CTP Schemes Comparison - Actuaries Institute › Library › 1530.2 CTP Schemes Compa… · Scheme...

CTP Schemes Comparison

CTP Working Group

Paul DriessenAaron CutterNeil DonlevySusan Ley

Martin Stollwitzer

Scheme Background – Underwriting

Privately Underwritten

Source: 2007/08 annual reports for eachScheme (approx premiums)

ICWA$400m

MAC$400m

MAC / TIO$50m

TAC$1.1bMAIB

$125m

ACC$650m

MAIC$1.0b

MAA$1.2b

ACT$100m

New South Wales – Recent Changes

Source: 2007/08 annual reports for MAA and MAIC

• MACA 2006

• Blameless accidents receivecompensation from 1 Oct 2007

• LTCS available to adults from 1 Oct 2007

• MACA 2007

• Increased ANF threshold to $5,000 from$500

• ANF now allows for past loss of earnings

• 2009 amendments

• Bulk billing extended to any personinjured in a motor vehicle accident

CIC

Allianz

7%

Zurich

7%

GIO

8%

Allianz

16%

AAMI

15%QBE

12%

NRMA

36%

Queensland – Current Changes

Source: 2007/08 annual reports for MAA and MAIC

• Bill designed to introduce indexation togeneral damages limits and caps

• Other changes, including recognition of:

• Loss of consortium

• Gratuitous services

Suncorp

48%

RACQI

15%

Allianz

22%

NRMA

5%

AAMI

5%

QBE

5%

ACT – Recent Changes

NRMA100%

• Changes designed to improve theefficiency of the Scheme

• e.g. caps applied to legal feesfor small claims

• Regulatory focus on introducingcompetition

• Removal of common law rights

• Greater access to attendant carebenefits

• Non-medical benefits may bereduced in certain circumstances

• e.g. not wearing helmet

Northern Territory – Recent Changes

• Always ongoing refinements

• For example:

• WA - payments for transporting injuredpersons

• Victoria - safety net income benefit forsevere injuries (Nov 2007)

• Tasmania - counselling benefits now paid

Other States – Recent Changes

• Injury Prevention, Rehabilitation, and CompensationAct (the ‘IPRC Act’)

• For example - expanded eligibility and entitlementprovisions for weekly compensation

• Injury Prevention, Rehabilitation,and Compensation Amendment Billand the “Stock Take”.We’ll know more in February 2010

New Zealand – Recent Changes

Scheme Background – Types

No fault

Common law

Common law with some no fault access

No fault with some (restricted) common law access

No fault with common law

Registered Vehicles per Person

0.50

0.55

0.60

0.65

0.70

0.75

0.80

0.85

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Reporting Year

Re

gis

tere

dV

eh

icle

sp

er

Pe

rso

n

NSW Vic Qld SA WATas NT ACT Aust NZ

Fatalities

Source: International Road Safety Comparisons: The 2007 Report (July 2009), Department of Infrastructure, Transport, Regional Development and Local Government

0

100

200

300

400

500

600

700

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Accident Year

Nu

mb

er

of

Fa

taliti

es

NSW VIC QLD SA WA TAS NT ACT

Fatalities


Improvement in Fatality Rate - Ten Year Exponential Fit

Improvement Rate

3.5% p.a.

Improvement rate

5.5% p.a.

0.5

0.7

0.9

1.1

1.3

1.5

1.7

1.9

2.1

2.3

2.5

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Accident Year

Fa

taliti

es

pe

r1

0,0

00

Ve

hic

les

Australia New Zealand

Fatalities


Fatality Rate Improvement - Ten Year Exponential Trend (1998-2007)

0%

2%

4%

6%

8%

10%

12%

Fra

nce

Port

ugal

Gre

ece

Icela

nd

Luxem

burg

Sw

itzerland

Spain

Neth

erlands

Irela

nd

Nth

.Ir

ela

nd

Norw

ay

Pola

nd

Germ

any

Denm

ark

Belg

ium

Austr

iaF

inla

nd

Slo

venia

Sw

eden

Czech

Rep.

