Report of operations 8
CLAIMS MANAGEMENT
Output 1.4 – Management of pre-premium claims
Key points
The major issues in pre-premium claims management for 2003 – 04 were
- the continuing management of outstanding liabilities
- the continuation of the pre-premium project reviewing, in detail, a selected set of claims
- ongoing review of all claims to ensure that entitlements are being managed correctly.
Activities
The major activity in 2003 – 04 against this output was the continuation of the pre-premium project.
Pre-premium project
In last year’s annual report, there was an extensive report on a project being undertaken to improve Comcare’s management of pre-premium claims. A special team was set up to review existing long term claim processes and practices and to improve the overall management of these claims.
In 2003 – 04, 109 claims were reviewed and finalised. Sixty-six were found to have a continuing entitlement and of these, 31 have some capacity to work; these are being followed up by a rehabilitation advisor. Thirty-nine were determined to have no ongoing entitlement to compensation and four claims resulted in varied entitlements. The preliminary results from this year of project activity are promising, with an estimated liability saving of around $ 8.3 million.
Performance
Output description
This output encompasses activities carried out by Comcare in relation to the management
of pre-premium claims under the Safety, Rehabilitation and Compensation Act 1988 (SRC Act).
Output performance measure
The measures in the Portfolio Budget Statements for Output 1.4 for the 2003 – 04 financial year were
Quantity/Quality
- Outstanding claims liabilities valuations reflect sound actuarial assessment of cost of claims
Price
- Budget estimate $72.4 million
Adjusted at Mid-year Economic Fiscal Outlook to $72.3 million
The actual price for delivering output 1.4 was $68.8 million
Outstanding claims liabilities valuations reflect sound actuarial assessment of cost of claims
Under the SRC Act, the Budget funds payments for costs relating to injuries suffered
before 1 July 1989.
Each year Comcare contracts consultant actuaries to estimate outstanding liabilities of these claims.
Also, as part of the external audit process the ANAO contracts separate consultant actuaries to review the estimate of outstanding liabilities.
In past years Comcare added a 10.6% margin to the consultant actuaries’ estimate of outstanding liabilities. The actuaries estimate that adding the 10.6% margin increases the probability of the estimate being sufficient from 50% to 80%.
This year, due to the uncertainty associated with asbestos related disease and the possibility that claims could escalate beyond the level allowed for by the consultant actuaries, Comcare added
an extra margin of $30 million before adding the 10.6% margin.
Adding $30 million to the estimate of outstanding liabilities and then adding the 10.6% margin produces an estimate of outstanding liabilities as at 30 June 2004 of $619.0 million for pre-premium claims.
Output 1.5 –
Regulation of the seacare scheme for workers’ compensation, rehabilitation and occupational health and safety
The Seafarers Safety, Rehabilitation and Compensation Authority
The Seafarers Safety, Rehabilitation and Compensation Authority (Seacare Authority) administers the Seafarers Rehabilitation and Compensation Act 1992, the Occupational Health and Safety (Maritime Industry) Act 1993, the Seafarers Rehabilitation and Compensation Levy Act 1992 and the Seafarers Rehabilitation and Compensation Levy Collection Act 1992. It performs the regulator role in relation
to these Acts.
Although responsibility for the output transferred to Comcare from 11 June 2003, and Comcare has operational and corporate responsibility for the Seacare function, DEWR continues to provide policy advice to the Minister on the Seafarers Safety, Rehabilitation and Compensation Authority and the relevant seafarer workers’ compensation and OHS legislation.
Key points
Major achievements in 2003 – 04 included
- a continuation of the review of Seacare scheme legislation. Stage two of the review of Seacare scheme legislation commenced in November 2003 when the Australian Shipowners Association and Australian Mines and Metals Association lodged a joint submission with the Authority. Stage one proposals which the Authority presented to the Minister in November 2002 and March 2003 for his consideration are currently being costed at the request of the Minister, as a final step before the Minister considers policy approval to enable the proposals to be developed into a Bill for introduction into the Parliament
- completion of an analysis of the extent and cost of claim settlements in the Seacare scheme
- adoption of the Seacare Leaders Program, which encourages a stronger partnership with industry employers aimed at improving injury prevention, injury management and reducing compensation costs
- management of the Seafarers Safety Net Fund, and implementation of a strategy to ensure
the Fund has sufficient reserves to meet its future liabilities - adoption of a set of Seacare Authority Performance Indicators (SAPI) including OHS
positive performance indicators, underpinned by adoption of new data specifications
agreed with the industry - commencement of discussions with the new National Offshore Petroleum Safety Authority (NOPSA) including the framework for a Seacare-NOPSA Memorandum of Understanding aimed at improving the administration of the OHS(MI) Act in the offshore petroleum sector
- introduction of Regulations under the OHS(MI) Act to prohibit the use of asbestos in maritime industry workplaces, and commencement of industry consultation on introduction of a regulations and a code of practice addressing manual handling standards
- provision of the first comprehensive report against the OHS performance improvement targets
for the maritime industry, set in 2001 – 02 - promotion of Sea Safe Work Day on 28 April 2004
- establishment of the first OHS Practitioners Network in Victoria
- completion of a review of support services to the Seacare Authority, undertaken by KPMG
- continued participation in Australasian comparative performance reporting projects – the national Comparative Performance Monitoring (CPM) Report and Australasian Return to Work Monitor (ARTW Monitor).
Activities
Comcare continued to provide secretarial and other support services to the Seafarers Safety, Rehabilitation and Compensation Authority, to enable it to meet quarterly and to perform its statutory functions. A key element of Comcare’s support is provision of legal advice to the Authority. In addition, Comcare provided policy and strategic advice to the Authority and administered statutory functions under delegation from the Authority.
During 2003 – 04 Comcare administered the financial aspects of the Seafarers Safety Net Fund consistent with obligations under the Financial Management and Accountability Act 1997, and
a levy collection regime to support the Fund.
Performance
Indicators
Three indicators or measures for assessing performance in meeting Output 1.5 are identified in the Portfolio Budget Statement. These are: (i) the incidence of workplace injuries (target: 40% reduction by 30 June 2012); (ii) incidence of work related fatalities (target: zero for the 10 years to 30 June 2012); and (iii) Seacare scheme performance meets Seacare Authority requirements.
Achievement of performance measure (i) would require, on average, a 4% reduction in injury incidence per year. On present trends it will be difficult to achieve the ten year target. Over the year the incidence of injuries decreased by just 0.80% using the National Occupational Health and Safety Commission (NOHSC) definition of injuries and increased by 4.17% using the Seacare definition of injuries.
The scheme met performance measure (ii) as there were no work related fatalities in the maritime industry covered by the OHS (MI) Act over the year.
With respect to performance measure (iii) the Authority has significant concerns with the performance of the Seacare scheme and has put in place strategies to address adverse trends.
The Seafarers Safety, Rehabilitation and Compensation Authority produce a separate Annual Report that is available on its website at www.seacare.gov.au.
Price
- Budget estimate $0.4 million
The actual price for delivering Output 1.5 was $0.4 million.