WorkCoverWesternAustralia...4 Analysis by type of payment 29 4.1 By financial year 29 4.2 PPCI by...

Liability limited by a Scheme approved under

Professional Standards Legislation

PricewaterhouseCoopersActuarial Pty LtdACN. 003 562 696

WorkCover Western Australia

Actuarial Assessment of the

RecommendedPremium Rates for

2009/10

Peter LurieFellow of the Institute of Actuaries of Australia

Fellow of the Institute of Actuaries (London)

14 April 2009

L:\FRM\Insurance\DOCS\PSL\2015report final.doc

1/05/2009 5:54 PM

i

Contents

1 Key findings 1

1.1 Average premium rates 1

1.2 Recommended rates by class 4

1.3 Outstanding claim liabilities 5

1.4 Data 5

1.5 GST 6

1.6 Workers’ Compensation Reform Act 2004 6

1.7 Noise – induced hearing loss claims 6

2 Background and objectives 8

2.1 Background 8

2.2 Objectives 10

3 Statement of results 11

3.1 Overall premium rate variation 11

3.1.1 Incurred cost of claims in Inflated and discounted values 11

3.1.2 Impact on overall premium levels 12

3.1.3 Financial performance of WA workers’ compensation 14

3.2 Premium rates by division 17

3.3 Relative premium rates 17

3.4 Outstanding claim reserves 23

3.4.1 Central Estimate of outstanding liabilities 23

3.5 Actual vs Expected Claims Experience 26

3.6 Reconciliation of reserves 27

4 Analysis by type of payment 29

4.1 By financial year 29

4.2 PPCI by type of payment 31

5 Expense analysis 35

6 Limitations and reliances 36

6.1 Limitations 36

6.2 Additional reliances on common law/election application costings 37


1/05/2009 5:54 PM

ii

7 Data and methods used 38

7.1 Data and assumptions 38

7.2 Types of estimates 38

7.3 Methods 38

7.4 Uncertainty in the estimates 39

7.5 Determination of provisions 39

7.5.1 Background 39

7.5.2 Levels of sufficiency 40

7.5.3 Sensitivity 41

A Relative premium rates – effective increase of 9.9% 43

B Comparative statistics and trends 55

B1 Comparative statistics 55

B2 Statistical trends 58

B2.1 Aggregate incurred cost of claims in current values before 2004 Reform Act58

B2.2 Claim numbers and sizes and estimated incurred costs 59

B2.3 Reserving and loss ratios 60

B2.4 Case estimates, expenses and discount levels and margins 61

B2.5 Comparison of workers' compensation costs and wages by industry division

61

C Summary of Forms WC101 and WC20 63

D Data 76

D1 Data supplied 76

D2 Data used 77

D3 Asbestos-related claim data 81

D4 Data quality 81

D5 Data enhancements 82

D6 General data considerations 82

D6.1 Former insurers 82

D6.2 Mergers/takeovers 83

D6.3 Administrative issues 83

D6.4 Insurance Commission of Western Australia Data 83

D6.5 Self-Insurers 83

E Assumptions 85

E1 Financial assumptions 85

E2 Management and other expenses 90

E3 Contingency margin 91

E4 WA Legislative changes 92

E5 GST 93


1/05/2009 5:54 PM

iii

F Methods 94

F1 Methods used 94

F1.1 Conversion of prior years data 94

F1.2 Relative rates 94

F1.3 Weighted loss ratio 99

F2 Projection methods 100

F2.1 Payments per claim incurred method 100

F2.2 Payments per claim finalised method 100

F2.3 Payments per Claim Handled Method 100

F2.4 Projected case estimates method 100

G Outstanding claim valuation 101

G1 Claims experience and analysis 101

G1.1 Numbers of claims reported 101

G1.2 Cumulative claims reported 101

G1.3 Active claims 102

G1.4 Claim payments 102

G1.5 Case estimates outstanding 102

G1.6 Claim notification pattern 103

G1.7 Claim finalised per handled rate 103

G1.8 Development of Case estimates outstanding 104

G1.9 Payment factors for case estimates outstanding 104

G1.10 Average real payment per claim incurred 105

G1.11 Average real payment per claim closed 105

G1.12 Average real payment per claim handled 105

G1.13 Average real payment per claim incurred – statutory benefits plus legals

(used for 2000 to 2008 accident years only) 106

G1.14 Average real payment per claim incurred – Common law benefits only (used

for 2000 to 2008 accident years only) 106

G1.15 Numbers of claims incurred 107

G2 Actual and projected claims experience during 2007/08 108

G2.1 Numbers of claims reported 108

G2.2 Proportions of claims finalised 108

G2.3 Claim payments 109

G2.4 Changes in case estimates 109

G3 Projection models 110

G3.1 Payments per claim incurred model 110

G3.2 Payments per claim finalised model 111

G3.3 Payments per claim handled model 111

G3.4 Projected case estimates model 112

G4 Adopted estimates of outstanding claims 113

G4.1 Estimates from models 113

G4.2 Average claim sizes 113

G4.3 Relationship to case estimates 114

G4.4 Adopted estimates in 30/06/2008 values 114

G4.5 Gross of Reinsurance Estimates with allowance for AWE Inflation,

Discounting and Claims Expenses 115


1/05/2009 5:54 PM

iv

H Analysis of election option experience 116

H1 Data used 116

H2 Base analysis 116

H3 Election applications by accident year and lodgement month 123

H4 Analysis of new election applications 125

H5 Average common law claim size 133

H7 Summary 135

I Analysis of large claim data 137

I1 Claims over $500,000 137

I2 Claims over $0.5M but not over $1.0M 137

I3 Claims over $1.0M but not over $2.0M 138

I4 Claims over $2.0M 138

J Claims experience 139

J1 Claims experience during 2007/08 139

J1.1 Aggregate trends 139

J1.2 Claims incurred in 2007/08 140

J1.3 Claims incurred in prior years (up to 30/06/2007) 140

J1.4 The 2007/08 experience 141

J2 Claims experience in the six months to 31/12/2008 143

J2.1 Claim reports 143

J2.2 Claims finalised 144

J2.3 Claim payments 144

J2.4 Case estimate development 146

J2.5 Summary of experience for the six months to 31 December 2008 146

J3 Analysis of large claim data 147

J4 Noise – induced hearing loss claims 148

J4.1 First election claims 148

J4.2 Subsequent election claims 149

K Claim statistics 151

K1 Numbers of claims incurred 151

K2 Finalisation of claims 152

K3 Payment per claim incurred (PPCI) 153

K4 Average claim sizes – including allowance for the 2004 Reform Act 155

K5 Loss ratios including allowance for 2004 Reform Act 156

K6 Analysis of settlement costs 158

L Analysis of the Number and Average Size of Common Law

Claims 161

M Table of assumptions 165

N Glossary 168


1/05/2009 5:54 PM

1

WorkCover Western Australia

Actuarial Assessment of theRecommended

Premium Rates for 2009/10

1 Key findings

1.1 Average premium rates

Based on the central estimate model presented in this report, the average premium ratehas increased by 9.9% from 1.582% of wages for 2008/09 to 1.738% for 2009/10,excluding allowance for brokerage.

The average recommended premium rate was 1.849% for 2007/08, 2.117% for2006/07 and 2.317% for 2005/06. The chart below shows average rates from 1996onwards.

Recommended Premium Rates by underwriting year

1.50%

1.75%

2.00%

2.25%

2.50%

2.75%

3.00%

3.25%

3.50%

1996 1997 1998 1999 2000 2000 2001 2002 2002 2003 2004 2005 2006 2007 2008 2009 2010

Gazette before 1999 Act change Gazette after 1999 Act changeGazette after 1999 Act change less brokerage

Notes: (a) the discontinuities at 2000 and 2002 are due to a second set of rates being Gazetted to take intoaccount the effect of the 1999 Act changes and the removal of allowance for brokerage respectively

(b) the 2006 and later rates include allowance for the impact of the 2004 Reform Actamendments.


1/05/2009 5:54 PM

Key findings

2

The central estimate actuarial model is the same model as used last year and isintended to represent a realistic and unbiased estimate of the projected risk cost ofclaims plus the disclosed allowances for expenses, margins and contingencies.

The 2009/10 premium rating basis has increased as a result of the followinginfluences:

a 5.1% increase due to the reduction in real rates of return rates (see section E1)

a 5.3% increase for increases in claim numbers and claim payments combined

a 4.6% increase in expense loading and contingency margin as discussed insection E2 and E3 (note the increase in contingency margin is a once-offinfluence)

partially offset by:

a 3.8% decrease due to wages increasing by significantly more than wageinflation (see section E1) and

a 3.3% reduction from phasing out the 2004 Reform Act allowances as theactual post Act change claims experience emerges (see section E5)

The other influences are more minor and include smaller increases and decreases, thenet impact of which makes up the balance of the recommended change in premiumrates.

The following table shows the main drivers influencing the overall level of premiumrates since last year. It reconciles this year's recommended rate to last year's rate of1.582%.

Key driver change Estimated ave premium rate % % change

Recommended rate 1.738%

Adjusted Act change allowance 1.797% -3.3%

Increase in Dec 08 halfyear claim numbers 1.781% 0.9%

Increase in 2007/08 claim numbers 1.744% 2.2%

Expense loadings 1.712% 1.9%

Increase in contingency margin 1.666% 2.7%

Excess growth in declared wages above AWE 1.732% -3.8%

Decrease in superimposed inflation 1.737% -0.2%

Decrease in common law frequency 1.744% -0.4%

Increase in common law average claim size 1.740% 0.3%

Change in market interest rates 1.637% 6.3%

Decrease in inflation rates 1.656% -1.2%

Increase in claim payments 1.620% 2.2%

Balance due to other sources 1.582% 2.4%

Total % change 9.9%


1/05/2009 5:54 PM

Key findings

3

Note that the percentages are calculated as the multiplicative impact on the riskpremium rate. The additive sum of the individual components do not add up to9.9%, but it is the total of all the percentages when applied multiplicatively.

The key drivers of premium rates over the most recent three premium rating years areshown below:

2010 2009 2008Key Driver (a) (b) (c) (a) / (b) -1 (b) / (c) -1

Number of claims incurred (d) 38,361 37,213 36,966 3.1% 0.7%Average claim size $ (e) 16,248 14,204 14,644 14.4% -3.0%Expense and margin loading (f) 0.32727 0.26974 0.25863 21.3% 4.3%Wageroll returned $M (g) 47,638 42,407 36,821 12.3% 15.2%Estimated incurred cost of claims $M (h) 827.744 670.759 680.942 23.4% -1.5%Average premium rate (i) 1.738% 1.582% 1.849% 9.9% -14.4%

Notes : (a) from 3.1.1 and 3.1.2 of this report

(b) & (c) from 1.1 of our 30/04/2008 RPR report

(d) includes allowance for IBNR's

(e) in inflated and discounted values

(f) for grossing up the estimated risk cost of claims for expenses and margins, net of interest credit

(g) adjusted to include final wage adjustments, 2008 somewhat moderated for the economic downturn

(h) = (d) x (e) x (1 + (f))

(i) = (h) / (g) %

% differencePremium rating year ending 30 June :

The average premium rates are not intended to include any allowance forconservatism. They are based on an unbiased estimate of future incurred risk cost ofclaims from our actuarial projection model. They do allow for incurred but notreported (IBNR) non-asbestos related disease claim numbers to be reported in future,based on current reporting delay trends of both statutory and common law claims.

A target loss ratio of 75.3% is adopted to calculate premium rates gross of expensesand margins excluding brokerage. Last year's loss ratio was 78.8% excludingbrokerage. The loss ratio decreases as the contingency margin has been increasedfrom 8% to 10% following our February 2009 actuarial review of this margin. Theinsurers’ expense margins excluding brokerage have also increased. Target loss ratiois the inflated and discounted estimated incurred cost of claims before expenses,divided by the premium charged.

The allowance for expenses, contingencies and interest does not include theSupplementation Fund Levy for the HIH run-off or the GST payable on the premium.

Insurer total expense levels varied between 13.3% to 32.9% of premiums, with anaverage of 18.5% (17.8%), excluding the Supplementation Fund Levy. The figures inbrackets are from last year and this convention is used throughout this report. Allinsurers’ expenses changed by less than 5.0% since last year.

The total expense level of 18.5% is made up of 3.3% (3.3%) brokerage, 1.9% (1.9%)statutory charges and 13.2% (12.6%) management expenses. If insurers not payingbrokerage are removed, the brokerage rate increases to 3.7% (3.6%).


1/05/2009 5:54 PM

Key findings

4

The actuarial projection basis implies a common law portion of 21% for the 2007/08accident year, excluding legal costs.

Prior to the October 1999 amendments, the common law portion was estimated as36%.

However, if claimants do not utilise common law, the use of statutory benefits usuallyincreases, leading to a net saving of only around half or less of the estimated commonlaw cost component.

An allowance for future employment growth was considered. The current economicconditions are very uncertain in this regard and on the level of overtime and part timehours and bonuses. Hence no allowance has been made until further trend data isavailable. See attachment E1 for analysis of employment growth expectations.However we did reduce the wage adjustment factor to make to some allowance forcurrent economic conditions.

The current global financial downturn adds significantly to the complexity anduncertainty for this year’s actuarial premium rate assessment. There is a high level ofuncertainty around future total wages in particular, and claim costs also. The pricingassumptions need to be regularly monitored against actual outcomes and if materialdeviations arise, an interim premium rate declaration may be required.