Hungary

Gre

atB

rita

in

South

Kore

aJapan

Isra

el

US

AC

anada

New

Zeala

nd

Austr

alia

AC

TS

AN

SW

Vic NT

WA

Qld

Tas

An

nu

alIm

pro

ve

me

nt

Vehicle (per 10,000)

Fatalities



0%

2%

4%

6%

8%

10%

12%

Fra

nce

Port

ugal

Gre

ece

Icela

nd

Luxem

burg

Sw

itzerland

Spain

Neth

erlands

Irela

nd

Nth

.Ir

ela

nd

Norw

ay

Pola

nd

Germ

any

Denm

ark

Belg

ium

Austr

iaF

inla

nd

Slo

venia

Sw

eden

Czech

Rep.

Hungary

Gre

atB

rita

in

South

Kore

aJapan

Isra

el

US

AC

anada

New

Zeala

nd

Austr

alia

AC

TS

AN

SW

Vic NT

WA

Qld

Tas

An

nu

alIm

pro

ve

me

nt

Vehicle (per 10,000) Population (per 100,000)

Fatalities



0%

2%

4%

6%

8%

10%

12%F

rance

Port

ugal

Gre

ece

Icela

nd

Luxem

burg

Sw

itzerland

Spain

Neth

erlands

Irela

nd

Nth

.Ir

ela

nd

Norw

ay

Pola

nd

Germ

any

Denm

ark

Belg

ium

Austr

iaF

inla

nd

Slo

venia

Sw

eden

Czech

Rep.

Hungary

Gre

atB

rita

in

South

Kore

aJapan

Isra

el

US

AC

anada

New

Zeala

nd

Austr

alia

AC

TS

AN

SW

Vic NT

WA

Qld

Tas

An

nu

alIm

pro

ve

me

nt

0

1

2

3

4

5

6

7

8

Fa

talit

ies

pe

r1

0,0

00

Ve

hic

les

Annual Improvement (LHS) 1998 Fatalities (RHS)

Fatalities



0%

2%

4%

6%

8%

10%

12%F

rance

Port

ugal

Gre

ece

Icela

nd

Luxem

burg

Sw

itzerland

Spain

Neth

erlands

Irela

nd

Nth

.Ir

ela

nd

Norw

ay

Pola

nd

Germ

any

Denm

ark

Belg

ium

Austr

iaF

inla

nd

Slo

venia

Sw

eden

Czech

Rep.

Hungary

Gre

atB

rita

in

South

Kore

aJapan

Isra

el

US

AC

anada

New

Zeala

nd

Austr

alia

AC

TS

AN

SW

Vic NT

WA

Qld

Tas

An

nu

alIm

pro

ve

me

nt

0

1

2

3

4

5

6

7

8

Fa

talit

ies

pe

r1

0,0

00

Ve

hic

les

Annual Improvement (LHS) 2007 Fatalities (RHS)

Fatalities



0%

2%

4%

6%

8%

10%

12%F

rance

Port

ugal

Gre

ece

Icela

nd

Luxem

burg

Sw

itzerland

Spain

Neth

erlands

Irela

nd

Nth

.Ir

ela

nd

Norw

ay

Pola

nd

Germ

any

Denm

ark

Belg

ium

Austr

iaF

inla

nd

Slo

venia

Sw

eden

Czech

Rep.

