 8,002 6,565

2011/12 2,938 3,178 889 298 59 7,087 7,201

2012/13 2,829 3,228 833 197 7,087 7,429

2013/14 3,144 2,920 606 6,670 7,781

2014/15 2,926 2,581 5,507 7,042

2015/16 2,491 2,491 5,922


Year 1 2 3 4 5 6 7 8

2008/09 727 798 201 51 21 8 3 1

2009/10 747 823 225 104 41 12 2

2010/11 847 947 261 113 32 10

2012/13 815 882 247 83 16

2012/13 835 953 246 58

2013/14 1,001 930 193

2014/15 903 797

2015/16 758


1 2 3 4 5 6 7 8 Tail

Dec-16 Selected 900 900 250 90 30 9 4 3 3



2008/09 1,939 2,248 604 159 70 28 10 3 11 5,072 11

2009/10 2,239 2,547 737 366 137 39 7 11 12 6,096 23

2010/11 2,802 3,250 964 399 113 36 16 12 13 7,603 40

2012/13 2,846 3,238 869 292 59 31 16 12 13 7,377 73

2012/13 2,910 3,163 817 195 102 30 16 12 13 7,256 172

2013/14 3,051 2,862 599 283 98 29 15 12 12 6,959 448

2014/15 2,876 2,551 810 302 104 31 16 12 13 6,716 1,288

2015/16 2,454 2,959 851 317 109 32 17 13 14 6,766 4,312


28/04/2017 - 10:48 AM Page 1 of 1


Legal & Investigation Costs

PPCI Model



2008/09 1,212 3,163 3,562 2,740 1,625 1,624 357 98 14,381 1,212

2009/10 1,114 3,410 4,364 3,210 2,160 1,432 767 16,456 4,278

2010/11 1,464 3,656 4,922 3,829 2,625 1,360 17,857 8,436

2011/12 1,276 2,960 4,426 3,718 2,875 13,493 11,947

2012/13 1,187 3,883 4,611 3,812 13,493 14,827

2013/14 1,373 3,736 4,536 9,646 17,479

2014/15 1,409 3,801 5,210 17,982

2015/16 1,510 1,510 15,884


Year 1 2 3 4 5 6 7 8

2008/09 365 951 1,071 824 489 488 107 29

2009/10 324 993 1,270 934 629 417 223

2010/11 404 1,009 1,359 1,057 725 376

2012/13 354 821 1,228 1,031 797

2012/13 351 1,146 1,361 1,126

2013/14 437 1,190 1,444

2014/15 435 1,173

2015/16 459


1 2 3 4 5 6 7 8 Tail

Dec-16 Selected 450 1,193 1,400 1,070 750 431 170 100 187



2008/09 972 2,710 3,232 2,605 1,665 1,588 349 97 651 13,869 651

2009/10 974 3,094 4,159 3,283 2,111 1,402 759 344 696 16,822 1,039

2010/11 1,338 3,495 5,043 3,741 2,574 1,343 616 375 759 19,283 1,750

2012/13 1,237 3,031 4,316 3,648 2,841 1,552 634 386 782 18,427 3,355

2012/13 1,224 3,786 4,526 3,762 2,540 1,509 617 376 760 19,099 5,802

2013/14 1,334 3,669 4,477 3,360 2,438 1,448 592 360 730 18,408 8,928

2014/15 1,386 3,751 4,537 3,589 2,603 1,547 632 385 779 19,209 14,072

2015/16 1,486 3,923 4,764 3,768 2,734 1,624 664 404 818 20,186 18,700


28/04/2017 - 10:48 AM Page 1 of 1


Recoveries

PPCI Model



2008/09 -163 -485 -307 -664 -114 -715 -353 -368 -3,169 -163

2009/10 -67 -405 -585 -1,045 -467 -124 -234 -2,927 -552

2010/11 -188 -511 -741 -1,234 -794 -665 -4,132 -900

2011/12 -130 -674 -935 -1,414 -1,080 -3,266 -1,952

2012/13 -193 -791 -1,081 -1,201 -3,266 -2,884

2013/14 -97 -669 -676 -1,443 -4,385

2014/15 -66 -580 -646 -4,288

2015/16 -38 -38 -3,763


Year 1 2 3 4 5 6 7 8

2008/09 -49 -146 -92 -200 -34 -215 -106 -111

2009/10 -19 -118 -170 -304 -136 -36 -68

2010/11 -52 -141 -204 -340 -219 -184

2012/13 -36 -187 -259 -392 -300

2012/13 -57 -234 -319 -355

2013/14 -31 -213 -215

2014/15 -20 -179

2015/16 -12


1 2 3 4 5 6 7 8 Tail

Dec-16 Selected -35 -200 -250 -350 -175 -100 -70 -70 -89



2008/09 -131 -417 -278 -635 -115 -697 -347 -366 -308 -3,291 -308

2009/10 -59 -367 -565 -1,072 -455 -121 -231 -240 -329 -3,440 -569

2010/11 -172 -486 -758 -1,200 -779 -660 -593 -262 -359 -5,268 -1,214

2012/13 -127 -692 -910 -1,386 -1,067 -360 -261 -270 -370 -5,443 -1,262

2012/13 -200 -768 -1,060 -1,182 -593 -351 -254 -263 -359 -5,030 -1,820

2013/14 -95 -658 -669 -1,099 -569 -336 -244 -252 -345 -4,266 -2,845

2014/15 -65 -572 -810 -1,174 -607 -359 -260 -269 -368 -4,486 -3,849

2015/16 -38 -658 -851 -1,233 -638 -377 -273 -283 -387 -4,737 -4,699


28/04/2017 - 10:48 AM Page 1 of 1



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

2008/09 12 55 108 96 55 51 11 5 393

2009/10 6 61 138 110 63 32 17 427

2010/11 9 53 144 111 72 34 423

2011/12 10 75 122 105 68 327

2012/13 4 87 133 103 327

2013/14 8 79 128 215

2014/15 8 79 87

2015/16 9 9

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

2008/09 1.0% 13.5% 26.5% 23.6% 13.5% 12.5% 2.7% 1.2%

2009/10 1.3% 13.5% 30.6% 24.4% 14.0% 7.1% 3.8%

2010/11 1.9% 11.3% 30.7% 23.7% 15.4% 7.2%

2012/13 2.2% 16.7% 27.2% 23.4% 15.1%

2012/13 0.9% 18.8% 28.7% 22.3%

2013/14 1.9% 18.4% 29.8%

2014/15 1.8% 17.8%

2015/16 2.0%

F6.3 Selected Proportion SettledDevelopment Year (of Last LS_CL Payment)