1.2 Recommended rates by class

Relative premium rates per industry class have been calculated using an experience-based partial credibility method. The method used is also referred to as hierarchicalcredibility. The movement in relative premium for an unchanged premium poolshows 70% of classes within a 10% range of last year’s rates. This is the same as the70% last year and 68% the year before. Once again, this year large claims werecapped at $3M when calculating the raw relative premium rates by class. Sevenclaims were capped in different rating classes (see F1.2.3 for detailed method). Lastyear five large claims were capped and six the year before. Also two rating classesexcluded the 2007 year from the premium rate calculation due to declared wagesbeing zero as the insurance cover was for greater than 12 months. Another classexcludes the 2007 year due to spurious data. See section F1.2.2 for further details.

The Recommended Minimum Policy Premiums are as follows:

2009/10 2008/09 2007/08 2006/07 2005/2006 2004/2005

Householders

Policies

$70.00 $65.00 $65.00 $60.00 $60.00 $55.00

All Other Policies $210.00 $200.00 $195.00 $185.00 $180.00 $170.00

Minimum premiums are indexed to CPI and increase in multiples of $5. This year theminimum for the householders policy is recommended to increase by $5 and all otherpolicies are recommended to increase by $10.


1/05/2009 5:54 PM

Key findings

5

1.3 Outstanding claim liabilities

Our actuarial assessment of the outstanding claim liabilities (inflated but notdiscounted) as at 30 June 2008 is $1,232M. This compares to aggregate reservesreturned by applicable insurers of $1,446M. Both insurers’ and our liabilities allowfor the impact of the 2004 Reform Act.

The insurers reserves are $213M or 15% higher than our estimates. Last year themarket was $72M or 5% higher.

Insurers reserving is higher in aggregate than the results of our projections. Note thatdue to the more detailed allowance for asbestos reserves, insurer’s reserves exceededour reserves in the oldest accident years.

The reserves of most insurers lie within an acceptable range. Generally reserves havereduced relative to claim payments from 306% last year to 300% now.

The results in section 3.4.1 shows the detail of this by accident year and insurer.

A detailed reconciliation of the build-up of inflated and discounted reserves over theyear is shown in section 3.6. This shows a net release of reserves of $122M (11%) onour projections and $25M (2%) on insurer’s reserves over 2007/08 on claims incurredto 30 June 2007. All accident years experienced a release of reserves.

1.4 Data

The form of the data supplied for the 2007/08 year is similar to the data supplied lastyear. The 2009/10 recommended premium rates are established using the 2007/08returns together with the quarterly returns to December 2008.

This is the fourteenth year that the data collected is based on the new industry classes.The quality of the data and the efficiency of its collection has improved. There aresome remaining areas of inaccuracy and issues which need to be considered, asdiscussed below.

Data for Government Insurance Fund and LGIS - WorkCare was included for the firsttime in 1997/98. The 1998/1999 average rate was adjusted to allow for the inclusionof these two funds. In 2004, at the request of the former Premium Rates Committee,we removed all LGIS - WorkCare data from our analysis and pricing models.

Note that, as a result, the claims experience for ANZSIC code 81130 – LocalGovernment Administration is based predominantly on historical data collected fromprivate insurers and does not reflect the current experience of the Local Governmentself-insurance scheme.

There is always room for improvement in the data quality and accuracy and in thedata collection process. This year, there was an improvement in the overall quality ofdata received (with a large majority of first revisions answering our queries ratherthan supplying amended returns). However, some insurers had difficulty in correctlysplitting multi-year policies across the relevant reporting years.


1/05/2009 5:54 PM

Key findings

6

The number of revisions required for the 2007/08 premium rating returns was asfollows:

2 returning entities had clear initial returns 13 returning entities were clear after a first revision 3 returning entities required two revisions 2 third revision were required

Last year, it was identified that the additional data (civil proceedings, large claims andnoise induced hearing loss (NIHL) claims) included data from self-insurers. Selfinsurance claims are separately identified and excluded from the civil proceedings andlarge claims data however due to the coding were unable to be removed from theNIHL data. We estimate these claims to be about 10% of the total cost of NIHL data.

The premium rating classification system will be reviewed during 2009/10, and thepossibility of using ANZSIC 2006 as a base for the classifications will be considered.If the classification system is changed, there would be data conversion requirements.

This year we found insurers had further difficulty splitting multi-year policies. Wealso identified a likely material understatement of gross written premium on formWC11 by insurers from burner policies. These data issues require attention andresolution prior to insurers commencing their 2008/09 premium rate returns.

1.5 GST

Our adopted projection bases use claim payments data which includes GST andtherefore appropriate GST allowance is included in the results obtained. The 10%GST on the workers’ compensation premium itself (which employers will generallybe able to recover via an input tax credit) is not included in our analysis or therecommended premium rates.

1.6 Workers’ Compensation Reform Act 2004

We have made allowance for stage 1 and stage 2 of the 2004 Reform Act whenprojecting future claim payments. See attachment E3 for details.

The Act change allowance has been scaled down at this valuation to reflect the extentthat post Act change claims experience forms part of our adopted projection basis.

1.7 Noise – induced hearing loss claims

The noise-induced hearing loss claim (NIHL) data supplied by WorkCover WAshows increasing trends in the confirmed assessment of first election claims over thepast 12 years, and also in the number and cost of claims with a formalisedMemorandum of Agreement (MOA).


1/05/2009 5:54 PM

Key findings

7

At current levels, first-election NIHL claims appear to be costing $1.3M per year(0.22%) of the estimated total cost of claims. Second-election NIHL claims appear tobe costing $0.07M per year (0.01%) of the estimated total cost of claims. These costshave been reduced by 10% to approximate the removal of self-insurers NIHL claims.


1/05/2009 5:54 PM

Background and objectives

8

2 Background and objectives

2.1 Background

In June 2003, we were re-appointed to provide actuarial services to WorkCoverWestern Australia and the former Premium Rates Committee, in accordance with theterms of RFT503 issued by the Western Australia Department of Treasury andFinance. This contract was extended in October 2008 to include the recommendedpremium rates for 2009/10. The actuarial services required are specified in detail inthe tender document and the letters of notification and this report is prepared inaccordance with those requirements. We have subsequently been reappointed byWorkCover WA, in accordance with the terms of WC33208. We were initiallyappointed to this role in October 1995 and in May 1998 the actuarial services to theformer Premium Rates Committee were publicly tendered again and our services wereretained.

Amendments to the then Workers’ Compensation and Rehabilitation Act 1981, whichcame into effect on 4 January 2005 abolished the Premium Rates Committee andestablished the WorkCover WA Authority, which is governed by a Board, asresponsible for the determination of recommended premium rates. The amendmentsalso renamed the legislation to the Workers’ Compensation and Injury ManagementAct 1981. Section 4 of the Employers’ Indemnity Policies (Premium Rates) Act 1980broadens the scope of an employer indemnity policy to include common law claims.Insurers may discount the recommended rate by any amount, or surcharge within thelimit imposed by Section 152 of the Workers' Compensation and Injury ManagementAct 1981. The surcharge limit to 30 June 2005 was 100% of the applicable rate. Asof 14 November 2005 an amendment to this section reduced the permissible surchargelimit to 75% of the applicable rate. Subject to the approval of the WorkCover WABoard, an insurer may surcharge the recommended premium rate by the relevantpercentage.

On 4 January 2005 stage 1 of the 2004 Reform Act was assented to, with Stage 2following on 14 November 2005. The Act amendments were intended to restorebalance to the WA workers’ compensation system. The Act amendments include:

enhanced statutory benefits altered access to common law based on impairment rather than disability enhanced medical benefits and enhanced processes for injury management and dispute resolution.

Consistent with instructions from WorkCover WA, we have incorporated the impactof the 2004 Reform Act in this report. The initial estimate of the impact on therecommended rates is detailed in a special actuarial assessment report dated 13 April2005.

The actuarial assessment in this report is based on claim data supplied by allapplicable approved private insurers as well the Insurance Commission of WesternAustralia (Insurance Commission), in respect of RiskCover and for the pre - 1987private sector risks. From 1997/98 onwards, data was also supplied by LGIS -


1/05/2009 5:54 PM


9

WorkCare (to ensure accurate premium rating for local government) and by theGovernment Insurance Fund (Unfunded). In 2002/03 the requirement to includeLGIS - WorkCare was removed and hence, all the data for this self-insurance fundwas removed.

In this report we use the term “Premium Rates returning entities” to mean approvedprivate insurers, RiskCover and the Insurance Commission Funded, Unfunded andICGF. We note that all self-insurers (other than RiskCover) are excluded from thisactuarial assessment.

This investigation is based on the 2007/08 data supplied together with the data forprior years. This is the fourteenth year that data is supplied on the industry classesintroduced with the 1994/95 Gazetted Premium Rates and hence the transition fromthe occupational to the ANZSIC industry classification was practically completedseveral years ago. Previously the data on the old occupation codes had to beconverted to the industry classes.

The current 2007/08 data was validated and aggregated. We then calculated anupdated set of relative premium rates and normalised them to produce the sameaggregate notional premium pool as this year’s recommended premium rates appliedto the current returned wages. Relative premium rates are calculated using ahierarchical credibility experience rating method based on a ten year weightedaverage. This method is sensitive to the claims experience of each class and theextent of this sensitivity increases with the size/exposure of the class. Large claimsare capped at $3M. There were eight such claims (not including self-insuranceclaims) this year of which seven were capped. The other claim had a date of accidentoutside this year’s data range.

The incurred cost of workers' compensation is estimated using actuarial projectionmethods. This includes the projection of future claim payments. The calculationslead to the suggested overall premium amount required and the overall increase ordecrease in premium rates.

The adequacy of aggregate outstanding claim reserves for the total industry isexamined as well as that of individual insurers. Expense levels are analysed and dataquality and accuracy is commented on.


1/05/2009 5:54 PM


10

2.2 Objectives

We have been asked to give advice on the recommended rates that should apply forpremium rating classes by industry. The main aims of this exercise are:

to calculate the total amount of premium income required to meet the cost ofclaims plus expenses and margins with anticipated investment income

to recommend rates that are broadly equitable across different industry classeswith no intentional cross subsidy of rates

to suggest an appropriate overall increase or decrease in relative premiumrates

to use methods which give relative stability in the rate structure.

A further objective of WorkCover WA is to examine the adequacy of outstandingclaims reserves both in aggregate and by insurer.

After an initial transition period from occupation to industry based classes in the mid1990’s, relative stability was achieved and: the maximum increase/decrease limits were removed a greater level of stability in the relativities was achieved and the minimum premium rate was reduced to $0.40 to reduce the level of cross

subsidies.

Note that the phasing in of the 2004 Reform Act over the 2005 to 2007 calendaryears, impacted claim costs and has the potential to produce future volatility in overallincurred costs and relative premium rates in an environment of increased uncertainty,while the financial impact of the Act amendments emerge over the next few years.

This uncertainty is further increased this year by the global financial downturnrelative to estimated future total wages and claim costs and other premium ratingaspects.


1/05/2009 5:54 PM

Statement of results

11

3 Statement of results

3.1 Overall premium rate variation

3.1.1 Incurred cost of claims in Inflated and discounted values

Our estimates show the following adopted average claim size for the 2009/10premium rating year including the 2004 Reform Act allowance:

Basis Average Claim Size (a)

current values (b) 15,957CV + Act change (c) 16,490ACS inflated/discounted (d) 16,248

Assumed claims incurred (e) 38,014

Notes: (a) the average claim size for the 2007/08 accident year from our actuarial projections x (1.029)^1.75 (to allow for future superimposed inflation at 2.9% pa from 30 June 2008 (data date) tothe mid point of the claims incurred period, to which the premium rates apply) x 1.022 (topartially allow for the current increase present in the 2008 payments for the half year to31 December 2008)

(b) as per the adopted actuarial assessment model

(c) as for (b) but including the 2004 Reform Act allowance

(d) = (c) x inflation and discount factor

= the inflated and discounted average claim size net of expenses and margins

The inflation and discount factor used is 0.9854 (0.9388 last year). This allows for projectedfuture cashflow to be inflated and discounted using the financial assumptions stated inAttachment E1

(e) the number of incurred claims assumed is equal to the 2007/08 accident year.

Average claim size calculated in this way includes allowance for the current claimsexperience and trends to 31 December 2008 and an analysis of the election optionexperience to 31 January 2009.

Note we have included an additional factor in a) this year to partially allow for thecurrent increase in 2008 accident payments present in the data for the half year to 31December 2008. As only 25% of payments for development year zero will have beenpaid to 31 December 2008 we have only partially allowed for this increasing trend.


1/05/2009 5:54 PM


12

The estimated incurred cost of claims, including the 2004 Reform Act allowance, isthen calculated as:

Estimated Incurred Cost = number incurred x average claim size

38,014 x 15,328.31 x 0.9854 = 574,161,560 for 2007/08 accident year

38,361 x 15,718.37 x 0.9854 = 594,139,312 for 2008/09 accident year

38,361 x 16,248.16 = 623,291,386 for 2009/10 underwriting year

The 2009/10 underwriting year assumes claim numbers incurred to increase by 1.0%as indicated by the experience in the half year to 31 December 2008.

3.1.2 Impact on overall premium levels

Loadings for expenses and contingency margins are required as follows:

Total expenses = 18.47% of premium (17.80% last year)Total expense less brokerage = 15.16% of premium (14.51% last year)Contingency margins = 10% of premium (8% last year)

Total expenses increase due to an increase in insurers management expenses andbrokerage, while statutory charges remain unchanged.

This year we actuarially reviewed the contingency margin adopted and the reviewindicated the contingency margin should be increased from 8% to 10% in order to begross of reinsurance. See Attachment E3 for further details.

