Comcare - Australian Government
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Note 2: Disclosure of funding for Comcare

Pre-premium business

Workers’ compensation claims resulting from injuries that occurred prior to 1 July 1989 are referred to as ‘pre-premium’ claims. Expenses associated with these claims are funded from Australian Government special appropriations. Comcare’s actuary has estimated that the outstanding liability for these claims as at 30 June 2011 is $372.1m (2010: $395.0m).  

The following table summarises the sources of funds available to Comcare to settle the outstanding claims for the pre-premium business.

  2011
$’000
2010
$’000
Special appropriation receivable 369,572 394,689
Cash and cash equivalents 2,528 311
Actuary assessed gross outstanding liability for payment of pre-premium related claims (372,100) (395,000)
Surplus funds in excess of claims liabilities - -

Asbestos related disease business

Comcare is also responsible for the management of asbestos related personal injury common law disease claims against the Commonwealth. Expenses associated with these claims are funded from Australian Government special appropriations. Comcare’s actuary has estimated that the outstanding liability for these claims as at 30 June 2011 is $595.1m (2010: $605.9m).

The following table summarises the sources of funds available to Comcare to settle the outstanding claims for the asbestos related disease business.

  2011
$’000
2010
$’000
Special appropriation receivable 557,696 577,690
Cash and cash equivalents 7,604 1,020
Actuary assessed third party recoveries 29,800 27,150
Actuary assessed gross outstanding liability for payment of pre-premium related claims (595,100) (605,860)
Surplus funds in excess of claims liabilities - -

Premium business

Premium business refers to workers’ compensation claims resulting from injuries that have occurred since 1 July 1989.

In accordance with Section 97C of the SRC Act, Comcare calculates premiums to be charged for each financial year based on the liability for claims expected to be incurred during that year and estimated administrative costs for that year. The calculation of the Comcare premium pool takes into account notional interest expected to be earned on the premium funds collected.

Prior to being repealed (effective 1 July 2002), Section 97A (1) of the SRC Act required that premiums collected by Comcare be paid to the Australian Government. These funds will be returned to Comcare through parliamentary appropriations as required for payment of claims relating to incidents occurring after 1 July 1989. As at 30 June 2011 the notional balance of these funds was $1,329.7m (2010: $1,267.7m). However, only $1,312.9m (2010: $1,064.0m) was able to be recognised as a receivable on the balance sheet, being the amount required to meet existing premium claims liabilities. Premiums received since 30 June 2002 are retained by Comcare.  (This appropriation is only payable to Comcare after it has exhausted all of its retained funds.)

The funds held with the Australian Government earned notional interest of $62.0m in 2010/11 (2010: $49.4m) calculated as part of the requirements of Section 90C of the SRC Act. This interest was added to the balance of the notional reserve as at 30 June 2011. The interest rate used is the rate of return on six month overnight indexed swaps as reported by the Reserve Bank of Australia.

Comcare’s actuary has estimated that the actuarial liability for the premium compensation claims as at 30 June 2011 is $1,517.3m (2010: $1,281.2m).

The following table summarises the sources of funds available to Comcare to settle the outstanding claims for the premium business.

  2011
$’000
2010
$’000
Net premiums held in the Commonwealth Consolidated Revenue Fund (recognised in the balance sheet) 1,312,929 1,064,009
Cash and cash equivalents 186,671 197,791
Actuary assessed third party recoveries 17,700 19,400
Actuary assessed gross outstanding liability for payment of premium related claims (1,517,300) (1,281,200)
Surplus funds in excess of claims liabilities - -