1 2 3 4 5 6 7 8 Tail

Dec-16 Selected 1.60% 17.20% 27.80% 22.00% 14.20% 7.55% 3.50% 2.10% 4.05%

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

2008/09 12 55 108 96 55 51 11 5 14 407

2009/10 6 61 138 110 63 32 17 8 16 451

2010/11 9 53 144 111 72 34 17 10 19 469

2012/13 10 75 122 105 68 30 14 8 16 449

2012/13 4 87 133 103 61 33 15 9 18 463

2013/14 8 79 128 89 57 30 14 8 16 430

2014/15 8 79 122 97 62 33 15 9 18 444

2015/16 9 77 125 99 64 34 16 9 18 451


28/04/2017 - 10:49 AM Page 1 of 2



Excludes Nil Claims

PPCS Model

F6.5 Incremental Inflated Payments ($000 Dec-16)Accident Development Year (of Last LS_CL Payment) Acc Yr Pay Yr


2008/09 375 3,881 11,365 9,917 7,302 11,138 3,139 370 47,487 375

2009/10 60 4,702 14,057 13,333 9,280 11,139 4,387 56,958 3,941

2010/11 254 3,055 16,004 18,317 11,533 7,357 56,519 16,322

2012/13 332 4,983 14,235 15,660 14,042 49,252 27,361

2012/13 180 6,273 15,295 16,983 38,732 41,801

2013/14 263 5,768 14,181 20,213 59,507

2014/15 397 6,210 6,607 62,931

2015/16 356 356 63,886

F6.6 Inflated Payments per Claim Settled in $Dec-16 ($000)Accident Development Year (of Last LS_CL Payment)

Year 1 2 3 4 5 6 7 8

2008/09 31 71 105 103 133 218 285 74

2009/10 10 77 102 121 147 348 258

2010/11 28 58 111 165 160 216

2012/13 33 66 117 149 207

2012/13 45 72 115 165

2013/14 33 73 111

2014/15 50 79

2015/16 40

F6.7 Selected Payments per Claim Settled in $Dec-16 ($000)Development Year (of Last LS_CL Payment)

1 2 3 4 5 6 7 8 Tail

Dec-16 Selected 41.5 72.6 114.1 150.0 175.0 226.2 226.2 226.2 226.2



2008/09 300 4,394 9,747 10,088 7,970 10,384 2,060 193 3,555 48,690 3,555

2009/10 90 4,584 13,746 14,147 9,221 10,637 3,374 2,458 3,481 61,738 5,939

2010/11 277 4,068 17,379 17,387 11,602 5,647 4,047 2,792 3,955 67,154 10,794

2012/13 546 5,468 14,611 16,299 11,802 6,860 3,550 2,450 3,470 65,056 16,329

2012/13 213 6,777 16,237 15,799 9,492 7,859 4,067 2,806 3,975 67,226 28,200

2013/14 271 6,351 13,375 14,138 9,146 7,573 3,919 2,704 3,830 61,306 41,309

2014/15 411 6,289 15,026 15,552 10,060 8,330 4,311 2,974 4,213 67,164 60,465

2015/16 512 6,036 15,782 16,334 10,566 8,749 4,528 3,124 4,425 70,057 69,544


28/04/2017 - 10:49 AM Page 2 of 2


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 16 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Tail Ultimate

2008/09 15,112 22,225 18,243 14,206 10,743 11,676 2,212 -39 1,495 497 451 409 384 176 175 173 87 90 92 95 0 0 0 0 0 0 0 0 0 0 98,501

2009/10 16,847 23,727 23,527 19,751 12,618 12,914 4,251 2,715 1,481 500 451 404 377 174 173 170 86 88 90 93 0 0 0 0 0 0 0 0 0 0 120,438

2010/11 20,186 26,019 29,062 23,328 14,722 6,767 4,268 3,068 1,671 559 506 456 428 197 196 193 97 100 103 106 0 0 0 0 0 0 0 0 0 0 132,031

2011/12 20,379 26,665 24,584 21,283 14,360 8,674 4,130 2,736 1,501 520 463 409 377 177 174 171 86 88 90 93 0 0 0 0 0 0 0 0 0 0 126,958

2012/13 20,810 30,300 26,074 20,396 12,744 9,636 4,635 3,089 1,681 563 510 459 430 198 196 194 98 100 103 106 0 0 0 0 0 0 0 0 0 0 132,326

2013/14 18,569 26,285 21,894 19,109 12,248 9,268 4,461 2,972 1,618 541 490 442 414 191 189 187 94 96 99 102 0 0 0 0 0 0 0 0 0 0 119,271

2014/15 20,211 27,771 24,819 20,832 13,361 10,134 4,888 3,259 1,772 589 535 484 455 209 208 205 104 106 109 113 0 0 0 0 0 0 0 0 0 0 130,162

2015/16 21,527 27,912 26,082 21,888 14,037 10,646 5,134 3,424 1,861 619 562 509 478 219 218 216 109 111 115 118 0 0 0 0 0 0 0 0 0 0 135,785

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 16 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Tail Ultimate