Premiums are received on average three months before the point to which claim costshave been discounted, therefore assuming 2.7% pa, a credit of 0.67% of premium ismade for interest earnings. Last year 6.7% pa was used as the risk-free market rate ofinterest.

A combination of these loadings excluding brokerage gives:

Gross Premium = Risk Premium(1 - 0.1516 – 0.10) x 1.027^0.25

= Risk premium x 1.3273 (calculated as 1 / rounded loss

ratio as below)

This is equivalent to a loss ratio of:

Risk Premium / Gross Premium = 75.3% excluding brokerage (rounded to 3decimal places)

The loss ratio used last year was 78.8%. The 3.5% increase is due mainly to theincrease in contingency margin and also higher management expenses and lowerinterest rates.


1/05/2009 5:54 PM


13

The estimated incurred cost gross of expenses, and contingency margins, butexcluding brokerage, is obtained by grossing-up the results from 3.1.1 above asfollows:

Gross Estimated Incurred Cost including expenses and margins

574,161,560 x 1.3280 = 762,498,751 for 2007/08 accident year

594,139,312 x 1.3280 = 789,029,631 for 2008/09 accident year

623,291,386 x 1.3280 = 827,744,204 for 2009/10 underwriting year

The 2009/10 estimate of incurred cost, including allowance for the 2004 Reform Act,is equivalent to 1.738% of the $47,638M adjusted returned wages (see AttachmentB1), compared to 1.582% last year. This is a real increase of 9.9% in aggregate.

The weighted average credibility rates are normalised to $736.7M, which is thenotional premium on 2007/08 returned wages, using 2008/09 Gazette rates. Theadjusted comparative figure on 2007/08 Gazette rates was $878.7M. The 2008/09notional premium is 16.2% lower than the 2007/08 comparative figure. While this islower than expected as the 2008/09 Gazette rates were reduced by 14.4%, it is stillregarded as reasonable.

The analysis of recent claim experience in the six months to 31 December 2008 isshown in Attachment J and suggests that claim costs are fairly consistent with, butlower than expectations.

The above analyses and discussion suggest that the weighted average Gazettepremium rate, including allowance for the 2004 Reform Act, should increase by 9.9%based on the actuarial projection model excluding brokerage. This conclusionincludes allowance for the estimated impact of the 2004 Reform Act. It is based onthe election option experience to 31 January 2009, and statutory claims experience to31 December 2008. The premium rates do not include allowance for the 10% GST onpremiums which is generally recoverable by employers.


1/05/2009 5:54 PM


14

3.1.3 Financial performance of WA workers’ compensation

The tables below show performance of the WA workers’ compensation system on twodifferent bases :

accident year basis

financial year basis.

(a) Accident year performance table including allowance for the 2004 ReformAct

Estimated2002 2003 2004 2005 2006 2007 2008 2009

$M $M $M $M $M $M $M $M

Gross earned premium (a) 585.164 587.328 575.865 617.083 701.619 734.888 764.946 717.400

Cumulative claim payments (b) 309.111 322.264 353.606 355.370 316.335 271.238 126.055 119.724Outstanding estimate (c) 18.008 39.505 74.110 110.371 146.891 265.567 494.980 545.411Net claims incurred (d) 327.118 361.769 427.717 465.742 463.226 536.805 621.035 665.136

Underwriting profit/loss (e) 258.045 225.559 148.148 151.342 238.393 198.083 143.911 52.264

Commission (f) 19.970 18.890 20.230 20.906 22.115 24.182 25.329 23.755Other expenses (g) 73.656 86.878 87.177 96.147 96.492 106.633 115.948 108.741Estimated investment income (h) 41.014 50.161 55.994 61.308 70.793 74.885 46.783 50.105

Estimated profit/loss - $ (i) 205.433 169.951 96.736 95.596 190.579 142.154 49.417 -30.126- % of gross EP (i) 35% 29% 17% 15% 27% 19% 6% -4%

Loss ratio (j) 56% 62% 74% 75% 66% 73% 81% 93%

Total profit/loss (k) 900.449 949.866 919.739Tot profit/loss % of EP(l) 24% 21% 17%

GWP on Gazette Rates (m) 627.877 632.926 675.604 734.407 863.562 907.793 878.416 762.266Est EP on Gazette Rates (n) 627.877 631.411 662.801 716.766 824.815 894.524 887.229 797.111

Difference in EP (o) 42.713 44.083 86.936 99.683 123.196 159.635 122.284 79.711

Estimated profit/loss on Gazette rates (p) 248.146 214.035 183.672 195.279 313.774 301.789 171.701 49.58540% 34% 28% 27% 38% 34% 19% 6%

Total profit/loss (q) 1,456.696 1,628.396 1,677.981Tot profit/loss % of EP(r) 33% 31% 28%

Number of active claims by accident year (s) 229 330 503 882 1,655 3,903 13,054

Notes : (a), (b) from section K5 of this report, estimated for the 2009 accident year. Assumed a 10% discount on Gazette rates in 2009.

(c) = PwC reserves from section 3.3.1of this report. The 2009 accident year estimated as inflated average claim size x number incurred with 18%

assumed paid in DY0. Excludes 5% claim management expense allowance and risk margins.

(d) = (b) + (c)

(e) = (a) - (d)

(f) = brokerage from section 5 of report x (a)

(g) = {total expense % from B2.4 in this report x (a)} - (f)

(h) = This is a theorectical allowance.

(i) = (e) - (f) - (g) + (h), where the % in the row below is of (a). Estimated profit/loss is after allowance for superimposed inflation and the rate change in

previous years. It is before allowance for (ie does not include) risk margins on outstanding claim reserves and the 8% contingency margin adopted by the RPR.

(j) = (d) / (a) %

(k) = sum of (i) in $M

(l) = (k) / sum of (a) %

(m) = gross written premium on the Gazette rates which applied for the year

(n) = estimated earned premium on Gazette rates allowing for 30% of GWP to be unearned at each 30 June. (n) = (m) for 1997

(o) = (n) - (a) ie Gazette earned premium minus insurer earned premium

(p) = (o) +(i) ie estimated profit on Gazette rates, where % in row below is of (n)

(q), (r) = defined as for (k) and (l) with reference to (p) and (n)

(s) = the number of open claims from the consolidated Form WC20s supplied by returning enitities.

Estimated Profit and Loss in the WA Workers' Compensation System

Accident Year ending 30 June


1/05/2009 5:54 PM


15

In the table above note that:

the results are indicative of actual past and expected future claim trends

the benefit of hindsight is included in using 30 June 2008 reserves for allaccident years in the post October 1999 amendments and post 2004 ReformAct environment

the outstanding claim reserves contain no allowance for claims managementexpenses or risk margin

the estimated profit/loss includes allowance for superimposed inflation, therate change from previous years, expenses and commission/brokerage

the estimated costs for the more recent years (2007 and 2008) comprise mainlyuncertain future estimates. For example, only 20% of 2008 has actually beenpaid and 77% is the uncertain future estimate

the whole of 2009 is an uncertain future estimate. The gross earned premiumis subject to external market forces. Claims costs are also influenced bymarket forces, uncertain future claim events and economic, legislative andsocial conditions.

The estimated investment income credit in the above table is a theoretical allowancebased on the forward rates implied by the Commonwealth Government Bond yieldcurve applicable in each year.

The profit levels attained in recent years are generally well in excess of the 8%contingency margin adopted in previous recommended premium rates, except for2008 which has a 6% of premium estimated profit. The 2009 year is estimated tomake a 4% loss assuming Gazette rates are discounted by 10%. Without discountingGazette rates, this changes to a 6% profit.


1/05/2009 5:54 PM


16

(b) Financial year performance table excluding allowance for the 2004 ReformAct

Estimated Profit and Loss in the WA Workers' Compensation System

2002 2003 2004 2005 2006 2007 2008 Total$M $M $M $M $M $M $M $M

Gross earned premium (a) 585.164 587.328 575.865 617.083 701.619 734.888 764.946 4,566.893

Claim payments (b) 357.649 357.266 348.556 387.859 412.303 442.301 482.466 2,788.400Change in o/s estimate (c) (38.896) 29.417 53.865 97.858 (34.888) 29.497 90.011 226.865Net claims incurred (d) 318.753 386.683 402.421 485.717 377.416 471.798 572.477 3,015.265

Commission (e) 19.970 18.890 20.230 20.906 22.115 24.182 25.329 151.622Other expenses (f) 73.656 86.878 87.177 96.147 96.492 106.633 115.948 662.931

Underwriting result (g) 172.785 94.877 66.038 14.313 205.596 132.275 51.192 737.075

Underwriting result % (h) 30% 16% 11% 2% 29% 18% 7% 16%

Number of active claims (i) 20,969 20,870 21,918 21,647 20,501 20,528 21,428

Notes : (a) = from section 5.5 of this report

(b) = from Form WC20 returns for 2007/08 and prior years

(c) = from Form WC20 returns for 2007/08 and prior years

(d) = (b) + (c)

(e) = 0.03 x (a) estimated

(f) = {total expense % from B2.4 in this report x (a)} - (e)

(g) = (a) - (d) - (e) - (f)

(h) = (g) / (a) %

(i) = the number of open claims from the consolidated Form WC20s supplied by returning enitities.

Financial Year ending 30 June

The inclusion of investment income would have improved the underwriting result formost years. In aggregate, over 2002 to 2008, investment return of $637.1M isestimated using the average funds available for investment and the one year forwardCommonwealth Bond rate.

The above table is different from the accident year table in many respects as it:

does not include investment income (as this data is not returned by insurers)

does not use the benefit of hindsight for reserving

is based purely on data supplied by premium rates returning entities

shows the financial year results aggregated across accident years.

The outstanding claim reserves reflect market knowledge and conditions at the end ofeach year.

The financial year results show a very different picture to the accident year table withlarge underwriting losses arising up to 1999 (as shown in prior years’ reports),followed by a generally increasing profit trend, and an overall profit equal to 16% ofgross earned premium over the seven year period. The 2005 and 2007 years are wellbelow the overall 16% profit, being 2% and 7% respectively.


1/05/2009 5:54 PM


17

3.2 Premium rates by division

The recommended premium rates by division are:

Division 2006/07 2007/08 2008/09 2009/10 Difference (a)

A - AGRICULTURE, FORESTRY AND FISHING 4.69 4.34 3.79 4.42 16.4%B - MINING 1.99 1.69 1.39 1.52 9.6%C - MANUFACTURING 3.60 3.16 2.66 2.97 11.5%D - ELECTRICITY, GAS AND WATER 1.18 0.91 0.69 0.71 2.2%E - CONSTRUCTION 3.34 2.82 2.18 2.30 5.4%F - WHOLESALE TRADE 1.95 1.73 1.46 1.67 14.1%G - RETAIL TRADE 1.99 1.72 1.47 1.63 10.9%H - ACCOMMODATION, CAFES AND RESTAURANTS 2.54 2.26 1.94 2.13 9.7%I - TRANSPORT AND STORAGE 2.94 2.74 2.36 2.77 17.5%J - COMMUNICATION SERVICES 1.19 0.99 0.90 1.08 19.5%K - FINANCE AND INSURANCE 0.40 0.40 0.40 0.40 0.0%L - PROPERTY AND BUSINESS SERVICES 0.92 0.80 0.67 0.72 7.0%M - GOVERNMENT ADMINISTRATION AND DEFENCE 0.75 0.56 0.43 0.50 15.8%N - EDUCATION 0.94 0.93 0.92 1.05 15.0%O - HEALTH AND COMMUNITY SERVICES 2.21 2.04 1.81 2.15 18.3%P - CULTURAL AND RECREATIONAL SERVICES 1.79 1.64 1.53 1.69 10.2%Q - PERSONAL AND OTHER SERVICES 2.88 2.57 2.17 2.54 16.9%Overall 2.12 1.85 1.58 1.74 9.9%

Notes : (a) = (2009/10 rate) / (2008/09 rate) -1 as a percentage

Recommended Premium Rates at ANZSIC division level by underwriting year

Note that the overall aggregate premium rate is weighted by wages per division whichdiffers each year.

The premium rate for each division has increased this year, except for K – Financeand Insurance because it is below the minimum before the caps are applied. The9.9% increase in overall premium rate is not a straight average of the percentagedifference in premium rate for each division. The reason is that wages are not uniformby division.

3.3 Relative premium rates

The experience rating method adopted, results in premium rates for an unchangedpremium pool which compare as follows to the current 2008/09 Gazette rates :

Table of movement in Recommended Premium Rates

Movement in Number of Recommended Rates which :

RecommendedPremium Rates Decrease Increase Unchanged Total

5% or less 95 82 35 212

more than 5% but less than or equal to 10% 52 71 0 123



more than 20% 6 25 0 31

Total 196 249 35 480


1/05/2009 5:54 PM


18

Last year 251 rates decreased, 95 changed by less than 5% and 86 changed bybetween 5% and 10%.

Relative premium rates are fairly robust this year in spite of:

the 10.7% increase in the self-rating point from $733M to $810.9M

any artificiality introduced by normalising rates to an unchanged premium poolwhich is differently distributed by rating class.

Note that the claims experience for ANZSIC code 81130 – Local GovernmentAdministration is based predominantly on historical data collected from privateinsurers and does not reflect the current experience of the Local Government self-insurance scheme.

70% of classes have rates which change by less than 10%. This is equivalent to lastyear but up from 68% the year before.

After the aggregate 9.9% increase in rates, inclusive of the 2004 Reform Act, thedistribution of the percentage movement in recommended rates is shown below:

Table of movement in Recommended Premium Rates

Movement in Number of Recommended Rates which :

RecommendedPremium Rates Decrease Increase Unchanged Total

5% or less 36 44 35 115




more than 20% 2 110 0 112

Total 58 387 35 480

The rates for 1 (0) class increase by more than 50% while the rates for 0 (9) classesdecrease by more than 33%. Figures in brackets are last years.

