Robin Shaw - Self Insurers of South Australia Inc. - Challenges facing self-insurers in this rapidly evolving environment

100 %
0 %
Information about Robin Shaw - Self Insurers of South Australia Inc. - Challenges facing...
News & Politics

Published on February 27, 2014

Author: informaoz



Robin Shaw, Manager, Self Insurers of South Australia Inc. presented this at the National Workers' Compensation Summit 2014. The Summit focused on minimising workplace injury claims through establishing a successful safety culture and embrace working towards successful outcomes should a workers compensation claim arise.

Find out more at

Challenges facing self insurers in a rapidly evolving environment Robin Shaw Manager, Self Insurers of SA

Content 1. What does the change of Federal Govt mean for self insurance? 2. Self insurance v premium – the tough times 3. Economic effects on SI balance sheets 4. Insurance bonds as a means to reduce balance sheet pressure 5. Making the business case for SI

The Federal Govt and self insurance • 2/12/13 – announced the lifting of the moratorium on private sector SI under Comcare • No mention of lifting competition test (Hanks) • Reportedly renewed interest • Reduce ‘red tape’ – but can only do so in the Federal sphere • Might be some tweaks for Comcare scheme

About the Comcare option • For multi-jurisdiction operations – admin simplification may deliver savings • Cost of claims – is Comcare more expensive than local schemes in some places? • Examples: • Comcare v Queensland • Comcare v WA • Comcare v SA • What does this mean long term for the balance sheet?

About the Comcare option Comparative cost for a notional multi-state SI Source – Finity Consulting – general estimate only – will vary case by case

Primary economic influences – discount rate • Discount rate - self insurance liabilities can be discounted because investment income earned on the provision can be used to pay claims • Lower discount rate = higher estimated liabilities (all else being equal!) • Dropped due to GFC & again in 2012 • Increasing since Sept 2013 • Source – Finity Consulting

Economic trends in SI – discount rates Source – Finity Consulting 7.0% European debt crisis & reducing Aust interest rates 6.8% GFC 6.0% 5.3% 5.0% 5.3% 5.0% 3.9% 4.0% 3.3% 3.0% 3.0% 2.0% 1.0% 0.0% Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Dec-13

Primary economic influences – wage index • Major driver of claim inflation • Has been much more stable than discount rates • Source – Finity Consulting 7.0% 6.0% 5.0% 4.5% 3.8% 4.0% 4.0% 4.0% 4.0% 4.0% Jun-10 Jun-11 Jun-12 Jun-13 3.8% 3.0% 2.0% 1.0% 0.0% Jun-08 Jun-09 Dec-13

General outlook • • • • Discount rate to stabilise for 12 months Wage index may decrease slightly Outlook for SI liabilities stable short term Scheme changes in NSW, Qld may reduce liabilities • Likely major changes in SA certain to do the same (post March 2014) • SA changes may make Comcare more expensive again by comparison

Insurance bonds v bank guarantees • QBE & Assetinsure have developed surety bonds • Currently discussing with regulators – not generally available as yet • QBE approved only in SA so far but limited exposure permitted – under discussion • Amounts of AUD$10M to AUD$50M • Pricing 1.25% to 2.50% per annum • Assetinsure approved by Comcare but under APRA review – current status unknown

Insurance bonds v bank guarantees • Advantages of surety bonds: • Not having to utilise established credit lines for bonding/guarantee purposes • Generally no tangible/collateral security required • Better utilisation of the company balance sheet, enhancing working capital and liquidity • Fast turnaround issuing bonds • Contact: Ivan Radovnikovic, Relationship Executive – Surety, QBE Ltd (02) 9375 4795

Making the business case for SI • SI is at times challenged by Boards concerned with liabilities • For new applicants – business case needed • Especially so now that Comcare SI is again available • Tough economic times makes the case more important and tests its robustness • Ultimate test – if it was not a good proposition, why do so many do it and defend it?

In a nutshell Assume $1m PA premium $800,000 retained by scheme to fund worse performers $750,000 retained by employer to re-invest in OHS etc SI admin overheads @ 25% of claim costs Claim costs $200,000 Insured by WorkCover Claim costs will reduce over time Claim costs $200,000 Self Insured

Or put another way…SA as an example Proportions of total SA workers comp liabilities - WorkCover SA v self insurers 100% 22.3% 22.8% 23.6% 22.8% 21.5% 19.9% 19.6% 19.0% 18.2% 17.0% 15.1% 13.9% 81.8% 83.0% 84.9% 86.1% 90% 80% 70% 77.7% 77.2% 76.4% 77.2% 78.5% 80.1% 80.4% 81.0% 60% 50% 40% 30% 20% 10% 0% 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 % WorkCover SA liabilities % Self Insured liabilities % of scheme self insured


Add a comment

Related presentations

Cfbp barometre octobre

Cfbp barometre octobre

November 10, 2014

VITOGAZ vous présente: CFBP baromètre gpl carburant

Ata Escrita da 16ª Sessão Ordinária realizada em 16/10/2014 pela Câmara de Vereado...

Ata Escrita da 10ª Sessão Extraordinária realizada em 16/10/2014 pela Câmara de Ve...

Rx1 nasil kullanilir

Rx1 nasil kullanilir

November 8, 2014

Rx1 zayiflama hapi, kullanimi nasildir, yan etkileri var mi? yan etkiler var ise h...

Esposto del MoVimento 5 Stelle sul Patto del Nazareno

Slide Servizi postali

Slide Servizi postali

November 7, 2014

Slides per i servizi postali presentati in occasione dell'incontro azienda e organ...

Related pages

Jessica Fung - BMO Capital Markets - Iron ore trends in 2015

Information about Jessica Fung - BMO Capital Markets ... Robin Shaw - Self Insurers of South Australia ... facing self-insurers in this rapidly evolving ...
Read more

Dr Simon O'Rourke, Western Australia Police - Challenging ...

Dr Simon O'Rourke, Supervisor, Western Australia Police delivered the presentation at the 2014 Police Technology Forum. The Police Technology Forum 2014 ...
Read more

Article View - United States Department of Defense

Home News Article View. News. News Articles. Casualty Releases. Press Advisories. News Transcripts. Publications. Speeches. Contracts. Testimony. Messages ...
Read more

Insurance | CSC

Property & Casualty/General Insurance Move into new markets fast, extend services to agents and policyholders, and control costs with CSC ...
Read more

Insurance & Technology | Connecting The Insurance Community

Insurance & Technology ... A comedic warning to insurers considering drones in their evolving ... Among the regulatory challenges facing insurers in ...
Read more

See Our Projects in Engineering & Construction - Bechtel

Bechtel has completed more than 23,000 ... we place a core focus on protecting people and the environment, ... New South Wales, Australia. Kosovo ...
Read more

Search Perspectives - BCG – Global Management Consulting

Browse full bcg.perspectives site . Filters. ... Energy & Environment. ... Amid the challenges, however, ...
Read more

General Insurance | Austbrokers Terrace Insurance ...

General Insurance. A change in the ... throughout Australia and internationally. ... “The market facing business area brands (Austbrokers, ...
Read more

Research - Global Initiative - Harvard Business School

... as it teamed up with TechShop Inc., ... decision that was made in front of the challenge presented in ... to a rapidly changing competitive ...
Read more