2008/09 15,112 21,261 16,833 12,524 9,077 9,566 1,767 -30 1,144 374 334 297 275 124 121 118 58 59 60 60 0 0 0 0 0 0 0 0 0 0 89,134

2009/10 16,847 22,887 21,683 17,445 10,806 10,787 3,469 2,172 1,165 387 343 302 277 126 123 119 59 59 60 61 0 0 0 0 0 0 0 0 0 0 109,177

2010/11 20,186 24,860 26,611 20,711 12,748 5,725 3,540 2,502 1,340 441 392 348 320 145 142 138 68 69 69 70 0 0 0 0 0 0 0 0 0 0 120,426

2012/13 20,379 25,554 22,844 19,289 12,715 7,530 3,525 2,296 1,239 422 369 321 291 134 130 125 62 62 63 64 0 0 0 0 0 0 0 0 0 0 117,415

2012/13 20,810 29,379 24,659 18,844 11,544 8,582 4,060 2,660 1,424 469 417 370 340 154 150 146 72 73 74 75 0 0 0 0 0 0 0 0 0 0 124,303

2013/14 18,569 25,638 20,862 17,851 11,251 8,371 3,962 2,596 1,389 457 407 361 332 150 147 143 71 71 72 73 0 0 0 0 0 0 0 0 0 0 112,773

2014/15 20,211 27,130 23,771 19,619 12,373 9,227 4,376 2,869 1,534 501 448 398 368 166 162 158 78 79 80 81 0 0 0 0 0 0 0 0 0 0 123,630

2015/16 21,527 27,365 25,143 20,747 13,083 9,756 4,627 3,034 1,622 530 473 421 389 176 172 167 83 83 84 86 0 0 0 0 0 0 0 0 0 0 129,569


28/04/2017 - 10:49 AM Page 1 of 1


April 2017

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 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

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

2010/11 153,922 53,594 14,317 86,011

2011/12 156,195 56,313 14,897 84,985

2012/13 153,916 54,612 15,424 83,880

2013/14 154,082 49,887 16,088 88,107

2014/15 155,298 45,490 16,359 93,449

2015/16 156,372 45,309 16,458 94,605

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.


April 2017

Table G.2 – Earned Wages Data

Accident

Year Reported

Gross-up

Factor

Estimated

Ultimate Inflated Ultimate1

$m $m $m

2006/07 4,882.2 1.000 4,882.2 6,497.0

2007/08 5,407.1 1.000 5,407.1 7,148.1

2008/09 5,677.2 1.000 5,677.2 7,086.9

2009/10 5,740.9 1.000 5,740.9 6,999.2

2010/11 6,224.4 1.000 6,224.4 6,905.1

2011/12 6,693.7 1.000 6,693.7 7,117.2

2012/13 6,832.6 1.000 6,832.6 6,693.5

2013/14 6,971.1 1.001 6,977.2 6,743.3

2014/15 7,338.2 1.002 7,349.8 7,414.6

2015/16 7,928.2 1.005 7,970.3 7,943.01 In 30 June 2016 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

2006/07 153.7 1.000 153.7 204.5

2007/08 148.5 1.000 148.5 196.3

2008/09 140.3 1.000 140.3 175.1

2009/10 146.8 1.000 146.8 179.0

2010/11 150.1 1.000 150.1 166.5

2011/12 159.0 1.000 159.0 169.1

2012/13 162.8 1.003 163.2 159.9

2013/14 163.8 1.001 164.0 158.5

2014/15 160.7 1.009 162.1 163.5

2015/16 161.8 1.018 164.8 164.21 In 30 June 2016 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 2016 values.


April 2017

Table G.4 – Calculation of Premium Rate

Accident

Year

Gross Earned

Premium

Gross Earned

Wages

Premium to

Wages

$m $m

2006/07 153.7 4,882.2 3.15%

2007/08 148.5 5,407.1 2.75%

2008/09 140.3 5,677.2 2.47%

2009/10 146.8 5,740.9 2.56%

2010/11 150.1 6,224.4 2.41%

2011/12 159.0 6,693.7 2.38%

2012/13 163.2 6,832.6 2.39%

2013/14 164.0 6,977.2 2.35%

2014/15 162.1 7,349.8 2.21%

2015/16 164.8 7,970.3 2.07%


April 2017

H Recommended Rates by ANZSIC Division


H.1 Premium Rates by ANZSIC Class

ANZSIC Description

Rel.