The table below shows the distribution of credibility level achieved by rating classeson their own claims experience:


1/05/2009 5:54 PM


19

Credibility No. of % No. of %Level Classes Classes

Up to 25% 150 31.3% 144 30.0%

> 25% but 50% 156 32.5% 154 32.1%

> 50% but 75% 73 15.2% 77 16.0%

> 75% but < 100% 40 8.3% 39 8.1%

100% 61 12.7% 66 13.8%

Total 480 100.0% 480 100.0%

This year Last year

The number of classes with less than 25% credibility increased by 6, 2 more classesachieved between 25% and 50% credibility, 4 less achieved between 50% to 75%credibility, 1 more achieved 75% to 100% credibility while 5 less achieved fullcredibility.

The resulting relative rates indicate the strength of the method in producingappropriate rates and minimising cross subsidies.

These relative rates are normalised to produce an unchanged aggregate notionalpremium, using the 2008/09 Gazette rates.

The Gazetted Recommended rates have been varied as follows since 30 June 1994:

Premium rating year Overall adjustmentending 30 June to rates

2010 9.9%2009 -14.4%2008 -12.7%

2007 -8.6%2006 2.9% {post 2004 Reforms}2005 -3.8%2004 -5.1%2003 -6.0%2002 -11.6% {-8.2% + -3.4%}2001 -3.9%2000 21.8% {35.3% before1999 13.6% Act change}

1998 -9.5%1997 -10.5%1996 -2.5%1995 -12.5%

Aggregate -40.5%


1/05/2009 5:54 PM


20

Variation in premium rates

13.6%

-6.0% -5.1%

-14.4%

-11.6%

9.9%

-8.6%

-3.8%

21.8%

-3.9%

-12.7%

2.9%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Year

%

The 1999/2000 Gazette rates were reduced by 10% from 1/11/1999 in response to theOctober 1999 amendments. Premium rates decreased by 59.3% from 2002 to 2009allowing for the 2002 removal of brokerage and the 2004 Reform Act.

The rate increase of 2.9% in 2006 is the combined impact of relatively stable claimcosts and high wages being more than offset by the allowance for the 2004 ReformAct. The large decreases of 8.6% in 2007, 12.7% in 2008 and 14.4% in 2009premium rates are the combined impact of relatively stable claim numbers and slightreal decreases in claim costs combined with wageroll increases far in excess of AWEgrowth, due to the buoyant state of the WA economy at that time. 2010 has increaseddue to the change in economic circumstances. Real rates of return have reduced,future wage growth is expected to reduce and claim costs have increased.

Revised minimum premiums are calculated each year based on movements in thePerth CPI index, but changes are only made in $5 multiples. This indexing producesthe following results:

Recommended Minimum Premium

Last Year's

Gazette

Indexed since last

change

2009/10

Recommended

Householder Policies 65.00 71.96 70.00

All other Policies 200.00 211.71 210.00

Indexing is cumulative irrespective of when recommended minimum premiums werelast revised.

The table below compares the 2007/08 gross written premium returned by insurers tonotional premiums on Gazette rates:


1/05/2009 5:54 PM


21

% Difference from

Gazette rates No. of % of % of No. of % of % ofClasses Classes GWP Classes Classes GWP

0% but < 5% 79 16.8% 9.9% 56 11.9% 6.8%

5% but < 10% 64 13.6% 14.0% 36 7.6% 8.5%

10% but < 15% 33 7.0% 9.3% 14 3.0% 0.7%

15% but < 25% 54 11.5% 16.1% 16 3.4% 1.6%

25% but < 50% 60 12.7% 20.8% 12 2.5% 0.4%

50% but < 100% 32 6.8% 11.0% 12 2.5% 0.7%

>100% 3 0.6% 0.1%

Total 322 68.4% 81.1% 149 31.6% 18.9%

Notes : (a) only 471 classes could be compared as 9 classes had NIL wages and GWP for 2007/08

(b) the aggregate difference from Gazette across all classes is = -23.2%

Analysis of Level of Discount / Surcharge to Gazette 2007/08 (a)

Classes with discounted premiums Classes with surcharged premiums

This table shows that 68% of classes and 81% premium are discounted. The overallimpact is a 23.2% aggregate discount against Gazette rates for all classes. This ishigher than the 17.5% calculated in aggregate for the premium pool in B2.4 as B2.4includes allowance for wage and premium adjustments as well as an additionaladjustment for increased burner usage and reduction in burner deposit premiums.

Note that 31% (47%) of premium is discounted by 15% or more and 3 (4) classes aresurcharged by over 100%. Figures in brackets are last years.

Note that the level of discount is heavily influenced by the presence of burners. Wedon’t receive burner data separately, however anecdotally the number of burners haveincreased significantly in recent years. The favourable economic and claimsconditions at that time led to burner deposit premiums reducing towards burnerminimum premiums. Therefore the level of gross written premium will beunderstated and the discounting of Gazette rates will be overstated for the first fewyears until burner policies have been finalised.

The table below analyses the number of policies per rating class:


1/05/2009 5:54 PM


22

% ofClasses Classes

0 but 5 70 14.6%

> 5 but 15 69 14.4%

> 15 but 30 69 14.4%

> 30 but 50 56 11.7%

> 50 but 100 62 12.9%

> 100 but 500 109 22.7%

> 500 but 1000 29 6.0%

> 1000 but 2000 10 2.1%

> 2000 but 5000 5 1.0%

> 5000 1 0.2%

Total Classes 480 100.0%

Policy range

Analysis of Policies for 2007/08 reporting year

Here we see that 15% of classes have 5 or less Policies while 45% have more than 50policies. There are 9 classes without any 2007/08 Policies issued, 11 with 1, 13 with2, 11 with 3, and 15 with 4 policies issued.

One objective of this analysis is to retain commercial confidentiality of employersworkers compensation data where they have the only policy in a premium rate class.


1/05/2009 5:54 PM


23

3.4 Outstanding claim reserves

3.4.1 Central Estimate of outstanding liabilities

The actuarial assessment of outstanding claim reserves since 30/06/95 are comparedto insurers reserves in the table below:

Inflated/Undiscounted Reserves ($M)Year ending

30 JuneActuarial

(a)

Aggregate Insurers

(b)

% Difference from

Insurers Reserves

(c)

2008 (e)

2007 (e)

2006 (e)

2005 (e)

2004 (e)

2003 (e)

2002 (d)

2001 (d)

1,232.5

1,283.5

1,411.4

1,303.2

1,145.5

1,217.5

1,186.9

1,101.6

1,455.7

1,355.7

1,326.2

1,361.1

1,263.2

1,209.4

1,192.4

1,231.0

-14.7%

-5.3%

+6.4%

-4.3%

-9.3%

0.7%

-0.5%

-10.5%

2000 (d) 1,197.0 1,184.0 1.1%

1999 (d) 1,195.4 1,143.9 4.5%

1998 (d) 1,117.5 938.2 19.1%

1997 738.2 641.9 15.0%

1996 608.9 604.1 0.8%

1995 600.0 542.7 10.6%

Notes: (a) = item (b) from Attachment G4.5 divided by 1.05 to remove claims expenses and from our prior

reports

(b) = col(d) + col(e) from Form WC20 data supplied by insurers (see Attachment C for 2008 and

prior reports for previous years)

(c) = (a) / (b) - 1

(d) includes Government Insurance Fund Unfunded (GIFU) and LGIS - WorkCare from 1998 year

onwards

(e) excludes LGIS WorkCare from 2003.

Inflated insurer reserves are 14.7% ($213.2M) higher than our actuarial estimatescompared to 5.3% higher last year.

This year’s analysis includes three and half years of post 2004 Reform Act changedata and separate explicit allowance is made for the estimated cost increases of theAct changes (see Attachment E3) scaled down to reflect the extent that the actual postAct change experience forms part of our adopted projection basis.


1/05/2009 5:54 PM


24

The adopted actuarial central estimate results are based on a blend of the methodsused. The detail can be found in Attachment G.

The inflated and discounted actuarial reserve at 30/06/2008 is $1,173M compared to$1,129M at 30 June 2007, $1,217M at 30 June 2006 and $1,146M at 30 June 2005.

This year the actuarial reserves increased by 3.9%.

Individual insurer reserves were broadly tested for adequacy, using a reserving rangeof 160% to 400% of claim payments as a benchmark. The average reserves to claimpayments is 256% (305%) for all insurers combined using inflated actuarial estimatesand 300% (306%) using insurer reserves. The figures in brackets are as at last year.

This shows that actuarial reserves decreased by 49% of claim payments since lastyear, and that insurer reserves have decreased by 6% of claim payments.

The table below shows the reserves to payments ratio and prudential margin perinsurer:

Insurer reserves / claim Prudential

payments (a) Margin (b)

Inflated o/s

1 536.8% 24.8%2 364.8% 9.2%3 350.7% 14.7%4 337.5% 25.2%5 334.9% 24.8%

6 316.8% 22.5%7 303.7% 7.0%8 228.7% 12.3%

9 211.4% 14.0%10 179.3% 14.5%11 178.5% 16.0%

Total 299.7% 17.3%

Notes : (a) = (case est o/s + IBNR+Dev est) /claim payments from Form WC20for 2007/08

(b) = prudential margin % as supplied

by insurers on Form WC20 for 2007/08

The insurer number in the above table does not concord with that in the expenseanalysis table in section 5 of this report.

Last year, no insurers had a ratio of less than 200%. Four (five) of eleven (eleven)returning insurers have ratios less than the 300% (306%) average. The figures inbrackets are as at last year.


1/05/2009 5:54 PM


25

The four largest insurers have 15% market share or more each and represent 69% ofthe 2007/08 gross written premium. One of these four insurers have reserves wellbelow the 300% average, the other three had reserving ratios slightly to moderatelyabove the average. The large insurer with low reserves also has a prudential marginjust below the 17.3% weighted average. We note that when setting prudentialmargins in compliance with the APRA standards, insurers can make allowances fordiversification across their book of business by geographical location and class ofbusiness. It must be appreciated that this reserving ratio is a broad approximatemeasure, affected by the state of maturity and rate of growth of an individualinsurance portfolio. Nonetheless the combination of low benchmark reserves andprudential margins should be taken as an early warning alert and may prompt theneed for further action eg seek explanation, require investigation, independentreports etc.

A prudential margin is commonly held in liability provisions to increase theprobability that the central estimate will be sufficient. The prudential marginsdeclared by insurers were in the range 7.0% to 25.2% (8.5% to 42.7% last year) withan average of 17.3% (20.9% last year).

We believe a 10% level of prudential margin is appropriate in times of stable claimexperience in aggregate for the whole system. In times of adverse claim trends eitherstronger prudential margins are required to obtain the same level of sufficiency inreserving or strong allowance for adverse trends is required in the valuation basis.

Research done by the Institute of Actuaries on APRA’s current standards, produced a10.5% risk margin at 75% level of sufficiency for a $1.5bn workers’ compensationoutstanding claim provision.

The table below shows an accident year comparison of our actuarial and insurers’reserving as at 30 June 2008:

Comparison of reserves as at 30 June 2008Inflated Insurers

Accident actuarial outstandingyear outstanding claim

ending claim reserves reserves Difference Difference30 June $M (a) $M (b) $M (c) % (d)

2008 494.980 536.863 -41.883 -8%2007 265.567 325.561 -59.994 -18%2006 146.891 185.319 -38.428 -21%2005 110.371 110.351 0.021 0%2004 74.110 70.393 3.717 5%2003 39.505 38.062 1.443 4%2002 18.008 24.523 -6.515 -27%2001 16.148 17.089 -0.941 -6%

earlier 66.955 137.567 -70.611 -51%

Total 1,232.536 1,445.728 -213.191 -15%

Notes : (a) = item (b) from Attachment G4.5 divided by 1.05 to remove

claim expenses

(b) = from consolidated Form WC20 columns (d) + (e)

(c) = (a) - (b)

(d) = {(a) / (b) - 1} x 100

Insurer reserves are stronger than ours for all accident years except 2003 to 2005. The‘earlier’ years are a major source of difference due to reserving for asbestos related


1/05/2009 5:54 PM


26

claims. The other source of difference could be adopted inflation. The insurersreserves would include higher inflation than ours due to the change in economicsituation since 30 June 2008 and we are using current economic assumptions.

Specialised data and methods are required to reserve IBNR dust-disease claims andour reserves do not include a full asbestos claim valuation. While this may be amaterial reserving issue, it should not directly affect the level of recommendedpremium rates, which depends on the more recent accident years. The shortfall for‘and earlier years’ has increased from 38% last year to 51% this year.

Some overall market reserving ratios which may assist insurers assess the relativestrength of their reserves are as follows :

Total case Ultimate UltimateAccident estimates incurred incurred

year to claim costs/claim costs/totalending payments payments case ests30 June (a) (b) (c)

2008 290% 493% 170%2007 154% 198% 128%2006 126% 146% 117%2005 114% 131% 115%2004 109% 121% 111%2003 105% 112% 107%2002 104% 106% 102%2001 103% 105% 102%

Notes: (a) from Attachment B2.3 item (d)

(b) from Attachment B2.3 item (e)

(c) from Attachment B2.3 item (f)

By applying the ratios in columns (a) and (c) above, insurers can obtain a measure ofthe strength of their own case estimates and total provisions, relative to overall marketlevels (see attachment B2.3 for details).

