Transmittal Certificate
Compliance Statement
The 2018-19 Default Insurance Fund Annual Report must comply with the Annual Reports (Government Agencies) Directions 2019 (the Directions) made under section 8 of the Annual Reports (Government Agencies) Act 2004. The Directions are found at the ACT Legislation Register: https://www.legislation.act.gov.au/View/ni/2019-296/current/PDF/2019-296.PDF
The Compliance Statement indicates the subsections, under Parts 1 to 5 of the Directions that are applicable to the Default Insurance Fund (the Fund) and the location of information that satisfies these requirements:
Part 1 Directions Overview
The requirements under Part 1 of the Directions relate to the purpose, timing and distribution, and records keeping of annual reports. The 2018-19 Default Insurance Fund Annual Report complies with all subsections of Part 1 under the Directions.
To meet Section 15 Feedback, Part 1 of the Directions, contact details for the Fund are provided within the 2018-19 Default Insurance Fund Annual Report to provide readers with the opportunity to provide feedback.
Part 2 Reporting Entity Annual Report Requirements
The requirements within Part 2 of the Directions are mandatory for all reporting entities and the Fund complies with all subsections. The information that satisfies the requirements of Part 2 is found in the 2018-19 Default Insurance Fund Annual Report as follows:
- A. Transmittal Certificate, see page 336.
- B. Organisational Overview and Performance, inclusive of all subsections, see page 338-343.
- C. Financial Management Reporting, inclusive of all subsections, is contained within Volume 2.2 of the 2018-19 CMTEDD Annual report.
Part 3 Reporting by Exception
The Fund has nil information to report by exception under Part 3 of the Directions for the 2018-19 reporting year.
Part 4 Directorate and Public Sector Body Specific Annual Report Requirements
Part 4 of the 2019 Directions is not applicable to the Fund.
Part 5 Whole of Government Annual Reporting
All subsections of Part 5 of the Directions apply to the Fund. Consistent with the Directions, the information satisfying these requirements is reported in the one place for all ACT Public Service directorates, as follows:
- L. The 2018-19 Justice and Community Safety Annual Report includes the following subsections:
- L.1 Bushfire Risk Management;
- L.2 Human Rights;
- L.3 Legal Services Directions;
- M. The 2018-19 CMTEDD Annual Report includes the annexed 2018-19 Director of Territory Records Annual Report (see page 345); and
- Public Sector Standards and Workforce Profile, see the 2018-19 ACT Public Service State of the Service Report.
ACT Public Service directorate annual reports are found at the following web address: www.cmd.act.gov.au/open_government/report/annual_reports.
Organisational Overview and Performance
B1. Organisational Overview
The Workers Compensation Act 1951 (the Workers’ Compensation Act) was established to provide compensation to workers employed in the private sector for injuries arising out of or in the course of their employment.
The Default Insurance Fund (the Fund) was established under the Workers’ Compensation Act effective 1 July 2006. It provides a safety net to meet the cost of workers’ compensation claims made by workers in circumstances where:
- an employer does not have a workers’ compensation insurance policy and cannot meet the claim costs payable under the Workers’ Compensation Act;
- an employer’s insurance company is wound up under the Corporations Act or cannot provide the indemnity required to be provided under a compulsory workers’ compensation policy; or
- a worker is suffering from an imminently fatal asbestos-related disease as a result of exposure to asbestos fibres whilst employed as a worker in the Australian Capital Territory.
Funds are held in trust under the Financial Management Act 1996 in two separate accounts:
- the Uninsured Employer Fund (UEF); and
- the Collapsed Insurer Fund (CIF).
Mr John Fletcher, General Manager, ACT Insurance Authority, was the Fund Manager up until 14 January 2019. Ms Lisa Manzoney was appointed as Acting General Manager for the ACT Insurance Authority in January 2019 and is currently the Fund Manager.
The Fund meets the cost of workers’ compensation settlements and any common law judgements including the payment of weekly compensation, medical expenses and rehabilitation costs.
Funds required to satisfy the cost of claims and other relevant expenses for the Fund are not guaranteed by the ACT Government however, Part 8.2 of the Workers’ Compensation Act allows the Fund Manager to impose contributions and supplementary contributions on approved insurers and self-insurers to meet the cost of claims.
The Fund’s administrative operations are subject to the same governance controls in relation to risk management, fraud prevention and records management as the ACT Insurance Authority (the Authority). The Authority’s reporting on these operations is included in the relevant sections of the ACT Insurance Authority Annual Report.
The Authority also oversights workplace health and safety and associated risk management, accommodation, facilities management and workplace environmental management for the Fund. Reporting on these issues is contained in the Authority’s Annual Report.