Group

Estimated

Wages

for

2017/18

Claim

Freq Rel -

last 3

years

Capped

Claim Cost

Rel - last 5

years

2017/18

Selected

Relativity

2017/18

Suggested

Premium Rate

0112 Nursery Production (Outdoors) 1 0.9 240 215 200 5.16%

0113 Turf Growing 1 1.2 201 44 200 5.16%

0142 Beef Cattle Farming (Specialised) 3 0.1 0 0 350 9.03%

0144 Sheep-Beef Cattle Farming 3 0.7 125 257 350 9.03%

0159 Other Crop Growing n.e.c. 1 0.1 2,672 36 200 5.16%

0171 Poultry Farming (Meat) 4 0.1 0 0 250 6.45%

0172 Poultry Farming (Eggs) 4 3.0 29 259 250 6.45%

0191 Horse Farming 3 0.2 926 201 350 9.03%

0301 Forestry 7 0.2 0 0 550 14.18%

0302 Logging 7 0.2 191 1,758 550 14.18%

0510 Forestry Support Services 8 0.5 288 1,221 350 9.03%

0522 Shearing Services 6 0.2 0 0 450 11.61%

0529 Other Agriculture and Fishing Support Services 5 0.8 130 102 260 6.71%

0911 Gravel and Sand Quarrying 11 1.0 87 105 400 10.32%

0919 Other Construction Material Mining 10 12.4 621 527 430 11.09%

1090 Other Mining Support Services 12 0.8 0 0 230 5.93%

1133 Cheese and Other Dairy Product Manufacturing 14 3.9 73 127 250 6.45%

1140 Fruit and Vegetable Processing 14 0.1 0 0 250 6.45%

1171 Bread Manufacturing (Factory based) 15 4.6 514 376 250 6.45%

1173 Biscuit Manufacturing (Factory based) 15 0.1 0 0 250 6.45%

1174 Bakery Product Manufacturing (Non-factory based) 47 15.5 77 85 100 2.58%

1199 Other Food Product Manufacturing n.e.c. 15 0.9 392 471 250 6.45%

1211 Soft Drink, Cordial and Syrup Manufacturing 15 0.5 649 1,417 250 6.45%

1212 Beer Manufacturing 15 0.1 856 4,325 250 6.45%

1213 Spirit Manufacturing 15 0.1 0 0 250 6.45%

1214 Wine and Other Alcoholic Beverage Manufacturing 15 0.8 0 2 250 6.45%

1331 Textile Floor Covering Manufacturing 18 0.3 0 0 300 7.74%

1334 Textile Finishing and Other Textile Product Manufacturing 17 0.2 1,070 240 180 4.64%

1351 Clothing Manufacturing 17 0.1 0 0 180 4.64%

1491 Prefabricated Wooden Building Manufacturing 28 1.4 88 108 450 11.61%

1492 Wooden Structural Fitting and Component Manufacturing 18 17.2 243 342 300 7.74%

1494 Reconstituted Wood Product Manufacturing 18 0.1 0 0 300 7.74%

1499 Other Wood Product Manufacturing n.e.c. 19 0.7 136 58 210 5.42%

1510 Pulp, Paper and Paperboard Manufacturing 20 0.2 0 16 90 2.32%

1611 Printing 20 16.7 66 134 90 2.32%

1612 Printing Support Services 20 0.1 0 0 90 2.32%

1709 Other Petroleum and Coal Product Manufacturing 21 0.9 0 93 300 7.74%

1811 Industrial Gas Manufacturing 18 0.1 0 0 300 7.74%

1831 Fertiliser Manufacturing 21 0.2 0 0 300 7.74%

1841 Human Pharmaceutical and Medicinal Product Manufacturing 27 1.7 91 36 60 1.55%

1912 Rigid and Semi-Rigid Polymer Product Manufacturing 18 0.3 0 0 300 7.74%

2010 Glass and Glass Product Manufacturing 23 1.6 934 937 500 12.89%

2029 Other Ceramic Product Manufacturing 22 0.1 0 0 140 3.61%

2032 Plaster Product Manufacturing 22 0.9 148 208 140 3.61%

2033 Ready-Mixed Concrete Manufacturing 24 1.0 478 11 170 4.38%

2034 Concrete Product Manufacturing 24 1.6 563 503 170 4.38%

2090 Other Non-Metallic Mineral Product Manufacturing 24 4.3 210 135 170 4.38%

2110 Iron Smelting and Steel Manufacturing 25 0.1 1,087 846 200 5.16%

2142 Aluminium Rolling, Drawing, Extruding 22 0.1 0 0 140 3.61%

2221 Structural Steel Fabricating 21 7.2 251 288 300 7.74%

2222 Prefabricated Metal Building Manufacturing 28 0.2 341 91 450 11.61%

2223 Architectural Aluminium Product Manufacturing 21 18.0 121 165 300 7.74%

2229 Other Structural Metal Product Manufacturing 21 2.8 442 321 300 7.74%

2231 Boiler, Tank and Other Heavy Gauge Metal Container Manufacturing 21 1.6 157 81 300 7.74%

2239 Other Metal Container Manufacturing 25 0.1 0 0 200 5.16%

2240 Sheet Metal Product Manufacturing (except Metal Structural and Container Products) 25 2.8 64 240 200 5.16%

2291 Spring and Wire Product Manufacturing 21 0.3 1,797 1,519 300 7.74%

2293 Metal Coating and Finishing 21 0.4 230 52 300 7.74%

2299 Other Fabricated Metal Product Manufacturing n.e.c. 21 5.0 590 708 300 7.74%

2391 Shipbuilding and Repair Services 26 0.5 0 0 150 3.87%

2394 Aircraft Manufacturing and Repair Services 26 7.4 42 17 150 3.87%

2412 Medical and Surgical Equipment Manufacturing 27 0.5 0 0 60 1.55%

2419 Other Professional and Scientific Equipment Manufacturing 27 2.2 55 4 60 1.55%

2421 Computer and Electronic Office Equipment Manufacturing 27 1.0 418 594 60 1.55%

2422 Communications Equipment Manufacturing 27 3.6 58 18 60 1.55%

2429 Other Electronic Equipment Manufacturing 27 1.1 0 0 60 1.55%

2431 Electric Cable and Wire Manufacturing 19 0.3 0 0 210 5.42%

2432 Electric Lighting Equipment Manufacturing 19 0.8 0 0 210 5.42%

2439 Other Electrical Equipment Manufacturing 19 3.0 36 1 210 5.42%

2452 Fixed Space Heating, Cooling and Ventilation Equipment Manufacturing 22 1.4 112 91 140 3.61%

2462 Mining and Construction Machinery Manufacturing 26 0.3 0 14 150 3.87%

2469 Other Specialised Machinery and Equipment Manufacturing 22 0.1 0 1,485 140 3.61%

2491 Lifting and Material Handling Equipment Manufacturing 25 7.9 161 362 200 5.16%

2499 Other Machinery and Equipment Manufacturing n.e.c. 22 1.7 66 71 140 3.61%

2511 Wooden Furniture and Upholstered Seat Manufacturing 19 14.0 262 210 210 5.42%

2512 Metal Furniture Manufacturing 28 0.7 138 97 450 11.61%

2513 Mattress Manufacturing 22 1.0 97 0 140 3.61%

2519 Other Furniture Manufacturing 22 3.7 191 75 140 3.61%


ANZSIC Description

Rel.