3.5 Actual vs Expected Claims Experience

The experience in 2007/08 on claims incurred in prior years is on balance favourablecompared to expected, with claim payments and case estimate development belowexpected but claim closure slightly slower than expected and claim reports slightlyhigher than expected.

During 2006/07, the experience of claims incurred in prior years showed on balancefavourable trends compared with our 30 June 2007 projections.

The experience in the six months to 31 December 2008 is adverse compared toexpected, with claim reports, case estimates above expected, claim closure slowerthan expected however claim payments are on par with expected. Note however thatpayments for 2008 are significantly higher than expected.

See Attachment J for full details.


1/05/2009 5:54 PM


27

3.6 Reconciliation of reserves

The tables below show the build-up of inflated and discounted outstanding claimreserves over 2007/08 for claims incurred to 30 June 2007 for:

our actuarial projections and

insurers outstanding claim reserves

(a) reconciliation actuarial

Accident year ending 30-June 2007 2006 2005 2004 2003 2002 2001

2000 &

earlier Total

$m $m $m $m $m $m $m $m $m

A. Estimates at 30/06/2007 (a) 430.631 225.076 157.410 98.195 65.332 38.434 18.968 94.670 1128.715

B. Gross payments 1/07/2007 to 30/06/2008 160.221 74.924 47.740 27.043 12.362 8.232 5.419 20.471 356.412

C. Expenses (b) 8.011 3.746 2.387 1.352 0.618 0.412 0.271 1.024 17.821

D. Assumed investment return (c) 23.308 12.487 8.894 5.643 3.949 2.290 1.083 5.634 63.290

E. = A-B-C+D 285.707 158.893 116.177 75.443 56.302 32.081 14.361 78.810 817.774

Updated estimates at 30/06/2008

F. Revised estimates at 30/06/2008 (d) 254.992 139.935 104.182 70.202 37.253 16.207 14.278 59.198 696.248

G. = F-E -30.715 -18.959 -11.995 -5.241 -19.049 -15.874 -0.083 -19.611 -121.526

Change 1/07/2007 to 30/06/2008

H. Proportion of change attributable to 11.063 6.374 5.160 3.421 1.821 0.824 0.766 3.178 32.607

changes in real rates of return assumed

I. = G-H -41.777 -25.333 -17.155 -8.662 -20.870 -16.698 -0.849 -22.789 -154.133

Balance of change attributable to

changes in underlying actuarial estimates

J. Amount incurred and outstanding for 476.918

2007/08 accident year (d)

K. = F + J

Total outstanding liability at 30/06/2008 1173.165

Notes : (a) from G4.5 of our 30/04/2008 report

(b) assumed to be 5% of claim payments in 2007/08

(c) calculated using 6.7% pa being the one year forward rate from E1 of our 30/04/2008 report

(d) from G4.5 of this report.

The table shows that:

overall estimates decreased by $122M which is 10.8% of the opening30/06/2007 estimates, of this changes to real rates of return cause the estimatesto increase by $33M (3% of opening estimates) which means the actuarialestimates actually decreased by $154M which is 13.7% of the opening30/06/2007 estimates

all accident years had a release of reserves with the increase spread fairlyevenly across the accident years

this release is mainly due to lower than expected claim payments and caseestimate development, reduced common law claim numbers and gradualphasing out the 2004 Reform Act allowances.


1/05/2009 5:54 PM


28

(b) reconciliation insurers

Accident year ending 30-June 2007 2006 2005 2004 2003 2002 2001

2000 &

earlier Total

$m $m $m $m $m $m $m $m $m

A. Estimates at 30/06/2007 (a) 450.642 256.547 140.205 95.678 50.360 32.009 18.736 142.131 1186.308

B. Gross payments 1/07/2007 to 30/06/2008 160.221 74.924 47.740 27.043 12.362 8.232 5.419 20.471 356.412

C. Expenses (b) 8.011 3.746 2.387 1.352 0.618 0.412 0.271 1.024 17.821

D. Assumed investment return (c) 24.649 14.596 7.742 5.475 2.946 1.860 1.068 8.814 67.149

E. = A-B-C+D 307.059 192.473 97.819 72.757 40.326 25.226 14.113 129.451 879.225

Updated estimates at 30/06/2008

F. Revised estimates at 30/06/2008 (d) 312.597 176.543 104.163 66.680 35.892 22.071 15.111 121.629 854.686

G. = F-E 5.538 -15.929 6.343 -6.077 -4.434 -3.155 0.997 -7.822 -24.539

Change 1/07/2007 to 30/06/2008

H. Proportion of change attributable to 19.172 11.442 7.323 4.595 2.507 1.758 1.289 10.379 58.465

changes in real rates of return assumed

I. = G-H -13.634 -27.371 -0.980 -10.672 -6.941 -4.914 -0.292 -18.201 -83.004

Balance of change attributable to

changes in underlying actuarial estimates

J. Amount incurred and outstanding for 517.272

2007/08 accident year (d)

K. = F + J

Total outstanding liability at 30/06/2008 1371.958

Notes : (a) from columns (d) + (e) on insurers consolidated Form WC20 for 30/06/2007 (see our

30/04/2008 report Attachment C) adjusted for future interest and 5% claim management

expenses

(b) assumed to be 5% of claim payments in 2007/08

(c) calculated using 6.7% pa being the one year forward rate from E1 of our 30/04/2008 report

(d) from columns (d) + (e) on insurers consolidated Form WC20 for 30/06/2008 (as per

Attachment C) adjusted as per notes (a).

This table shows that:

overall estimates declined by $25M which is 2% of the opening estimates, ofthis changes to real rates of return cause the estimates to increase by $58M (5%of opening estimates) which means the insurer estimates actually decreased by$83M which is 7% of the opening 30/06/2007 estimates

there were declines in insurer estimates once the influence of real rates ofreturn are removed for all years, except 2007, 2005 and 2001 in percentageterms

there was no reserve strengthening for any years once the influence of realrates of return are removed.

The drivers for the reserve changes mentioned in the actuarial reconciliation above,apply to the build-up of insurer reserves also, except that insurers reserves havereduced by less than actuarial reserves.

We have made allowance for the impact of the 2004 Reform Act in the opening andclosing reserve estimates in the actuarial reconciliation tables above and we wouldexpect that insurers’ reserving are also adjusted for this. The 2004 Reform Actallowance in the PwC reserves is being phased out to reflect the extent that actual postAct change experience forms part of our adopted projection basis.


1/05/2009 5:54 PM

Analysis by type of payment

29

4 Analysis by type of payment

4.1 By financial year

The table below shows how the composition of claim payments from Form WC101has changed over the period. Figures are taken from a summary of the Form WC101returns.

2008/09 2007/08 2006/07 2005/06 2004/05 2003/04 2002/03 2001/02

Type of Payment 6 months

(a) (a) (a) (a) (a) (a)

% % % % % % % %

Weekly benefits 35.3% 35.3% 33.8% 32.9% 32.0% 32.9% 30.4% 31.1%Redemptions 11.6% 12.0% 13.1% 14.1% 13.9% 14.0% 15.1% 14.6%Schedule 2 3.4% 3.3% 3.6% 3.8% 3.9% 4.4% 4.2% 4.4%Medical 10.4% 11.1% 10.7% 10.8% 10.9% 10.8% 10.8% 11.2%Hospital & other treatment 10.8% 10.9% 10.3% 10.8% 10.9% 11.4% 9.5% 9.0%Rehabilitation 3.3% 3.2% 3.5% 3.8% 3.9% 4.4% 3.8% 3.8%Legal 4.8% 4.5% 5.4% 5.9% 6.4% 6.3% 7.1% 7.9%Common law 15.1% 14.7% 14.4% 13.5% 13.8% 11.0% 15.3% 13.3%Other 5.4% 5.0% 5.1% 4.3% 4.3% 4.8% 3.8% 4.7%Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%Amount ($000's) 276,070 483,357 442,526 412,379 388,275 348,649 357,250 358,096% change 16.8% 9.2% 7.3% 6.2% 11.4% -2.4% -0.2%WC20 Amount ($000's) 275,831 482,711 442,301 412,297 387,867 348,180 357,153 357,970% difference from WC101 -0.1% -0.1% -0.1% 0.0% -0.1% -0.1% 0.0% 0.0%

Note : (a) from 1/7/99 onwards, the above figures include GIFU.

The percentage change for the six months to 31/12/2008 is against the comparableperiod of the previous year. Note LGIS - WorkCare has been excluded in all accidentyears, in the above table.

The following trends are apparent:

weekly benefits declined to 1999/2000 (refer prior reports), increased in2000/01, and has been stable to increasing since

there were steady increases each year in common law, leading up to the Actchanges in 1999/2000 (refer prior reports). There was a very significantdecline in common law in 2000/01 and 2001/02. 2002/03 increased slightly,followed by a material decrease in 2003/04. The common law percentage wasfairly stable at around 14% from 2004/05 to 2006/07. However, this increasedto 14.7% in 2007/08 and has increased to 15.1% in the 6 months to31 December 2008. This increase in recent years might be an indication of theemerging impact of the 2004 reform Act changes

very low redemptions up to 1998/99 (refer prior reports) and a rapid increase to8.6% in 2000/01. 2001/02 had a further significant increase to 14.6% and2002/03 increased slightly to 15.1% and has been stable to reducing since then.The October 1999 amendments removed the previous redemption restrictions

Schedule 2 payments have been slowly declining over the last five years

since 2001/02 medical payments have been relatively stable at 10-11% of totalpayments


1/05/2009 5:54 PM


30

since 2001/02 hospital payments have steadily increased from 8.5% to a newlevel of around 11%

rehabilitation has been generally declining since 2003/04 (4.4%) and was 3.4%of total payments in the six months to December 2008

the trend in legal shows steady decreases, from a high of 8.0% in 2000/01, ithas declined to around 5% since then

other payments comprise miscellaneous and fatals and have a stable toincreasing trend, with the six months to December 2008 at 5.4%.

Assumptions to allow for these trends have been made in our projections of futureclaim costs. The trends are generally close to what was expected from the 1993 Actchanges and the escalation of common law costs prior to the Act changes in both 1993and 1999. The response to the October 1999 amendments is reflected not only by theincrease in weekly benefits and the rapid increase in Schedule 1 redemptions, but alsothe sharp decline in common law payments. This decline in the common law portionhas lead to stronger apparent increases in other pay type portions, notably weekly andlegal. However over the recent years common law payments have started to increasefollowing the introduction of the 2004 Reform Act.

The most significant features of the distribution by type of payment during 2007/08and the six months to 31 December 2008 are:

the increase in weekly benefits over 2007/08 which remained stable in the sixmonths to 31 December 2008,

the increase in common law levels, some of which may be seasonal and largeclaim effects, and

the six months claim payment data to 31 December 2008 shows a 17% increasefrom the same time last year in actual dollar terms.


1/05/2009 5:54 PM


31

4.2 PPCI by type of payment

An analysis by development year of the payments per claim incurred (PPCI) in realterms enables a different perspective on trends and helps identify areas ofsuperimposed inflation (real growth after adjusting prior payments for normal/AWEinflation). The trends are shown in the charts below with brief commentary.

Weekly Benefit

Weekly benefit PPCIs

-

400

800

1,200

1,600

2,000

2,400

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

$

DY0 DY1 DY2 DY3DY4 DY5 DY6->

Real growth is apparent for development years zero and one since 2001. The rate ofgrowth has accelerated in 2008, particularly for development year 1. The remainingdevelopment years are relatively flat/stable in real terms.

Redemptions and Schedule 2

Redemption and Sch 2 PPCIs

-

100

200

300

400

500

600

700

800

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

$


Redemptions and Schedule 2 payments grew strongly in real terms from 2000 to 2003across all development years, due to the October 1999 amendments removingredemption restrictions. The growth is most marked for development years 1, 2 and3. Since 2005 / 2006, the PPCIs have been decreasing with yearly variations.


1/05/2009 5:54 PM


32

Vocational rehabilitation

Vocational rehab PPCIs

-

50

100

150

200

250

300

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

$


Vocational rehabilitation shows some real growth trends up to 2004 for developmentyears 0 to 2, but have been stable to somewhat declining since 2004.

Medical, hospital and all other treatment

Medical, hosp & all other treatment PPCI

-

200

400

600

800

1,000

1,200

1,400

1,600

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

$


The combination of medical, hospital and all other treatment show material realincreases since 2001 in development years 0 and 1. The rate of growth accelerated in2008. All other development years are relatively stable.


1/05/2009 5:54 PM


33

Miscellaneous and fatals

Miscellaneous and fatals PPCI

-

40

80

120

160

200

240

280

320

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

$


Miscellaneous and fatals combined is a fairly minor payment type (5.4% of total)which has a declining overall trend over the start of the period shown with a level ofstability from 2004 to 2006. Sharp increases for development years 0 and 1 haveoccurred in 2007 and 2008 caused mainly by increases in miscellaneous payments.

Common law and legals

Common law and legals PPCIs

-

200

400

600

800

1,000

1,200

1,400

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

$


Common law and legals combined declined significantly from 2000 to 2002,increased in 2003 with a relatively stable trend thereafter, notwithstanding the year onyear variability. Note that DY3 and DY4 have experienced sharp increase in 2007and 2008.


1/05/2009 5:54 PM


34

Total of all paytypes

Total of all paytypes : PPCIs

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

$


All payment types combined show some real growth in development years 0 and 1since 2001. The rate of growth accelerated in 2008. The later development years arestable to declining.

In summary we have evidence of:

superimposed inflation in the early development years probably due tolengthening claim durations for statutory benefit claims in particular weeklybenefits, combined with

some neutral to negative superimposed inflation experience in the middle toolder development years due to the reduction in common law costs net ofheavier but now stable redemption experience together with

some recent increase in weekly benefits and combined medical payment rates.


