WA CTP SCHEME UPDATE

Fab Zanuttigh General Manager CTP

Insurance Commission of WA

© Fab Zanuttigh

This presentation has been prepared for the Actuaries Institute 2015

Injury Schemes Seminar. The Institute Council wishes it to be understood that opinions put forward

herein are not necessarily those of the Institute and the Council is not

responsible for those opinions.

Agenda

• Organisational Overview

• Key Financial Features

• Claims Experience

• Claim Frequency

• Scheme Solvency

• CTP Premiums

• Claims Payments

• Catastrophic Injury Support Scheme (CISS)

• Questions

Organisational Overview

• Government owned, self funded trading enterprise

• Motor Vehicle (Third Party Insurance) Act 1943 is the governing legislation

• Sole underwriter of the WA CTP scheme (Common Law)

• 2.7 million registered vehicles

Key Financial Features

Year 30 June Liabilities

$M

Assets

$M

Surplus/ Deficit

$M Funding

Provisions for Outstanding Claims

(Net)

($M)

2007 1,677.5 2,365.4 687.9 141% 1,295.4

2008 1,652.8 2,320.1 667.3 140% 1,326.5

2009 1,584.3 2,103.1 518.8 133% 1,307.8

2010 1,649.3 2,288.3 639.1 139% 1,342.0

2011 1,811.3 2,484.1 672.7 137% 1,473.7

2012 2,018.5 2,566.8 548.4 127% 1,656.0

2013 2,083.5 2,954.9 871.4 142% 1,610.0

2014 2,292.3 3,154.1 861.8 138% 1,785.0

2015 2,419.0 3,433.0 1,014.0 142% 1,826.0

Claims Experience 2010/11

2011/12

2012/13

2013/14 2014/15

Gross Claims payments $381M $420M $373M $493M $453M

Claims Received 3,885 3,632 3,509 3,561 3,478

Claims Closures 4,081 3,999 3,822 3,583 3,721

Outstanding Claims 6,841 6,474 6,161 6,139 5,896

Claims Experience (cont’d)

3000

4000

5000

6000

7000

8000

9000

Nu

mb

er

of

Cla

ims

Financial Year

Claims History

New claims

Settledclaims

Outstanding

Claim Frequency • Registered vehicles growth averaging approximately 2.8% pa over the

past two years, compared to 3.4% over the last 5 years. • Claims frequency continues to decline, albeit at a slightly reduced rate in

more recent times

0.0

0.5

1.0

1.5

2.0

2.5

3.0

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

05 06 07 08 09 10 11 12 13 14 15 16Forecast

Cla

im F

req

ue

ncy

% V

eh

icle

Gro

wth

Financial Year

Vehicle Growth & Claim Frequency

% VehicleGrowthYear onYear

Ratio ofClaims toVehicles

Scheme Solvency

• Scheme remains fully funded

32%

29%

41% 40%

33%

39% 37%

27%

42%

38%

42%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

So

lve

nc

y M

arg

in

Financial Years

TPIF Solvency Margin (Assets/Liabilities)

CTP Premiums

• CTP premiums rose 3.7% in 2014 and 4.1% in 2015.

0.0 0.0

-10.0

4.6

0.0

4.0

0.0 0.0

4.0

4.1 3.7 4.1

-12.0

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16

% C

han

ge

At 1 July

WA CTP Premiums

CTP Premiums (cont’d)

$250

$289

$298

$408

$420

$495

$549

$569

$0 $100 $200 $300 $400 $500 $600

WA

TAS

QLD*

Vic

SA

NT

ACT

NSW*

Premium

Compulsory Third Party Insurance Premiums Rates for a Private Motor Car, (exc GST & Stamp Duty) Australia Wide as at 1 July 2015

Claims Payments

200

250

300

350

400

450

500

550

05 06 07 08 09 10 11 12 13 14 15

$M

Financial Year

Total CTP Claims Payments

20,000

40,000

60,000

80,000

100,000

120,000

140,000

05 06 07 08 09 10 11 12 13 14 15

Avera

ge

Co

st

Financial Year

Average CTP Claims Cost (unadjusted)

Expanded Motor Injury Insurance

• Cabinet approved the implementation of expanded no-fault, motor vehicle Injury insurance from 1 July 2016.

• CTP premiums for the average family car will increase by $99 to fund the additional costs of providing long term care and support to all people catastrophically injured in motor vehicle crashes in WA.

• The cost of care and support for people catastrophically injured is estimated at an average of around $4m per person.

Expanded Motor Injury Insurance(cont’d)

• Estimated 92 people are catastrophically injured in motor vehicle accidents in WA each year.

• 48 of the 92 currently receive compensation in the existing CTP Scheme.

• The 48 ‘compensable’ people retain the choice of ‘commuting’ their life time care and support costs to a lump sum.

• 44 people not able to prove fault will receive their care and support on an ‘as you go basis’.

Expanded Motor Injury Insurance (cont’d)

The scheme will be based on nationally agreed benchmark definitions of catastrophic injuries:

• spinal cord injuries;

• acquired brain injuries;

• multiple amputations;

• traumatic blindness; and

• severe burns.

Expanded Motor Injury Insurance (cont’d) Benefits to be provided under the scheme are also based on nationally agreed

minimum benchmarks: • rehabilitation; • attendant and nursing care services; • domestic assistance; • respite care; • dental treatment; • ambulance transportation; • aids and appliances; • home and transport modifications; • prostheses; • medical treatment; and • educational and vocational training.

Expanded Motor Injury Insurance - Model

Care and Support (New Capability to ICWA)

TPIF FUND

MVCIF FUND

Expanded Motor Injury Insurance (cont’d)

Insurance Commission commenced scheme implementation tasks which include:

• Drafting of legislation with Parliamentary Counsel;

• Engagement with Department of Transport for premium collections;

• Creation of service delivery models/provider procurement;

• Enhancements to current IT systems

• Resource planning