Group

Estimated

Wages

for

2017/18

Claim

Freq Rel -

last 3

years

Capped

Claim Cost

Rel - last 5

years

2017/18

Selected

Relativity

2017/18

Suggested

Premium Rate

2591 Jewellery and Silverware Manufacturing 27 0.5 0 0 60 1.55%

2592 Toy, Sporting and Recreational Product Manufacturing 22 0.1 0 0 140 3.61%

2599 Other Manufacturing n.e.c. 18 0.7 0 0 300 7.74%

2611 Fossil Fuel Electricity Generation 44 0.4 0 0 130 3.35%

2630 Electricity Distribution 44 124.0 98 135 130 3.35%

2700 Gas Supply 30 3.7 25 47 70 1.81%

2811 Water Supply 29 61.0 51 80 60 1.55%

2812 Sewerage and Drainage Services 29 2.4 146 106 60 1.55%

2911 Solid Waste Collection Services 97 3.5 377 660 360 9.28%

2919 Other Waste Collection Services 97 3.7 225 739 360 9.28%

2921 Waste Treatment and Disposal Services 97 7.9 450 422 360 9.28%

2922 Waste Remediation and Materials Recovery Services 21 0.8 920 388 300 7.74%

3011 House Construction 31 54.8 141 212 170 4.38%

3019 Other Residential Building Construction 31 40.1 136 139 170 4.38%

3020 Non-Residential Building Construction 31 79.0 91 145 170 4.38%

3101 Road and Bridge Construction 32 23.8 453 293 350 9.03%

3109 Other Heavy and Civil Engineering Construction 31 31.9 233 181 170 4.38%

3211 Land Development and Subdivision 65 12.0 0 9 40 1.03%

3212 Site Preparation Services 33 61.9 198 278 285 7.35%

3221 Concreting Services 36 29.9 133 422 500 12.89%

3222 Bricklaying Services 36 10.1 302 515 500 12.89%

3223 Roofing Services 36 10.8 282 338 500 12.89%

3224 Structural Steel Erection Services 36 18.0 192 613 500 12.89%

3231 Plumbing Services 34 71.6 179 251 210 5.42%

3232 Electrical Services 35 129.0 169 132 130 3.35%

3233 Air Conditioning and Heating Services 34 53.6 174 176 210 5.42%

3234 Fire and Security Alarm Installation Services 35 41.7 76 85 130 3.35%

3239 Other Building Installation Services 22 17.7 141 204 140 3.61%

3241 Plastering and Ceiling Services 98 13.2 267 261 280 7.22%

3242 Carpentry Services 98 48.4 242 349 280 7.22%

3243 Tiling and Carpeting Services 98 14.6 153 253 280 7.22%

3244 Painting and Decorating Services 98 25.1 130 261 280 7.22%

3245 Glazing Services 98 5.6 249 299 280 7.22%

3291 Landscape Construction Services 37 31.8 304 379 350 9.03%

3292 Hire of Construction Machinery with Operator 33 2.7 478 425 285 7.35%

3299 Other Construction Services n.e.c. 21 27.0 151 356 300 7.74%

3312 Cereal Grain Wholesaling 38 0.1 582 39 100 2.58%

3319 Other Agricultural Product Wholesaling 38 0.4 285 115 100 2.58%

3321 Petroleum Product Wholesaling 30 5.9 60 17 70 1.81%

3322 Metal and Mineral Wholesaling 16 9.1 239 539 210 5.42%

3323 Industrial and Agricultural Chemical Product Wholesaling 30 3.1 26 35 70 1.81%

3331 Timber Wholesaling 16 1.7 235 823 210 5.42%

3332 Plumbing Goods Wholesaling 16 2.1 48 5 210 5.42%

3339 Other Hardware Goods Wholesaling 16 18.5 239 379 210 5.42%

3411 Agricultural and Construction Machinery Wholesaling 39 0.4 226 63 100 2.58%

3419 Other Specialised Industrial Machinery and Equipment Wholesaling 41 4.4 177 127 120 3.09%

3491 Professional and Scientific Goods Wholesaling 40 7.7 34 23 60 1.55%

3492 Computer and Computer Peripheral Wholesaling 63 51.7 16 16 15 0.39%

3493 Telecommunication Goods Wholesaling 40 1.7 127 104 60 1.55%

3494 Other Electrical and Electronic Good Wholesaling 40 52.7 66 82 60 1.55%

3499 Other Machinery and Equipment Wholesaling n.e.c. 41 8.7 91 18 120 3.09%

3501 Car Wholesaling 39 0.5 234 20 100 2.58%

3504 Motor Vehicle New Parts Wholesaling 39 2.8 73 30 100 2.58%

3505 Motor Vehicle Dismantling and Used Parts Wholesaling 39 0.1 0 0 100 2.58%

3601 General Line Grocery Wholesaling 43 14.5 277 244 275 7.09%

3602 Meat, Poultry and Smallgoods Wholesaling 43 2.1 186 616 275 7.09%

3603 Dairy Produce Wholesaling 43 0.1 284 191 275 7.09%

3604 Fish and Seafood Wholesaling 43 0.1 0 0 275 7.09%

3605 Fruit and Vegetable Wholesaling 43 2.4 240 149 275 7.09%

3606 Liquor and Tobacco Product Wholesaling 39 10.1 162 88 100 2.58%

3609 Other Grocery Wholesaling 39 5.7 97 229 100 2.58%

3711 Textile Product Wholesaling 39 0.4 0 0 100 2.58%

3712 Clothing and Footwear Wholesaling 39 1.7 89 21 100 2.58%

3720 Pharmaceutical and Toiletry Goods Wholesaling 39 14.2 96 88 100 2.58%

3731 Furniture and Floor Covering Wholesaling 39 2.5 39 5 100 2.58%

3733 Kitchen and Diningware Wholesaling 39 0.1 0 0 100 2.58%

3735 Book and Magazine Wholesaling 39 0.9 95 227 100 2.58%

3736 Paper Product Wholesaling 16 3.0 93 363 210 5.42%

3739 Other Goods Wholesaling n.e.c. 16 1.6 0 57 210 5.42%

3800 Commission-Based Wholesaling 73 6.5 62 5 60 1.55%

3911 Car Retailing 50 96.3 101 95 150 3.87%

3912 Motor Cycle Retailing 50 6.0 134 258 150 3.87%

3913 Trailer and Other Motor Vehicle Retailing 50 0.2 0 167 150 3.87%

3921 Motor Vehicle Parts Retailing 42 12.4 131 141 150 3.87%

3922 Tyre Retailing 50 7.6 210 291 150 3.87%

4000 Fuel Retailing 42 8.3 63 114 150 3.87%

4110 Supermarket and Grocery Stores 99 134.4 243 224 230 5.93%

4121 Fresh Meat, Fish and Poultry Retailing 46 8.4 253 272 130 3.35%

4122 Fruit and Vegetable Retailing 47 6.5 67 37 100 2.58%

4123 Liquor Retailing 47 4.5 42 188 100 2.58%

4129 Other Specialised Food Retailing 47 9.3 74 14 100 2.58%


ANZSIC Description

Rel.

