Office of the Nominal Defendant of the ACT

Transmittal Certificate

Compliance Statement

The 2018-19 Office of the Nominal Defendant 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.

The Compliance Statement indicates the subsections, under Parts 1 to 5 of the Directions that are applicable to the Office of the Nominal Defendant of the ACT (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 Office of the Nominal Defendant 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 Office of the Nominal Defendant 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 Office of the Nominal Defendant Annual Report as follows:

• A. Transmittal Certificate, see page 380;
• B. Organisational Overview and Performance, inclusive of all subsections, see page 382-393; and
• 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 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.

View the ACT Public Service directorate annual reports.

Organisational Overview and Performance

B.1 Organisational Overview

The ACT Insurance Authority is the Nominal Defendant of the ACT as defined under section 13 of the Road Transport (Third Party Insurance) Act 2008 (the Act). Under section 163B of the Act the ACT Compulsory Third-Party Insurance Regulator (CTP regulator) has established the Nominal Defendant Fund (the Fund).

The purpose of the Fund is to:

• provide a safety net mechanism to meet the costs of third party personal injury claims made by injured parties where;
  • the vehicle involved does not have a compulsory third party (CTP) insurance policy; or
  • the injured person is unable to identify the driver and vehicle at fault;
• ensure that persons, who are injured in the circumstances listed above, receive the same entitlements as an injured person would receive where the vehicle did have CTP insurance;
• collect recoveries from uninsured drivers at fault to the sum paid out by the Fund; and
• receipt levies collected from each licensed ACT CTP insurers as well as the Territory and the Commonwealth.

Funds required to satisfy the cost of claims and other relevant expenses for the Fund are not guaranteed by the ACT Government, however Part 4.10A of the Act requires the CTP Regulator to collect amounts from licensed insurers and recognised self-insurers to meet the cost of nominal defendant claims.

Functions

The Fund exists to enable persons injured by unregistered vehicles without CTP insurance or by unidentified vehicles (e.g. hit and run accidents) to be compensated. The Fund meets the cost of all legislated entitlements for injured people including medical expenses, rehabilitation costs, and lump sum settlements. Where possible, the Fund also recovers costs of claims from the at-fault driver of an unregistered vehicle.

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

As a small reporting entity, the Fund does not have any complex internal accountability structures and processes. As stated above all administration operations and governance controls of the Fund are overseen by the Authority.

B.2 Performance Analysis

Revenue

Total income recognised by the Fund during the year amounted to $8.05 million.

The CTP regulator imposes a levy on licensed insurers and recognised self-insurers to meet the cost of nominal defendant claims in accordance with the Act.

The funds required to meet the cost of nominal defendant claims is apportioned among the insurers having regard to the amount of third party premium income they receive. Funds are transferred from the CTP Regulator to the Fund on a quarterly basis.

In addition, revenue is received by the Fund from the following sources:

• any penalties or penalty interest imposed under the Act;
• amounts recovered by the Fund;
• unregistered vehicle permits (UVPs) liability contributions;
• unregistered vehicle fines liability contributions; and
• interest accruing from the investments.

The following table details funds received as other revenue during the period:

Expenses

The total expenses paid by the Fund during the year was $8.72 million, which includes claims expense was $8.14 million.

Balance Sheet

The Fund had total assets of $31.42 million and liabilities of $31.29 million.

As at 30 June 2018 the total equity of the Fund was $0.13 million.

Debtor Recoveries

There are currently 49 ‘recovery only’ claim files open. These files are claims that have either settled or been finalised and the Fund is pursuing recovery from unregistered vehicle owners and/or the drivers of unregistered vehicles responsible for the accident.

Where the Fund has made payments on a claim involving an uninsured motor vehicle, attempts are made to recover the cost of those payments from the owner or driver concerned.

Recovery prospects are poor in the majority of matters as it is often difficult to identify or locate the driver/owner and when located, generally they do not have the capacity to repay any/all of the costs incurred.

The Office of the Nominal Defendant of the ACT financial statements are reported in Volume 2.2 of the 2018-19 CMTEDD Annual Report.

Claims

During the reporting year the Fund received 62 new claims.

There are 173 open claims remaining as at 30 June 2019 with a combined total provision for outstanding claims of $31 million.

Of the 173 open claims, unidentified vehicles account for 39%, unregistered and uninsured vehicles for 54% and 7% are related to unregistered vehicle permits.

An estimate of the provision for claims payable is completed annually by an independent actuary. The Fund has used the services of KPMG Actuarial Pty Limited to provide a full assessment of the provision for claims payable at 30 June 2019. The movement in the provision for claims payable can either reduce claims expense in the case of a reduction in liability or increase claims expense in the case of an increase in liability.

Claims Frequency and Vehicle Registrations

The Australian Capital Territory has 299,708 registered vehicles.

During the reporting year there were approximately 0.17 claims per 1,000 vehicles registered.

A comparison between the number of vehicles registered and the number of claims made to the Fund is shown in the following chart:

Figure 1. Claim frequency and vehicle registrations

Source: Nominal Defendant Liability Valuation Report as at 30 June 2019 produced by KPMG Actuarial Pty Limited.

Notes:

• The vehicle registrations for 2019 are sourced from Road User Services ACT, and other years from previous actuarial reports.
• Claim frequency refers to number of road incidents giving rise to a claim, whether one or more claimants. The measure is expressed per thousand vehicles registered.

Average claims size and cost per policy

A comparison between the average size of a claim and the cost of a CTP policy is shown in the following table. The average claim size in the period was $0.175 million while the average CTP Claim per policy cost was $29.89.

Figure 2. Average claim size and cost per policy by accident year (inflated and undiscounted)

Source: Nominal Defendant Liability Valuation Report as at 30 June 2019 produced by KPMG Actuarial Pty Limited.

Notes:

• Average claim size and Cost Per Policy (CPP) are in expected payment date values, but without allowance for time value of money (i.e. present value discounting), and are gross of all recoveries.
• The historical data component is sourced from previous actuarial reports.

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 for 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 part of the ACT Insurance Authority. As such, the internal audit functions were provided by 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’s 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 Fund has nothing to report against this section as it did not undertake any community engagement or support.

B.9. Aboriginal and Torres Strait Islander Reporting

The Fund has nothing to report against this section as it did not undertake any Aboriginal and Torres Strait Islander programs, projects and/or initiatives.

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  Ecological Sustainable Development

The ACT Insurance Authority’s Annual Report section on Ecological 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 Goods and Services Procurement, 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.

Table 3: Contracts with a value of $25,000 or more are listed in the table below

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