1/05/2009 5:54 PM

Expense analysis

35

5 Expense analysis

The expenses are analysed from the Statement of Premium and Expenses. The resultsobtained are summarised below:

2007/08 2006/07 2005/06 2004/05 2003/04 2002/03 2001/02

Commission / Brokerage 3.3% 3.3% 3.2% 3.4% 3.5% 3.2% 3.4%Statutory Charges / Levy 1.9% 1.9% 1.9% 1.7% 1.9% 1.9% 1.8%Management Expenses 13.2% 12.6% 11.8% 13.8% 13.2% 12.9% 10.8%Total 18.5% 17.8% 16.9% 19.0% 18.7% 18.0% 16.0%

Expense Ratios

The expense ratios are used directly in deriving the loss ratio used to quantify thegross incurred cost of WA workers' compensation claims. The 0.7% increase sincelast year is due to an increase in management expenses. Note that from 2002/03,insurers supplied statutory charge information broken down into General Fund,Supplementation Fund and ‘other’. Only General Fund contributions have been usedfor statutory charges from 2002/03 in this analysis.

Detail by insurer for 2007/08 is as follows:

Brokerage General Fund Management Total Supp Fund

Insurer % (a) Charges % Expenses % Expenses Charges %

(b) (c) (d) (e)

1 0.0% 2.9% 30.0% 32.9% 1.0%2 3.6% 2.2% 24.7% 30.5% 1.1%3 3.5% 1.8% 20.2% 25.5% 0.8%4 3.5% 2.3% 16.3% 22.1% 1.1%5 0.0% 2.1% 18.8% 20.9% 0.9%6 3.9% 1.8% 15.2% 20.9% 1.0%7 0.0% 1.5% 17.0% 18.5% 0.0%8 3.4% 2.0% 9.1% 14.5% 0.9%

9 4.0% 2.0% 8.0% 14.1% 1.0%

10 3.9% 1.7% 7.7% 13.3% 0.9%

Total (f) 3.3% 1.9% 13.2% 18.5% 0.9%

Notes : (a) = Commission and Brokerage / Gross Written Premium

(b) = General Fund Charges / Gross Written Premium

(c) = Management Expenses / Earned Premium

(d) = (a) + (b) + (c)

(e) = Supplementation Fund Charges / Gross Written Premium.

(f) = includes ICGF which has expenses but no premium.ICGF not shown in table as all expenses % are zero.

The 2007/08 expense levels are adopted for 2009/10 recommended rates.

If brokerage is spread over only those insurers paying brokerage, the percentageincreases from 3.3% to 3.7%.

Note that we have shown the Supplementation Fund percentage for illustrativepurposes only. The insurer number in the above table does not concord with that inthe reserving strength table in section 3.4.1.


1/05/2009 5:54 PM

Limitations and reliances

36

6 Limitations and reliances

6.1 Limitations

The actuarial advice contained in this report is provided in the context of the briefreceived, the data provided, the analysis conducted and the assumptions and methodsadopted and is for the sole use and benefit of WorkCover WA Board. Judgementsbased on the contents of this report should be made only after studying the reportand the attachments in their entirety, as conclusions reached by a review of anaspect or section in isolation may be misleading.

We have taken every care in the preparation of this report. However, the conclusionsreached in this report are reliant on the completeness and accuracy of informationcompiled and provided by insurers to WorkCover WA. Other than preliminary datachecks, we have not conducted an independent review of this information. We do notaccept any liability or responsibility for errors or omissions arising from the provisionof inaccurate or incomplete information to us.

This report has been prepared on the instructions of WorkCover WA in accordancewith the detailed terms of reference in the tender document referred to in section 2.1above.

Unless required by law no copy of or extract from this report is to be distributed tothird parties (or the public) without our prior written consent.

No oral or written reference to the content of this report may be made by WorkCoverWA to any third parties without our prior written consent.

No third party recipients may distribute this report to anyone else under anycircumstances.

We may at our discretion, grant our written consent to the above subject to thefollowing conditions:

the report is to be released in its entirety in response to a request, including allappendices and attachments

we accept no responsibility to any other person or entity in relation to thisreport.

no one other than WorkCover WA should rely on this report for any purpose.


1/05/2009 5:54 PM

Limitations and reliances

37

6.2 Additional reliances on common law/election application costings

The common law projections in Attachment H and L involve assumptions aboutfuture uncertain claim events, the impact of legislative change and economicconditions and hence the actual outcome may well be different from the results in thisreport.

The actuarial valuation of workers' compensation risks is subject to a high level ofuncertainty (see section 7.4 and 7.5 of this report).

This uncertainty is even greater when trying to project the common law component onits own. This is because the cost of common law claims by their nature are moredifficult to predict since they are the larger claims, they tend to have longer reportingand payment delays than the statutory benefit claims and a greater dispersion of claimsize.

The uncertainty is also influenced by the response of system participants to theOctober 1999 and the 2004 Reform Act amendments. The robustness of the changesis unpredictable but depends on:

the frequency of use of lump sum redemptions

the effectiveness of the election option

the administration of the common law access process

the trends in late lodgements of common law claims with 30% or moredisability /25% or more impairment after the 6/12 month limit for electionoption expires

the use of psychological overlays to access common law (October 1999amendments only).

The claims experience after the October 1999 Act changes was mainly better thanexpected by the assumptions in our earlier reports. It is early to reliably assess thecommon law impact of the 2004 Reform Act amendments, which appears stable butthe influence of the 12 month election option and the frequency of its extension to 24months, creates a potential latency impact.


1/05/2009 5:54 PM

Data and methods used

38

7 Data and methods used

7.1 Data and assumptions

The data used and the assumptions adopted are detailed fully in Attachment D and E.

The data quality was improved compared to last year. This was the eighth yearinvolving two new data items in Form WC11 being number of policies and grosswritten premium. These fields were generally better completed than last year.

This is the fourteenth time the enhanced data forms have been completed. Someinsurers are still finding it difficult to provide accurate and consistent data. We findvariances between claim numbers, claim payments and case estimates on Form WC11and Form WC20 for the some insurers. This means that the aggregation of claim databy premium rating class is not equal to the total data. This calls into question both thecompleteness and accuracy of the allocation of rating classes to policies and their linkto the claims which emanate from those policies.

The data for the election application and large claim analyses are described inAttachment D2.

7.2 Types of estimates

The estimated liability for outstanding claims has been calculated as the present valueof the liability allowing for:

(a) future increases prior to payment, due to claims inflation

(b) discounting to take into account investment return attributable to the assetsbacking the provisions during the run-off period

(c) expenses associated with administering claims during the run-off period.

This approach is consistent with that required by the Accounting Standards for privateand State Government general insurers (AASB1023), and APRA’s prudentialstandard GPS310 for liability valuations for general insurance. It also complies withthe Institute of Actuaries of Australia's Professional Standard PS300 to the extentpossible given the data available. We note in section 3.4 that we have not performed afull review of asbestos liabilities due to lack of available data.

The question of uncertainty in the actuarial estimates and the determination ofprovisions is discussed in Sections 7.4 and 7.5.

7.3 Methods

The methods used are fully described in Attachment F.

The methods for the election application analysis are fully described in Attachment H.


1/05/2009 5:54 PM


39

7.4 Uncertainty in the estimates

Actuarial estimates are obtained after analysis of past claims experience. From theseanalyses, models of the claim payment process can be established and used to projectfuture payments on claims outstanding at the balance date.

The estimates of outstanding claims obtained in this manner are indeed estimates inthe sense that there is a degree of uncertainty as to the difference which willultimately arise between the estimates and the final result of the experience. Thisuncertainty arises from four sources:

(a) because the nature of the claims process is not fully understood, it might bethat none of the various models used is an entirely accurate representation ofreality

(b) because there are components of randomness in the claims process, it is notpossible to estimate the parameters of that process with complete precisioneven if complete confidence were felt in the nature of the model

(c) any erroneous data will similarly have introduced uncertainties into theestimates of those parameters

(d) even if the parameters could be estimated with precision, it would not bepossible to predict outstanding claims with the same precision because of therandom component in future experience.

Errors associated with (b) and (d) above can, for some portfolios, be quantified in aformal way (estimation and statistical errors). However a large part of theuncertainty is associated with (a) (model specification error), and unfortunately it isnot possible to quantify this component.

The investigation and application of different models to the data is intended to reducethe model specification error, although the extent to which this is achieved isunknown.

The initial estimates obtained from the calculations are "central" estimates in thesense that they incorporate no deliberate bias towards over or under estimation. Bydefinition, the estimates are intended to have about an even chance of ultimatelyturning out to be sufficient.

7.5 Determination of provisions

7.5.1 Background

Because of the uncertainty described above, provisions which are somewhat greaterthan the actuarial "central" estimates are often adopted. A 50% probability ofprovisions being too low, is seen as involving a higher than desirable risk.

This is intended to provide security for stakeholders.


1/05/2009 5:54 PM


40

However, security is not the only reason to adopt provisions which are greater thanthe statistical central estimates. It may be to ensure as far as possible that reserves arenot released until it is reasonably certain that they are not required. A 50% chancethat the reserves will eventually not be required is generally not seen as sufficient.

Any decision to adopt provisions for outstanding claims which are greater than thecentral estimates, together with the extent of any margin, is in my view a decisionwhich should properly be taken by the Boards of insurers. In making this decisionthey may take into account various matters (both objective and subjective) whichinfluence their view of future experience.

It should be realised that, by definition, any margins over central estimates areintended to have a better than even chance of falling into future surplus, provided thatfuture experience is consistent with that of the recent past. This should be consideredin making management decisions.

7.5.2 Levels of sufficiency

The nature of insurance claims is such that the actual value of the liabilities isunknown because claims experience is subject to random fluctuations. The amount ofthe claim liability cannot be estimated with certainty. Also it is very difficult todetermine the central estimate with a reasonable degree of precision. For this reasonthe inherent uncertainty in the central estimate must also be considered.

It is common practice for the actuary to provide a central estimate of the liabilities.Such an estimate should contain no deliberate or conscious over or under estimation.

The provision adopted in the accounts should usually be greater than the centralestimate, the difference is referred to as a prudential margin. As explained above, theprudential margin allows for some part of the uncertainties in the claim process andalso it ensures as far as possible that surplus is not released until it is reasonablycertain that the surplus is real.

The adopted method was tested for its sensitivity to changes in the claim ratesassumed and a measure of the variation in the results was obtained. This analysisindicated that the distribution of likely results was skewed to the right. This meansthat the variation upwards in the provision is expected to be greater than the variationdownwards.

The dispersion of expected results is added to by :

the variable nature of the claim experience

very large common law claims ($350,000 or more) can sometimes occur.


1/05/2009 5:54 PM


41

The variation analysed together with benchmarking against reports published byAPRA and the Institute of Actuaries leads to the assumption of a 20% standarddeviation of the distribution of results which allows for the skew distribution andsystemic variation. The lognormal distribution was then assumed to apply whencalculating the prudential margin required to increase the level of sufficiency above50%.

The coefficient of variation calculated as described above is taken as 17%. Thisleads to the following prudential margins.

60% 70% 75% 80%RPR provision 2.89% 7.71% 10.47% 13.63%

Level of sufficiency

7.5.3 Sensitivity

The adopted method was tested for its sensitivity to changes in the assumptions aboutfuture interest and inflation rates, adopted reporting rates, the adopted coefficient ofvariation and superimposed inflation and a measure of the variation in the results wasobtained. The results of this analysis are shown below:

% ChangeAssumption Varied Variation in total provision

Future interest rates: 1% increase -2.33%1% decrease 2.47%

Future inflation rates: 1% increase 2.44%1% decrease -2.34%

Adopted reporting DY0 rate decreasedrates from 9.63% to 4.82% -2.36%

Coefficient of variation increased from 17% to25% 3.68%

Superimposed inflation 1% increase 2.18%

Common law frequency 20% increase 3.31%20% decrease -3.31%

2004 Reform Act 25% increase 0.76%25% decrease -0.76%

Recommended Premium Rates Provisions - Sensitivity Analysis

Notes: (a) the change in coefficient of variation only impacts the risk margin and hence the provision

while the control estimate does not change.


1/05/2009 5:54 PM


42

The percentage change in the outstanding claim provision as at 30/06/2008 is shownin the table above. The inherent robustness of the various assumptions in the tableabove means that the variations shown are not necessarily cumulative. Hence careneeds to be exercised in developing any best or worst case scenario.

The relative change in the required premium pool would be similar to the provisionvariations shown above.


1/05/2009 5:54 PM

Attachment A Relative premium rates –

effective increase of 9.9%

43

Note that the claims experience for ANZSIC code 81130 – Local Government Administrationis based predominantly on historical data collected from private insurers and does not reflectthe current experience of the Local Government self-insurance scheme.