Group

Estimated

Wages

for

2017/18

Claim

Freq Rel -

last 3

years

Capped

Claim Cost

Rel - last 5

years

2017/18

Selected

Relativity

2017/18

Suggested

Premium Rate

4211 Furniture Retailing 42 40.4 179 145 150 3.87%

4212 Floor Coverings Retailing 42 7.7 125 170 150 3.87%

4213 Houseware Retailing 48 29.9 145 161 210 5.42%

4214 Manchester and Other Textile Goods Retailing 48 5.3 84 189 210 5.42%

4221 Electrical, Electronic and Gas Appliance Retailing 49 25.9 74 32 60 1.55%

4222 Computer and Computer Peripheral Retailing 49 1.0 0 0 60 1.55%

4229 Other Electrical and Electronic Goods Retailing 49 4.7 144 104 60 1.55%

4231 Hardware and Building Supplies Retailing 48 17.3 300 241 210 5.42%

4232 Garden Supplies Retailing 48 6.5 186 126 210 5.42%

4241 Sport and Camping Equipment Retailing 49 21.8 62 59 60 1.55%

4242 Entertainment Media Retailing 49 2.0 56 28 60 1.55%

4243 Toy and Game Retailing 49 6.4 47 61 60 1.55%

4244 Newspaper and Book Retailing 49 13.7 44 90 60 1.55%

4245 Marine Equipment Retailing 49 0.1 0 0 60 1.55%

4251 Clothing Retailing 100 52.1 131 176 160 4.13%

4252 Footwear Retailing 45 10.7 85 25 150 3.87%

4253 Watch and Jewellery Retailing 49 9.8 51 79 60 1.55%

4259 Other Personal Accessory Retailing 48 0.7 364 93 210 5.42%

4260 Department Stores 100 19.0 187 98 160 4.13%

4271 Pharmaceutical, Cosmetic and Toiletry Goods Retailing 49 45.7 102 37 60 1.55%

4272 Stationery Goods Retailing 49 1.0 98 13 60 1.55%

4273 Antique and Used Goods Retailing 49 2.7 0 0 60 1.55%

4274 Flower Retailing 42 1.9 234 329 150 3.87%

4279 Other Store-Based Retailing n.e.c. 48 45.7 181 230 210 5.42%

4310 Non-Store Retailing 49 9.4 98 81 60 1.55%

4320 Retail Commission-Based Buying and/or Selling 49 1.7 556 260 60 1.55%

4400 Accommodation 51 105.5 164 119 140 3.61%

4511 Cafes and Restaurants 52 199.1 127 133 140 3.61%

4512 Takeaway Food Services 46 66.4 150 115 130 3.35%

4513 Catering Services 52 15.6 406 130 140 3.61%

4520 Pubs, Taverns and Bars 52 23.0 120 120 140 3.61%

4530 Clubs (Hospitality) 51 79.4 186 152 140 3.61%

4610 Road Freight Transport 53 33.2 267 560 500 12.89%

4621 Interurban and Rural Bus Transport 53 6.4 340 448 500 12.89%

4622 Urban Bus Transport (Including Tramway) 54 0.1 0 0 310 7.99%

4623 Taxi and Other Road Transport 54 4.7 194 327 310 7.99%

4900 Air and Space Transport 56 28.5 123 147 140 3.61%

5010 Scenic and Sightseeing Transport 87 1.9 86 46 200 5.16%

5021 Pipeline Transport 57 4.2 0 0 210 5.42%

5029 Other Transport n.e.c. 55 4.9 266 597 150 3.87%

5101 Postal Services 49 5.7 38 146 60 1.55%

5102 Courier Pick-up and Delivery Services 54 13.1 374 413 310 7.99%

5219 Other Water Transport Support Services 58 1.8 0 1 130 3.35%

5220 Airport Operations and Other Air Transport Support Services 59 14.2 140 133 180 4.64%

5291 Customs Agency Services 61 0.2 0 0 30 0.77%

5292 Freight Forwarding Services 60 2.4 137 450 200 5.16%

5299 Other Transport Support Services n.e.c. 57 3.4 279 205 210 5.42%

5309 Other Warehousing and Storage Services 62 6.9 103 425 220 5.67%

5411 Newspaper Publishing 20 23.2 56 18 90 2.32%

5412 Magazine and Other Periodical Publishing 20 2.2 0 0 90 2.32%

5413 Book Publishing 20 0.8 0 33 90 2.32%

5419 Other Publishing (except Software, Music and Internet) 20 1.2 0 0 90 2.32%

5420 Software Publishing 64 57.9 7 4 15 0.39%

5511 Motion Picture and Video Production 85 1.6 64 167 40 1.03%

5512 Motion Picture and Video Distribution 85 0.2 0 0 40 1.03%

5513 Motion Picture Exhibition 85 9.0 96 22 40 1.03%

5514 Post-production Services and Other Motion Picture and Video Activities 85 0.2 0 0 40 1.03%

5521 Music Publishing 20 0.4 0 0 90 2.32%

5522 Music and Other Sound Recording Activities 85 0.1 0 0 40 1.03%

5610 Radio Broadcasting 85 16.3 32 12 40 1.03%

5621 Free-to-Air Television Broadcasting 85 15.3 54 74 40 1.03%

5622 Cable and Other Subscription Broadcasting 85 1.7 0 0 40 1.03%

5700 Internet Publishing and Broadcasting 65 0.5 0 0 40 1.03%

5801 Wired Telecommunications Network Operation 65 5.8 51 72 40 1.03%

5802 Other Telecommunications Network Operation 65 2.5 0 0 40 1.03%

5809 Other Telecommunications Services 65 25.5 20 81 40 1.03%

5921 Data Processing and Web Hosting Services 73 3.7 9 9 60 1.55%

5922 Electronic Information Storage Services 65 3.4 40 4 40 1.03%

6020 Other Information Services 85 4.5 16 1 40 1.03%

6221 Banking 65 10.4 48 61 40 1.03%

6222 Building Society Operation 65 1.7 157 234 40 1.03%

6223 Credit Union Operation 66 6.1 136 73 90 2.32%

6230 Non-Depository Financing 65 1.5 0 0 40 1.03%

6240 Financial Asset Investing 65 1.8 0 0 40 1.03%

6310 Life Insurance 65 0.7 0 0 40 1.03%

6321 Health Insurance 65 1.6 55 4 40 1.03%

6322 General Insurance 66 16.7 106 90 90 2.32%

6330 Superannuation Funds 65 6.8 14 43 40 1.03%

6411 Financial Asset Broking Services 64 14.2 24 16 15 0.39%

6419 Other Auxiliary Finance and Investment Services 64 62.0 17 28 15 0.39%

6420 Auxiliary Insurance Services 65 20.9 9 22 40 1.03%


ANZSIC Description

Rel.