Internal Accountability
The Default Insurance Fund Advisory Committee is established under Schedule 3 of the Workers’ Compensation Act. Their role is to monitor the operations of the Fund and, if requested by the Minister or the Fund Manager, advise on matters relating to the operation of the Workers’ Compensation Act.
The Committee comprises the Executive Director, Continuous Improvement and Workers’ Compensation (Chair), the Fund Manager and three members appointed by the Minister.
The membership of the Fund Advisory Committee is:
- Michael Young – Executive Director, Continuous Improvement & Workers’ Compensation (Chair);
- Graciete Ferreira – Master Builders Association ACT (Employer Representative);
- Susie Walford – GIO Insurance (Insurer Representative);
- Rosalind Read – CFMEU (Employee Representative);
- John Fletcher – Fund Manager (exited 14th January 2019); and
- Lisa Manzoney – Fund Manager (commencing 31st January 2019).
The Committee met on four occasions during 2018-19. At each meeting, a report on the status of the Fund was provided and a schedule detailing the status of all open claims was considered.
B2. Performance Analysis
The Fund uses Taylor Fry Consulting Actuaries to estimate the provision for claims payable (liability) and related claims expenses. Actuarial assumptions are based on past claims experience, risk exposure and projections of economic variables.
Uninsured Employer Fund (UEF)
This component of the Fund currently administers claims which have arisen when a worker has been injured and the employer failed to hold an ACT Workers’ Compensation Policy. Where the employer does not or cannot meet the cost of claims, the UEF responds on behalf of the employer as the default insurer.
Claims
When a claim is received the UEF undertakes a search in an attempt to locate an insurer for the injured worker. In some cases an insurer is identified and the claim is then forwarded to the appropriate insurer.
When satisfied that an insurance policy is not in place, the Fund acts as the default insurer for the injured worker. The Fund arranges and facilitates appropriate rehabilitation and medical treatment for injured workers with the aim of returning an injured worker back to their pre-injury condition where possible. Claims are managed within the auspices of the Workers’ Compensation Act, and the Fund meets the cost of all legislated entitlements for injured workers including medical expenses, rehabilitation costs, weekly compensation and lump sum settlements.
Total claims opened during the reporting year | 11 |
|---|---|
Total claims closed during the reporting year | 14 |
Current open claims | 33 |
Revenue
Section 168A of the Workers’ Compensation Act requires the Fund Manager to undertake a review of the UEF each year to determine the appropriate levy on approved insurers and self-insurers.
In determining an appropriate levy for 2018-19, the Fund Manager took into consideration a range of issues including a sensitivity analysis of the volatility of the UEF, the potential for an increase in claims costs, and claim numbers in the current and future insurance years.
The Fund Manager imposed contributions from insurers and self-insurers equal to 2.9% of the gross written premiums equating to the collection of $5.824 million in levy revenue.
Expenses
The total expenses paid by UEF during the year were $5.71 million, which includes $5.473 million in claims expenses and $0.237 million in supplies and services. The claims expense consisted of $2.987 million in settlements, compensation payments and other claims costs along with an increase in the provision for claims payable of $2.486 million as the result of the 2018-19 actuarial valuation.
Balance Sheet
As at 30 June 2019, the UEF held total assets of $41.751 million consisting of $17.342 million in cash and cash equivalents and total receivables of $24.409 million comprising of current receivables of $1.98 million and non-current receivables of $22.429 million. The UEF’s liabilities total $41.751 million, which includes $3.638 million of current provision of claims payable and $38.012 million of non-current provision of claims payable.
Collapsed Insurer Fund (CIF)
This component of the Fund currently administers claims which have arisen from a previously approved Workers’ Compensation Insurer that has been wound up or is under liquidation. Currently the Fund administers claims for two collapsed insurers, National Employers’ Mutual Association Ltd in 1990 (NEM) and HIH Insurance in 2001 (HIH).
Claims
When satisfied that an insurer is unable to pay, the Fund acts as the default insurer for the injured worker. The Fund arranges and facilitates appropriate rehabilitation and medical treatment for injured workers with the aim of returning an injured worker back to their pre-injury condition where possible. Claims are managed within the auspices of the Workers’ Compensation Act, and the Fund meets the cost of all legislated entitlements for injured workers including medical expenses, rehabilitation costs, weekly compensation and lump sum settlements.
As at 30 June 2019 there was one open claim against NEM and two open claims against HIH.
The Fund Manager is the Fund’s representative on the committee of inspection for the HIH liquidation. The liquidation for NEM is now complete.
Total claims opened during the reporting year | - |
|---|---|
Total claims re-opened during the reporting year | 1 |
Total claims closed during the reporting year | - |
Current open claims | 3 |
Revenue
The CIF is not levying insurers or self-insurers for the CIF at present. The fund can appropriately and responsibly manage the impact of any future insurance collapses within the Workers’ Compensation industry through the retention of its current reserve and the imposition of a tailored levy on employers in the event of a collapse.
