Note 2.4 Provisions

      2016
$'000
2015
$'000
   
2.4A Workers' compensation claims
Premium claims 2.4D 2,767,500 2,834,400
Commonwealth latent mental disease claims 2.4E 22,600 22,600
Pre-premium claims 2.4F 373,600 368,400
3,163,700 3,225,400
Workers' compensation claims provisions are expected to be settled in:
    No more than 12 months 340,700 366,600
    More than 12 months 2,823,000 2,858,800

Total workers' compensation claims

3,163,700 3,225,400
         
2.4B Common law asbestos related disease claims  2.4G 1,070,580 1,077,020
Common law asbestos related disease claims provisions are expected to be settled in:
    No more than 12 months 48,300 44,800
    More than 12 months 1,022,280 1,032,220

Total common law asbestos related disease claims provisions

  1,070,580 1,077,020

 

2.4C

 

Other provisions

Provision for restoration obligations 2,422 2,541
Total other provisions 2,422 2,541
 
Other provisions are expected to be settled in:
    No more than 12 months 236 700
    More than 12 months 2,186 1,841
Total other provisions 2,422 2,541
     
Total provisions 4,236,702 4,304,961
 
Provision for restoration obligations reconciliation
Carrying amount 1 July 2,541 2,610
Additional provisions made - -
Amount used (220) -
Adjustment in provision as a result of revaluation - (130)
Unwinding of discount 101 61
Closing balance as at 30 June 2,422 2,541

 

Comcare currently has eight agreements for the leasing of premises which have contract clauses with a requirement to restore the premises to their original condition at the conclusion of the lease. Comcare has made a provision to recognise this obligation.

 

2.4D Provision for premium claims
Carrying amount at 1 July 2,834,400 2,765,901
Increase/(Decrease) in provisions made during the year (85,461) 151,624
Claims payments made during the year (230,239) (243,625)
Unwinding of discount 51,800 66,300
Change in discount rate 259,700 172,200
Change in inflation rate (62,700) (78,000)
Closing balance at 30 June* 2,767,500 2,834,400

 

* Refer to Overview for disclosure of the funding available to Comcare to meet this liability.

The valuation of premium claims liabilities was undertaken as at 30 June 2016 by an independent firm of consulting actuaries, Taylor Fry Pty Ltd. Taylor Fry has stated that its valuation complies with actuarial Professional Standard PS300 Actuarial reports and advice on general insurance technical liabilities.

The provision for premium claims represents an actuarial assessment of the expected payments to be made in the future by Comcare in relation to workers' compensation claims incurred on or after 1 July 1989. The provision is recognised on a gross basis with an intended 75% probability of sufficiency. Estimate for third party recoveries is included in trade and other receivables. Refer to Note 2.1B Trade and Other Receivables for third party recoveries.

 

The following assumptions have been made in determining the provision amount:
Economic assumptions
Medical payments inflation 3.79%-4.87% 4.0%-5.2%
Other payments inflation 2.33%-3.09% 2.9%-3.5%
Discount rate 1.5%-4.0% 1.9%-4.4%
 
Premium business liability assumptions
Claim frequency 1.01% 1.19%
Third party recoveries 0.7% 0.5%
Claims administration expenses 14.7% 14.0%
Average claim size $108,749 $109,587
     
2.4E Provision for Commonwealth latent mental disease claims  
Carrying amount at 1 July 22,600 -
Increase/(decrease) in provisions made during the year (2,000) 22,600
Claims payments made during the year - -
Unwinding of discount 400 -
Change in discount rate 2,100 -
Change in inflation rate (500) -
Closing balance at 30 June* 22,600 22,600

 

* Refer to Overview for disclosure of the funding available to Comcare to meet this liability.

The valuation of Commonwealth latent mental disease claims liabilities was undertaken as at 30 June 2016 by an independent firm of consulting actuaries, Taylor Fry Pty Ltd. Taylor Fry has stated that its valuation complies with actuarial Professional Standard PS300 Actuarial reports and advice on general insurance technical liabilities.

The provision represents an actuarial assessment of the expected payments to be made in future by Comcare in relation to latent mental disease claims, for which the date of injury as defined in the SRC Act is after balance date.

The provision is recognised on a gross basis with an intended 75% probability of sufficiency. 

 

2.4F Provision for pre-premium claims
Carrying amount at 1 July 368,400 409,173
Increase/(decrease) in provisions made during the year 1,746 (32,898)
Claims payments made during the year (28,946) (32,675)
Unwinding of discount 7,400 9,900
Change in discount rate 32,600 20,600
Change in inflation rate (7,600) (5,700)
Closing balance at 30 June* 373,600 368,400

 

* Refer to Overview for disclosure of the funding available to Comcare to meet this liability.

The valuation of pre-premium claims liabilities was undertaken as at 30 June 2016 by an independent firm of consulting actuaries, Taylor Fry Pty Ltd. Taylor Fry has stated that its valuation complies with actuarial Professional Standard PS300 Actuarial reports and advice on general insurance technical liabilities.

The provision from pre-premium claims represents an actuarial assessment of the expected payments to be made in the future by Comcare in relation to workers' compensation claims incurred prior to 1 July 1989. The provision is recognised on a gross basis with an intended 75% probability of sufficiency.

Economic assumptions used in determining the amount of the provision for pre-premium claims liability are the same as those applied for premium business.

 

2.4G Provision for common law asbestos related disease claims  
Carrying amount at 1 July 1,077,020 975,940
Increase/(decrease) in provisions made during the year (86,466) 7,888
Claims payments made during the year (22,594) (17,128)
Unwinding of discount 37,240 43,260
Change in discount and inflation rate 65,380 67,060
Closing balance at 30 June* 1,070,580 1,077,020

 

*Refer to Overview for disclosure of the funding available to Comcare to meet this liability.

The valuation of common law asbestos related disease claims liabilities was undertaken as at 30 June 2016 by an independent firm of consulting actuaries, Finity Consulting Pty Ltd. Finity Consulting has stated that its valuation complies with actuarial Professional Standard PS300 Actuarial reports and advice on general insurance technical liabilities.

The provision for common law asbestos related disease claims represents an actuarial assessment of the expected payments to be made in the future by Comcare in relation to common law claims against the Australian Government by individuals seeking compensation as a result of direct or indirect exposure to asbestos. The provision is recognised on a gross basis with an intended 75% probability of sufficiency. Estimate for third party recoveries is included in trade and other receivables. Refer to Note 2.1B.

The following assumptions have been made in determining the Provision amounts:

 

2016 2015
Economic assumptions
Wage inflation 3.50% 3.50%
Superimposed inflation 2.00% 2.00%
Discount rate 3.00% 3.50%