Group

Estimated

Wages

for

2017/18

Claim

Freq Rel -

last 3

years

Capped

Claim Cost

Rel - last 5

years

2017/18

Selected

Relativity

2017/18

Suggested

Premium Rate

6611 Passenger Car Rental and Hiring 67 5.3 134 86 200 5.16%

6619 Other Motor Vehicle and Transport Equipment Rental and Hiring 67 0.3 244 94 200 5.16%

6631 Heavy Machinery and Scaffolding Rental and Hiring 67 5.9 221 262 200 5.16%

6632 Video and Other Electronic Media Rental and Hiring 85 0.4 0 0 40 1.03%

6639 Other Goods and Equipment Rental and Hiring n.e.c. 102 5.6 179 315 140 3.61%

6711 Residential Property Operators 65 12.5 76 26 40 1.03%

6712 Non-Residential Property Operators 65 53.3 82 59 40 1.03%

6720 Real Estate Services 61 134.9 18 28 30 0.77%

6910 Scientific Research Services 65 73.6 36 25 40 1.03%

6921 Architectural Services 64 40.9 13 13 15 0.39%

6922 Surveying and Mapping Services 65 18.0 39 35 40 1.03%

6923 Engineering Design and Engineering Consulting Services 64 188.4 21 29 15 0.39%

6924 Other Specialised Design Services 73 14.8 44 55 60 1.55%

6925 Scientific Testing and Analysis Services 65 6.7 94 40 40 1.03%

6931 Legal Services 65 120.3 48 46 40 1.03%

6932 Accounting Services 64 223.1 14 15 15 0.39%

6940 Advertising Services 61 14.5 37 5 30 0.77%

6950 Market Research and Statistical Services 61 19.8 27 56 30 0.77%

6961 Corporate Head Office Management Services 101 163.6 47 40 50 1.29%

6962 Management Advice and Related Consulting Services 61 413.2 25 41 30 0.77%

6970 Veterinary Services 84 21.9 399 120 100 2.58%

6991 Professional Photographic Services 102 1.4 0 0 140 3.61%

6999 Other Professional, Scientific and Technical Services n.e.c. 73 10.7 97 46 60 1.55%

7000 Computer System Design and Related Services 64 1,458.6 9 10 15 0.39%

7211 Employment Placement and Recruitment Services 69 109.0 53 59 110 2.84%

7212 Labour Supply Services 105 10.4 250 248 155 4.00%

7220 Travel Agency and Tour Arrangement Services 49 20.5 13 35 60 1.55%

7291 Office Administrative Services 73 28.1 90 58 60 1.55%

7292 Document Preparation Services 73 4.0 49 56 60 1.55%

7293 Credit Reporting and Debt Collection Services 73 0.1 1,283 1,329 60 1.55%

7294 Call Centre Operation 73 1.8 51 154 60 1.55%

7299 Other Administrative Services n.e.c. 73 34.2 41 22 60 1.55%

7311 Building and Other Industrial Cleaning Services 72 107.0 176 241 240 6.19%

7312 Building Pest Control Services 71 2.7 292 284 350 9.03%

7313 Gardening Services 93 17.0 311 349 350 9.03%

7320 Packaging Services 93 0.1 0 0 350 9.03%

7510 Central Government Administration 74 0.4 0 0 100 2.58%

7530 Local Government Administration 74 2.3 147 100 100 2.58%

7552 Foreign Government Representation 74 36.7 107 92 100 2.58%

7600 Defence 74 0.1 0 0 100 2.58%

7712 Investigation and Security Services 70 75.9 95 166 170 4.38%

7714 Correctional and Detention Services 79 10.6 521 149 210 5.42%

7719 Other Public Order and Safety Services 74 0.7 0 0 100 2.58%

8010 Preschool Education 75 3.6 225 81 120 3.09%

8021 Primary Education 75 4.8 91 355 120 3.09%

8022 Secondary Education 76 169.0 122 72 70 1.81%

8023 Combined Primary and Secondary Education 76 126.6 110 64 70 1.81%

8101 Technical and Vocational Education and Training 76 27.6 192 54 70 1.81%

8102 Higher Education 77 31.6 29 17 40 1.03%

8211 Sports and Physical Recreation Instruction 104 6.7 71 24 70 1.81%

8212 Arts Education 76 2.8 253 132 70 1.81%

8219 Adult, Community and Other Education n.e.c. 76 30.3 47 56 70 1.81%

8220 Educational Support Services 61 12.9 108 41 30 0.77%

8401 Hospitals (Except Psychiatric Hospitals) 78 83.1 116 76 85 2.19%

8511 General Practice Medical Services 80 96.5 47 48 35 0.90%

8512 Specialist Medical Services 80 80.2 21 38 35 0.90%