Hungary

Gre

atB

rita

in

South

Kore

aJapan

Isra

el

US

AC

anada

New

Zeala

nd

Austr

alia

AC

TS

AN

SW

Vic NT

WA

Qld

Tas

An

nu

alIm

pro

ve

me

nt

0

1

2

3

4

5

6

7

8

Fa

taliti

es

pe

r1

0,0

00

Ve

hic

les

Annual Improvement 1998 Fatalities 2007 Fatalities

Ultimate Claim Frequency Trend

Source: Claims data provided by each Scheme

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Accident Year

Cla

imF

req

ue

nc

y(R

ela

tiv

eto

19

96

)

NSW VIC QLD SA WA TAS NT ACT NZ

Average Claim Size Trend

Source: Claims data provided by each Scheme

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Accident Year

Cla

imS

ize

(Re

lati

ve

to1

99

6)

NSW VIC QLD SA WA TAS ACT

Affordability – Premiums as % AWE

0%

10%

20%

30%

40%

50%

60%

70%

80%

97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10

Underwriting Year

%o

fA

vera

ge

Weekly

Earn

ing

s

NSW VIC QLD SA WA TAS NT ACT NZ

2009/10 Premiums

Common law

Common law with some no fault access

No fault with some (restricted) common law access No fault

No fault with common law

0

50

100

150

200

250

300

350

400

450

NSW QLD SA WA ACT VIC TAS NT NZ

An

nu

alP

rem

ium

($)

Premium Setting

• Similarities:

• Discounted central estimate of claims and expenses

• Allowance for profit margin/risk margin

• Actuarial involvement

• Differences:

• Fund view vs. Prospective accident year view

• Discount rate

• Actuarial guidance

Funding Ratio

Source: Scheme Annual Reports

0%

20%

40%

60%

80%

100%

120%

140%

160%

2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

Reporting Year

As

se

ts/L

iab

iliti

es

TAC (VIC) MAC (SA) ICWA (WA)

MAIB (TAS) MAC (NT) ACC (NZ)

Funding Ratio


0%

20%

40%

60%

80%

100%

120%

140%

160%

2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

Reporting Year

As

se

ts/L

iab

ilit

ies

TAC (VIC) MAC (SA) ICWA (WA) MAIB (TAS)

MAC (NT) ACC (NZ) ACC Pre 1999 ACC Post 1999

Underwriting Result


-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

Reporting Year

%o

fN

et

Ea

rne

dP

rem

ium



Profit (Pre Tax)


-250%

-200%

-150%

-100%

-50%

0%

50%

100%

150%

2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

Reporting year

%o

fN

et

Ea

rne

dP

rem

ium



Discounting Effect


0

2

4

6

8

10

12

14

16

18

20

MAC (SA)

73%

MAIB (TAS)

19%

TAC (VIC)

29%

MAC (NT)

48%

ACC (NZ)

32%

ICWA (WA)

74%

Ce

ntr

alE

sti

ma

teL

iab

ilit

ies

($B

illio

ns

)

0

2

4

6

8

10

12

14

16

18

20

We

igh

ted

Av

gD

isc

.M

ea

nT

erm

Undiscounted CE: 2007-2008 (LHS) Discounted CE: 2007-2008 (LHS)

Mean Term (2007-08) (RHS)

Investment Mix


ACC (NZ)

MAC (NT)

TAC (VIC)

ICWA (WA)MAC (SA)

MAIB (TAS)

0

5

10

15

20

25

0% 20% 40% 60% 80% 100%

%Asset Base Invested in Growth Assets

Me

an

Te

rm(Y

ea

rs)

Risk Margins (75% PoS)

Source: Scheme Annual Reports (SA has been restated to 75% level from 80% level shown in Annual Report)

TAC (VIC)

ICWA (WA)

MAC (NT)

ACC (NZ)

MAC (SA)

MAIB (TAS)

0

5

10

15

20

25

0% 5% 10% 15% 20% 25%

Risk Margin (as %of Central Estimate)

Me

an

Te

rm(Y

ea

rs)

• Schemes change continually

• General trends

• Premiums have been kept affordable

• GFC has impacted funding positions

• Schemes are all very different

Summary

• Can frequency continue to fall?

• Further moves to no-fault?

• Harmonisation of benefits?

• Periodic payments vs. lump sums?

• Investment mix changes (reduce volatility)?

• Premium levels?

Questions for the Future

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