The CIF collected $192,000 in interest from its investment during the reporting year.
Expenses
The total expenses paid by the CIF during the year were $37,000, consisting of $31,000 in supplies and services and $6,000 in claims expense. The claims expense consisted of $26,000 in compensation and legal costs and a decrease of $19,000 in the provision for claims payable of as the result of the 2018-19 actuarial valuation.
Balance Sheet
As at 30 June 2019, the CIF had cash and cash equivalents totalling $7.425 million with an estimated outstanding claims provision of $0.873 million.
The CIF Fund’s total equity as at 30 June 2019 is $6.552 million.
B.3 Scrutiny
There were no inquiries or reviews from the ACT Auditor-General, the ACT Ombudsman, or any Legislative Assembly Committees in 2018-19. The only scrutiny from the Auditor-General during the reporting year was the audit of the 2017-18 Financial Statements.
B.4 Risk Management
The Fund is part of the ACT Insurance Authority. As such, it is covered in the ACT Insurance Authority’s risk management arrangements.
B.5 Internal Audit
The Fund is administered by ACT Insurance Authority. As such, the internal audit functions were provided by the CMTEDD’s Audit and Risk Committee (the Committee). The Committee’s functions are governed by the Audit Committee Charter.
No internal audits for the Fund were undertaken during 2018-19.
B.6 Fraud Prevention
The functions of the Fund are supported by the ACT Insurance Authority who adhere to its own Fraud and Corruption Prevention Plan.
B.7 Freedom of Information (FOI)
The Freedom of Information Act 2016 (FOI Act) gives individuals the legal right to:
- access government information unless access to the information would, on balance, be contrary to the public interest;
- ask for personal information to be changed if it is incomplete, out-of-date, incorrect or misleading; and
- appeal a decision about access to a document, or a decision in relation to a request to amend or annotate a personal record.
In accordance with Section 96 of the FOI Act the Fund is required to report on the operation of the FOI Act in relation to the Fund for the reporting year.
The Fund did not receive any requests for access to any information under the FOI Act during 2018-19.
Further information relating to the FOI including how to make an FOI application, what details you need to make an application and contact details for the FOI information officer can be found on the CMTEDD website. There is also details of requests received by the directorate listed on the Freedom of Information Disclosure Log for the CMTEDD.
B.8 Community Engagement and Support
The ACT Insurance Authority’s Annual Report section on Community Engagement and Support applies to the Fund.
B.9. Aboriginal and Torres Strait Islander Reporting
The ACT Insurance Authority’s Annual Report section on Aboriginal and Torres Strait Islander Reporting applies to the Fund.
B10. Work Health and Safety
The Fund does not directly employ any personnel. The functions of the Fund are supported by the ACT Insurance Authority who adhere to the provisions outlined in CMTEDD’s Workplace Health and Safety practices.
B.11 Human Resource Management
The Fund does not directly employ personnel. The functions of the Fund are supported by the ACT Insurance Authority.
The ACT Insurance Authority’s Annual Report section on Human Resources Management applies to the Fund.
B.12 Ecologically Sustainable Development
The ACT Insurance Authority’s Annual Report section on Ecologically Sustainable Development applies to the Fund.
Financial Management Reporting
C.1 Financial Management Analysis
The Fund does not report on any financial management analysis.
C.2 Financial Statements
The Fund’s financial statements are reported in Volume 2.2 of the 2018-19 CMTEDD Annual Report.
C.3 Capital Works
The Fund did not have any capital works expenditure during the reporting year.
C.4 Asset Management
The Fund has no physical or intangible assets under management. The Fund has some capacity to invest funds over the medium and long term.
C.5 Government Contracting
The Fund engages consultants to perform specialised actuarial and legal services.
The procurement selection and management processes for all contractors including consultants complied with the Government Procurement Act 2001 and the Government Procurement Regulation 2007.
Procurement processes above $25,000 have been reviewed by Procurement ACT, and if necessary, by the Government Procurement Board consistent with the provisions of the Government Procurement Regulation 2007. The Authority has complied with all employee and industrial relations obligations in relation to contractors employed.
Contract Title | Procurement Methodology | Contractor Name | Contract Amount | Execution Date | Expiry/ |
|---|---|---|---|---|---|
Actuarial Services to the | Public | Taylor Fry Consulting | $100,000 | February | February |
C.6 Statement of Performance
The Fund does not report on a statement of performance.
Further information can be obtained from
Lisa Manzoney
A/g General Manager
ACT Insurance Authority
+61 2 6207 0268
Lisa.Manzoney@act.gov.au