8520 Pathology and Diagnostic Imaging Services 81 68.4 97 96 100 2.58%

8531 Dental Services 80 44.8 111 29 35 0.90%

8532 Optometry and Optical Dispensing 82 20.1 36 14 20 0.52%

8533 Physiotherapy Services 80 25.3 37 16 35 0.90%

8534 Chiropractic and Osteopathic Services 80 7.9 22 31 35 0.90%

8539 Other Allied Health Services 83 17.1 152 115 100 2.58%

8591 Ambulance Services 78 1.9 85 21 85 2.19%

8599 Other Health Care Services n.e.c. 83 38.7 74 98 100 2.58%

8601 Aged Care Residential Services 79 136.9 301 198 210 5.42%

8609 Other Residential Care Services 79 75.1 244 201 210 5.42%

8710 Child Care Services 68 132.9 371 165 170 4.38%

8790 Other Social Assistance Services 103 102.2 317 194 250 6.45%

8910 Museum Operation 86 4.0 96 90 20 0.52%

8921 Zoological and Botanical Gardens Operation 87 2.3 240 434 200 5.16%

8922 Nature Reserves and Conservation Parks Operation 87 0.2 0 69 200 5.16%

9001 Performing Arts Operation 88 2.4 73 189 160 4.13%

9002 Creative Artists, Musicians, Writers and Performers 88 3.5 140 232 160 4.13%

9003 Performing Arts Venue Operation 88 5.6 289 142 160 4.13%

9111 Health and Fitness Centres and Gymnasia Operation 90 15.0 100 57 100 2.58%

9112 Sports and Physical Recreation Clubs and Sports Professionals 104 16.3 39 26 70 1.81%

9113 Sports and Physical Recreation Venues, Grounds and Facilities Operation 90 26.8 157 38 100 2.58%

9114 Sports and Physical Recreation Administrative Service 104 13.9 39 19 70 1.81%

9121 Horse and Dog Racing Administration and Track Operation 89 0.3 197 62 450 11.61%

9129 Other Horse and Dog Racing Activities 89 1.2 912 496 450 11.61%

9131 Amusement Parks and Centres Operation 87 2.4 317 48 200 5.16%

9139 Amusement and Other Recreational Activities n.e.c. 87 2.7 36 23 200 5.16%

9201 Casino Operation 91 6.9 122 136 130 3.35%

9202 Lottery Operation 65 0.2 0 0 40 1.03%

9209 Other Gambling Activities 91 6.3 47 19 130 3.35%

9411 Automotive Electrical Services 42 3.1 0 15 150 3.87%


ANZSIC Description

Rel.

Group

Estimated

Wages

for

2017/18

Claim

Freq Rel -

last 3

years

Capped

Claim Cost

Rel - last 5

years

2017/18

Selected

Relativity

2017/18

Suggested

Premium Rate

9412 Automotive Body, Paint and Interior Repair 50 27.2 127 258 150 3.87%

9419 Other Automotive Repair and Maintenance 50 40.8 178 180 150 3.87%

9421 Domestic Appliance Repair and Maintenance 42 4.4 103 168 150 3.87%

9422 Electronic (except Domestic Appliance) and Precision Equipment Repair and Maintenance65 33.9 16 39 40 1.03%

9429 Other Machinery and Equipment Repair and Maintenance 39 2.1 191 48 100 2.58%

9491 Clothing and Footwear Repair 42 0.2 213 1 150 3.87%

9499 Other Repair and Maintenance n.e.c. 49 4.9 147 71 60 1.55%

9511 Hairdressing and Beauty Services 94 48.7 75 105 90 2.32%

9512 Diet and Weight Reduction Centre Operation 88 0.4 0 0 160 4.13%

9520 Funeral, Crematorium and Cemetery Services 102 3.2 200 45 140 3.61%

9531 Laundry and Dry-Cleaning Services 92 4.1 260 198 230 5.93%

9532 Photographic Film Processing 102 0.7 0 0 140 3.61%

9533 Parking Services 56 1.0 89 250 140 3.61%

9534 Brothel Keeping and Prostitution Services 88 0.4 0 0 160 4.13%

9539 Other Personal Services n.e.c. 88 4.6 79 35 160 4.13%

9540 Religious Services 95 52.9 89 83 50 1.29%

9551 Business and Professional Association Services 61 192.9 32 27 30 0.77%

9552 Labour Association Services 61 10.9 98 153 30 0.77%

9559 Other Interest Group Services n.e.c. 96 44.5 103 142 130 3.35%

9601 Private Households Employing Staff 88 0.8 0 295 160 4.13%

act workers’ compensation review of scheme performance to 30 june 2016 · 2017-05-24 · chief...

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