A Relative premium rates – effective increase of 9.9%

Relative Premium Rates % Change in Relative MarginsGazette Gazette Normalised 2009/2010

Weighted 2007/08 2008/09 Relative Prem Rates (RES09/10)/ (GAZ08/09)/ TRUE /Divn/Class Name Loss Ratio Credibilty GAZ07/08 GAZ08/09 TRUE Restricted GAZ08/09 GAZ07/08 (RES09/10)

A AGRICULTURE, FORESTRY AND FISHING

1110 Plant Nurseries 65.4% 45.2% 3.71 3.06 3.43 3.38 10.2% -17.5% -1.4%1120 Cut Flower and Flower Seed Growing 67.7% 24.3% 3.86 3.20 3.68 3.63 13.3% -16.9% -1.4%

1130 Vegetable Growing 64.5% 42.4% 5.04 3.83 4.59 4.52 18.2% -24.1% -1.4%1140 Grape Growing 54.3% 43.6% 4.17 3.15 3.19 3.15 -0.1% -24.4% -1.4%1150 Apple and Pear Growing 64.9% 27.0% 4.24 3.33 3.88 3.83 14.8% -21.4% -1.4%

1160 Stone Fruit Growing 57.5% 13.2% 5.04 3.96 4.08 4.03 1.7% -21.4% -1.4%1170 Kiwi Fruit Growing 63.3% 0.9% 4.22 3.31 3.76 3.71 12.0% -21.5% -1.4%

1190 Fruit Growing n.e.c. 66.3% 41.2% 4.08 3.23 3.82 3.76 16.5% -20.9% -1.4%1210 Grain Growing 73.6% 21.8% 5.13 4.60 5.33 5.26 14.4% -10.4% -1.4%1220 Grain-Sheep and Grain-Beef Cattle Farming 77.7% 94.5% 4.89 4.50 5.36 5.28 17.4% -7.9% -1.4%

1230 Sheep-Beef Cattle Farming 65.3% 25.8% 6.93 5.50 6.38 6.29 14.3% -20.6% -1.4%1240 Sheep Farming 77.2% 18.5% 5.65 5.12 6.15 6.06 18.5% -9.4% -1.4%1250 Beef Cattle Farming 69.3% 31.1% 5.87 5.19 5.74 5.66 9.0% -11.6% -1.4%

1300 Dairy Cattle Farming 68.9% 27.0% 4.98 4.04 4.85 4.78 18.3% -18.9% -1.4%1410 Poultry Farming (Meat) 80.0% 17.2% 4.65 4.27 5.25 5.18 21.1% -8.1% -1.4%1420 Poultry Farming (Eggs) 82.9% 16.4% 4.52 4.43 5.28 5.21 17.5% -1.9% -1.4%

1510 Pig Farming 69.4% 19.8% 6.23 5.38 6.10 6.01 11.8% -13.7% -1.4%1520 Horse Farming 66.6% 15.0% 6.36 5.37 5.97 5.89 9.7% -15.6% -1.4%

1530 Deer Farming 70.5% 2.1% 5.61 4.79 5.58 5.50 14.9% -14.6% -1.4%1590 Livestock Farming n.e.c. 72.3% 10.1% 5.37 4.60 5.47 5.40 17.3% -14.3% -1.4%1610 Sugar Cane Growing 65.8% 3.5% 4.99 4.08 4.63 4.57 12.1% -18.3% -1.4%

1620 Cotton Growing 65.0% 0.8% 5.14 4.17 4.71 4.64 11.3% -18.8% -1.4%1690 Crop and Plant Growing n.e.c 60.8% 14.8% 5.42 4.23 4.65 4.58 8.3% -21.9% -1.4%2110 Cotton Ginning 81.2% 0.4% 3.90 3.51 4.47 4.41 25.7% -10.1% -1.4%

2120 Shearing Services 78.8% 59.4% 5.09 4.51 5.66 5.58 23.7% -11.4% -1.4%2130 Aerial Agriculture Services 91.1% 8.2% 3.76 3.92 4.83 4.76 21.5% 4.2% -1.4%2190 Services to Agriculture n.e.c 79.1% 72.9% 3.13 2.78 3.50 3.45 24.0% -11.3% -1.4%

2200 Hunting and Trapping 78.4% 2.7% 3.85 3.41 4.25 4.19 23.0% -11.4% -1.4%3010 Forestry 80.8% 28.7% 2.54 2.28 2.89 2.85 25.1% -10.2% -1.4%3020 Logging 87.6% 36.2% 3.45 3.03 4.27 4.21 39.1% -12.4% -1.4%

3030 Services to Forestry 77.1% 45.1% 3.03 2.94 3.29 3.24 10.3% -2.8% -1.4%4110 Rock Lobster Fishing 84.6% 35.9% 2.93 2.74 3.50 3.45 26.1% -6.7% -1.4%

4120 Prawn Fishing 81.3% 14.6% 2.63 2.40 3.01 2.97 23.9% -8.8% -1.4%4130 Finfish Trawling 81.0% 7.0% 3.16 3.19 3.61 3.56 11.7% 0.9% -1.4%4140 Squid Jigging 79.7% 0.9% 3.01 2.73 3.38 3.33 22.1% -9.1% -1.4%

4150 Line Fishing 77.8% 9.9% 3.36 2.94 3.69 3.63 23.5% -12.3% -1.4%4190 Marine Fishing n.e.c. 75.0% 36.7% 2.87 2.50 3.03 2.99 19.6% -12.7% -1.4%4200 Aquaculture 75.3% 39.5% 4.27 3.74 4.53 4.47 19.5% -12.4% -1.4%

Premium Rates


1/05/2009 5:54 PM



44



B MINING

11010 Black Coal Mining 74.3% 63.9% 2.03 1.70 2.12 2.09 23.2% -16.1% -1.4%

11020 Brown Coal Mining 72.7% 1.8% 1.99 1.66 2.04 2.01 21.2% -16.6% -1.4%12000 Oil and Gas Extraction - On Land 60.6% 87.6% 0.43 0.40 0.37 0.40 0.0% -7.7% 7.4%

12001 Oil and Gas Extraction - Offshore 82.8% 99.4% 2.04 1.90 2.39 2.35 24.1% -7.2% -1.4%13110 Iron Ore Mining 82.9% 100.0% 0.47 0.42 0.56 0.55 31.0% -12.0% -1.4%13120 Bauxite Mining 56.3% 27.3% 1.28 0.96 1.01 1.00 3.9% -24.6% -1.4%

13130 Copper Ore Mining 59.5% 35.2% 1.46 1.10 1.22 1.21 9.5% -24.5% -1.4%13140 Gold Ore Mining 53.3% 100.0% 1.45 1.02 1.09 1.07 5.2% -29.5% -1.4%13141 Gold Mining Underground 93.2% 100.0% 3.04 3.02 4.00 3.94 30.8% -0.9% -1.4%

13150 Mineral Sand Mining 60.7% 100.0% 1.17 0.94 1.00 0.99 4.6% -19.3% -1.4%13160 Nickel Ore Mining 65.5% 100.0% 1.55 1.26 1.44 1.42 12.7% -19.1% -1.4%13170 Silver-Lead-Zinc Ore Mining 49.5% 43.0% 1.53 1.24 1.07 1.05 -15.3% -18.7% -1.4%

13190 Metal Ore Mining n.e.c. 61.5% 49.6% 1.31 1.08 1.14 1.12 3.9% -17.7% -1.4%14110 Gravel and Sand Quarrying 67.9% 22.2% 3.72 3.49 3.56 3.51 0.6% -6.1% -1.4%

14190 Construction Material Mining n.e.c. 78.8% 47.3% 4.24 4.34 4.72 4.65 7.2% 2.2% -1.4%14200 Mining n.e.c. 64.6% 100.0% 1.74 1.37 1.58 1.56 14.4% -21.5% -1.4%14201 Salt Harvesting 60.6% 54.3% 1.25 0.92 1.07 1.06 14.3% -26.3% -1.4%

15110 Petroleum Exploration (Own Account) 66.2% 25.9% 1.41 1.12 1.32 1.30 16.4% -20.9% -1.4%15120 Petroleum Exploration Services 55.9% 30.7% 2.14 1.81 1.69 1.66 -8.3% -15.2% -1.4%15130 Mineral Exploration (Own Account) 43.6% 90.4% 0.84 0.60 0.52 0.51 -15.1% -28.5% -1.4%

15140 Mineral Exploration Services 81.2% 66.8% 3.19 2.68 3.66 3.61 34.7% -16.1% -1.4%15200 Other Mining Services - On Land 60.3% 100.0% 2.48 1.93 2.11 2.08 8.0% -22.3% -1.4%

15201 Other Mining Services - Offshore 47.6% 70.3% 1.58 0.92 1.06 1.05 13.9% -41.9% -1.4%

C MANUFACTURING

21110 Meat Processing 59.6% 87.9% 6.17 4.91 5.19 5.11 4.1% -20.4% -1.4%21120 Poultry Processing 60.6% 36.1% 5.90 4.67 5.04 4.97 6.6% -21.0% -1.4%

21130 Bacon, Ham and Smallgood Manufacturing 67.1% 39.9% 6.33 5.37 5.99 5.90 9.9% -15.1% -1.4%21210 Milk and Cream Processing 68.0% 25.7% 3.29 2.72 3.15 3.11 14.3% -17.3% -1.4%

21220 Ice Cream Manufacturing 73.2% 47.8% 3.47 2.87 3.58 3.53 23.1% -17.3% -1.4%21290 Dairy Product Manufacturing n.e.c. 67.8% 41.0% 3.31 2.69 3.16 3.12 15.7% -18.6% -1.4%21300 Fruit and Vegetable Processing 59.4% 21.8% 4.62 3.53 3.87 3.82 8.0% -23.5% -1.4%

21400 Oil and Fat Manufacturing 89.2% 17.0% 3.07 2.57 3.86 3.81 48.3% -16.4% -1.4%21510 Flour Mill Product Manufacturing 72.4% 23.7% 3.09 2.56 3.15 3.11 21.5% -17.1% -1.4%21520 Cereal Food and Baking Mix Manufacturing 70.7% 27.6% 3.72 3.10 3.71 3.66 18.3% -16.8% -1.4%

21610 Bread Manufacturing 60.9% 53.0% 4.07 3.13 3.50 3.45 10.2% -23.1% -1.4%21620 Cake and Pastry Manufacturing 67.4% 30.1% 3.73 3.04 3.54 3.49 14.8% -18.3% -1.4%21630 Biscuit Manufacturing 68.9% 13.8% 3.54 2.80 3.44 3.39 21.1% -20.9% -1.4%

21710 Sugar Manufacturing 75.7% 12.5% 4.91 4.36 5.25 5.17 18.5% -11.1% -1.4%21720 Confectionery Manufacturing 71.1% 18.8% 5.37 4.61 5.39 5.31 15.2% -14.2% -1.4%

21730 Seafood Processing 76.4% 44.3% 5.38 4.46 5.80 5.72 28.2% -17.1% -1.4%21740 Prepared Animal and Bird Feed Manufacturing 70.8% 28.3% 5.70 5.09 5.70 5.62 10.3% -10.7% -1.4%21790 Food Manufacturing n.e.c. 83.5% 44.2% 6.54 6.54 7.70 7.60 16.2% 0.0% -1.4%

Premium Rates


1/05/2009 5:54 PM



45



21810 Soft Drink, Cordial and Syrup Manufacturing 80.2% 56.2% 2.49 2.48 2.82 2.78 12.2% -0.6% -1.4%

21820 Beer Manufacturing 79.7% 47.4% 1.95 1.92 2.19 2.16 12.4% -1.4% -1.4%21821 Malt Manufacturing 0.0% 0.0% 2.20 2.10 2.29 2.26 7.9% -4.8% -1.4%21830 Wine Manufacturing 61.5% 68.5% 2.26 1.91 1.96 1.93 1.0% -15.3% -1.4%

21840 Spirit Manufacturing 65.6% 8.0% 2.28 2.05 2.11 2.08 1.5% -10.0% -1.4%21900 Tobacco Product Manufacturing 68.7% 4.6% 3.83 3.26 3.71 3.66 12.2% -14.9% -1.4%

22110 Wool Scouring 76.1% 10.3% 3.31 3.14 3.55 3.50 11.5% -5.1% -1.4%22120 Synthetic Fibre Textile Manufacturing 67.7% 1.7% 3.63 3.13 3.46 3.41 9.1% -13.8% -1.4%22130 Cotton Textile Manufacturing 87.4% 25.6% 2.84 3.01 3.51 3.46 14.8% 5.9% -1.4%

22140 Wool Textile Manufacturing 71.7% 0.8% 3.46 3.14 3.50 3.45 9.6% -9.0% -1.4%22150 Textile Finishing 59.3% 2.2% 5.74 5.08 4.80 4.74 -6.8% -11.5% -1.4%22210 Made-Up Textile Product Manufacturing 73.9% 52.2% 3.23 2.88 3.37 3.32 15.4% -10.9% -1.4%

22220 Textile Floor Covering Manufacturing 71.7% 11.8% 2.97 2.67 3.01 2.97 11.1% -10.3% -1.4%22230 Rope, Cordage and Twine Manufacturing 70.9% 1.2% 3.26 2.94 3.26 3.22 9.5% -10.0% -1.4%

22290 Textile Product Manufacturing n.e.c. 64.2% 16.2% 3.15 2.65 2.85 2.81 6.4% -16.0% -1.4%22310 Hosiery Manufacturing 70.4% 13.0% 4.78 4.29 4.75 4.69 9.3% -10.4% -1.4%22320 Cardigan and Pullover Manufacturing 81.9% 10.7% 3.78 3.74 4.37 4.31 15.2% -1.1% -1.4%

22390 Knitting Mill Product Manufacturing n.e.c. 91.1% 3.2% 3.89 3.59 5.00 4.93 37.2% -7.6% -1.4%22410 Men's and Boys' Wear Manufacturing 64.9% 16.0% 4.12 3.48 3.77 3.72 6.9% -15.5% -1.4%22420 Women's and Girls' Wear Manufacturing 68.4% 10.2% 3.81 3.60 3.67 3.62 0.6% -5.5% -1.4%

22430 Sleepwear, Underwear and Infant Clothing Manufacturing 67.2% 2.9% 3.74 3.35 3.54 3.50 4.3% -10.4% -1.4%22490 Clothing Manufacturing n.e.c. 63.9% 19.3% 4.23 3.62 3.81 3.76 3.7% -14.3% -1.4%

22500 Footwear Manufacturing 62.4% 16.8% 2.95 2.50 2.60 2.56 2.6% -15.4% -1.4%22610 Leather Tanning and Fur Dressing 73.1% 16.2% 3.25 4.31 3.35 3.30 -23.4% 32.8% -1.4%22620 Leather and Leather Substitute Product Manufacturing 69.0% 10.8% 3.25 3.43 3.16 3.12 -9.1% 5.6% -1.4%

23110 Log Sawmilling 80.8% 45.8% 3.80 3.02 4.34 4.28 41.5% -20.6% -1.4%23120 Wood Chipping 77.8% 13.0% 3.50 2.82 3.85 3.79 34.6% -19.6% -1.4%

23130 Timber Resawing and Dressing 61.5% 6.8% 5.42 3.97 4.71 4.64 17.0% -26.8% -1.4%23210 Plywood and Veneer Manufacturing 120.1% 25.1% 2.65 3.23 4.48 4.42 36.9% 22.0% -1.4%23220 Fabricated Wood Manufacturing 95.1% 39.7% 2.65 2.68 3.56 3.51 31.1% 0.9% -1.4%

23230 Wooden Structural Component Manufacturing 75.8% 64.5% 3.86 3.42 4.12 4.07 18.9% -11.4% -1.4%23290 Wood Product Manufacturing n.e.c. 79.9% 37.5% 4.06 3.73 4.58 4.52 21.0% -8.1% -1.4%23310 Pulp, Paper and Paperboard Manufacturing 58.7% 32.2% 5.18 3.93 4.28 4.22 7.4% -24.0% -1.4%

23320 Solid Paperboard Container Manufacturing 68.3% 1.1% 4.09 3.32 3.94 3.89 17.1% -18.9% -1.4%23330 Corrugated Paperboard Container Manufacturing 72.5% 18.2% 3.49 2.77 3.57 3.52 26.9% -20.5% -1.4%

23340 Paper Bag and Sack Manufacturing 67.2% 11.5% 3.80 3.02 3.60 3.55 17.3% -20.3% -1.4%23390 Paper Product Manufacturing n.e.c. 63.7% 10.7% 4.35 3.41 3.90 3.85 13.0% -21.6% -1.4%24110 Paper Stationery Manufacturing 106.1% 20.2% 1.26 1.47 1.89 1.87 27.2% 16.1% -1.4%

24120 Printing 78.9% 86.5% 1.23 1.00 1.37 1.35 35.0% -18.7% -1.4%24130 Services to Printing 79.0% 28.3% 1.30 1.17 1.45 1.43 21.9% -9.9% -1.4%24210 Newspaper Printing or Publishing 85.8% 100.0% 0.69 0.62 0.84 0.83 33.1% -10.4% -1.4%

24220 Other Periodical Publishing 60.4% 27.9% 0.82 0.71 0.70 0.69 -1.8% -14.4% -1.4%24230 Book and Other Publishing 72.6% 23.6% 0.73 0.62 0.75 0.74 19.3% -15.4% -1.4%

24300 Recorded Media Manufacturing and Publishing 80.1% 11.6% 1.21 1.07 1.36 1.34 26.0% -11.6% -1.4%25100 Petroleum Refining 46.3% 16.1% 2.85 2.06 1.86 1.84 -11.1% -27.5% -1.4%25200 Petroleum and Coal Product Manufacturing n.e.c. 52.3% 55.6% 1.09 0.86 0.80 0.79 -8.3% -20.6% -1.4%

Premium Rates


1/05/2009 5:54 PM



46



25310 Fertiliser Manufacturing 68.6% 61.8% 1.47 1.36 1.42 1.40 3.2% -7.6% -1.4%

25320 Industrial Gas Manufacturing 65.7% 34.1% 1.74 1.54 1.61 1.59 3.6% -11.8% -1.4%25330 Synthetic Resin Manufacturing 59.4% 23.2% 2.07 1.73 1.73 1.71 -1.1% -16.5% -1.4%25340 Organic Industrial Chemical Manufacturing n.e.c. 76.6% 25.9% 1.27 1.13 1.38 1.36 20.1% -11.3% -1.4%

25350 Inorganic Industrial Chemical Manufacturing n.e.c. 73.9% 62.4% 0.97 0.94 1.01 1.00 6.5% -3.5% -1.4%25410 Explosive Manufacturing 75.9% 40.2% 1.36 1.18 1.46 1.44 21.5% -13.1% -1.4%

25420 Paint Manufacturing 63.6% 27.8% 1.88 1.40 1.69 1.66 19.2% -25.8% -1.4%25430 Medicinal and Pharmaceutical Product Manufacturing 69.1% 48.7% 1.36 1.08 1.32 1.30 21.1% -20.6% -1.4%25440 Pesticide Manufacturing 68.3% 12.3% 1.43 1.16 1.38 1.36 17.7% -19.2% -1.4%

25450 Soap and Other Detergent Manufacturing 72.8% 16.1% 1.38 1.11 1.42 1.40 26.1% -19.6% -1.4%25460 Cosmetic and Toiletry Preparation Manufacturing 73.6% 9.9% 1.75 1.46 1.82 1.79 22.6% -16.5% -1.4%25470 Ink Manufacturing 66.6% 6.0% 1.71 1.36 1.60 1.58 16.4% -20.4% -1.4%

25490 Chemical Product Manufacturing n.e.c. 75.2% 26.8% 1.57 1.32 1.67 1.64 24.5% -15.9% -1.4%25510 Rubber Tyre Manufacturing 79.6% 23.7% 3.71 3.54 4.17 4.11 16.0% -4.5% -1.4%

25590 Rubber Product Manufacturing n.e.c. 82.2% 48.3% 3.44 3.44 3.99 3.93 14.3% 0.0% -1.4%25610 Plastic Blow Moulded Product Manufacturing 58.4% 29.7% 3.00 2.53 2.47 2.44 -3.6% -15.8% -1.4%25620 Plastic Extruded Product Manufacturing 62.6% 36.6% 3.02 2.45 2.67 2.63 7.5% -18.9% -1.4%

25630 Plastic Bag and Film Manufacturing 66.9% 28.1% 3.63 3.11 3.42 3.37 8.5% -14.2% -1.4%25640 Plastic Product Rigid Fibre Reinforced Manufacturing 54.7% 38.5% 3.10 2.35 2.39 2.36 0.2% -24.0% -1.4%25650 Plastic Foam Product Manufacturing 62.4% 17.0% 2.81 2.43 2.48 2.44 0.7% -13.8% -1.4%

25660 Plastic Injection Moulded Product Manufacturing 56.5% 30.7% 3.08 2.52 2.45 2.42 -3.9% -18.2% -1.4%26100 Glass and Glass Product Manufacturing 58.0% 17.8% 4.62 3.59 3.78 3.73 3.7% -22.2% -1.4%

26210 Clay Brick Manufacturing 54.5% 49.0% 3.53 2.65 2.71 2.68 1.1% -25.0% -1.4%26220 Ceramic Product Manufacturing 62.3% 17.2% 5.09 4.49 4.47 4.41 -1.7% -11.9% -1.4%26230 Ceramic Tile and Pipe Manufacturing 65.6% 5.9% 4.22 3.56 3.90 3.85 8.2% -15.6% -1.4%

26290 Ceramic Product Manufacturing n.e.c. 58.3% 20.1% 4.18 3.05 3.44 3.39 11.3% -27.2% -1.4%26310 Cement and Lime Manufacturing 51.3% 29.1% 4.79 3.51 3.47 3.42 -2.5% -26.8% -1.4%

26320 Plaster Product Manufacturing 45.5% 20.3% 6.07 4.12 3.90 3.84 -6.8% -32.0% -1.4%26330 Concrete Slurry Manufacturing 54.9% 33.8% 4.16 3.25 3.22 3.18 -2.2% -21.9% -1.4%26340 Concrete Pipe and Box Culvert Manufacturing 53.4% 7.9% 5.21 3.98 3.93 3.87 -2.7% -23.6% -1.4%

26350 Concrete Product Manufacturing n.e.c. 50.9% 51.2% 6.87 5.30 4.94 4.87 -8.2% -22.8% -1.4%26400 Non-Metallic Mineral Product Manufacturing n.e.c. 57.7% 25.6% 5.33 3.98 4.34 4.28 7.3% -25.2% -1.4%26401 Fibreglass and Insulation Manufacturing 72.4% 17.0% 6.17 5.06 6.30 6.21 22.6% -17.9% -1.4%

26402 Stone Products Manufacturing 58.9% 21.2% 7.65 6.12 6.35 6.26 2.4% -20.0% -1.4%27110 Basic Iron and Steel Manufacturing 73.6% 42.4% 4.11 3.30 4.27 4.21 27.7% -19.8% -1.4%

27120 Iron and Steel Casting and Forging 75.8% 40.5% 3.57 2.77 3.82 3.77 36.0% -22.5% -1.4%27130 Steel Pipe and Tube Manufacturing 82.0% 30.7% 3.57 3.24 4.13 4.07 25.7% -9.2% -1.4%27210 Alumina Production 50.6% 65.2% 1.72 1.09 1.23 1.21 10.9% -36.5% -1.4%

27220 Aluminium Smelting 67.4% 10.4% 1.57 1.23 1.49 1.47 19.5% -21.6% -1.4%27230 Copper, Silver, Lead and Zinc Smelting, Refining 83.0% 6.4% 2.18 1.84 2.56 2.52 37.0% -15.8% -1.4%27290 Basic Non-Ferrous Metal Manufacturing n.e.c. 59.0% 46.7% 1.90 1.49 1.58 1.56 4.7% -21.6% -1.4%

27310 Aluminium Rolling, Drawing, Extruding 68.9% 17.5% 3.34 2.77 3.25 3.20 15.5% -17.0% -1.4%27320 Non-Ferrous Metal Rolling, Drawing, Extruding n.e.c. 62.4% 1.9% 4.13 3.22 3.64 3.59 11.4% -22.1% -1.4%

27330 Non-Ferrous Metal Casting 80.7% 7.6% 4.44 3.71 5.06 4.99 34.4% -16.4% -1.4%27410 Structural Steel Fabricating 55.3% 100.0% 4.03 2.91 3.14 3.10 6.6% -27.8% -1.4%27420 Architectural Aluminium Product Manufacturing 67.0% 58.8% 3.32 2.63 3.14 3.09 17.7% -20.7% -1.4%

Premium Rates


1/05/2009 5:54 PM



47



27490 Structural Metal Product Manufacturing n.e.c. 67.6% 34.8% 4.76 3.81 4.54 4.48 17.5% -20.0% -1.4%

27510 Metal Container Manufacturing 69.0% 20.0% 3.52 2.83 3.42 3.37 19.1% -19.4% -1.4%27590 Sheet Metal Product Manufacturing n.e.c. 63.0% 73.8% 4.44 3.57 3.94 3.89 9.0% -19.6% -1.4%27610 Hand Tool and General Hardware Manufacturing 70.0% 12.7% 3.57 3.01 3.52 3.47 15.4% -15.6% -1.4%

27620 Spring and Wire Product Manufacturing 64.0% 24.1% 3.73 2.90 3.36 3.31 14.2% -22.1% -1.4%27630 Nut, Bolt, Screw and Rivet Manufacturing 74.8% 15.1% 3.94 3.39 4.16 4.10 21.1% -14.1% -1.4%

27640 Metal Coating and Finishing 63.6% 65.7% 4.95 4.11 4.44 4.38 6.7% -17.1% -1.4%27650 Non-Ferrous Pipe Fitting Manufacturing 68.9% 2.2% 3.77 3.19 3.66 3.61 13.1% -15.3% -1.4%27690 Fabricated Metal Product Manufacturing n.e.c. 69.8% 100.0% 3.37 2.90 3.32 3.27 13.1% -14.1% -1.4%

27691 Boiler Making and Installation 73.1% 79.9% 4.18 3.63 4.31 4.25 17.1% -13.1% -1.4%28110 Motor Vehicle Manufacturing 71.6% 19.9% 3.08 2.75 3.11 3.07 11.7% -10.8% -1.4%

28120 Motor Vehicle Body Manufacturing 70.7% 55.5% 4.53 4.04 4.52 4.45 10.2% -10.8% -1.4%28130 Automotive Electrical and Instrument Manufacturing 71.5% 10.2% 3.32 2.92 3.35 3.30 13.2% -12.2% -1.4%28190 Automotive Component Manufacturing n.e.c. 74.5% 41.5% 3.44 2.95 3.62 3.57 21.0% -14.3% -1.4%

28210 Shipbuilding 60.3% 78.2% 3.77 3.00 3.21 3.16 5.3% -20.4% -1.4%28220 Boatbuilding 63.1% 47.0% 3.90 3.12 3.47 3.42 9.5% -19.8% -1.4%28230 Railway Equipment Manufacturing 42.4% 34.8% 4.47 3.39 2.68 2.64 -22.1% -24.3% -1.4%

28240 Aircraft Manufacturing 57.0% 40.4% 3.15 2.28 2.53 2.49 9.4% -27.5% -1.4%28290 Transport Equipment Manufacturing n.e.c. 54.1% 19.1% 4.32 3.39 3.30 3.26 -3.9% -21.7% -1.4%

28310 Photographic and Optical Good Manufacturing 64.0% 21.5% 1.59 1.30 1.44 1.42 8.7% -18.1% -1.4%28320 Medical and Surgical Equipment Manufacturing 70.0% 29.7% 1.56 1.31 1.54 1.52 15.9% -15.9% -1.4%28390 Professional and Scientific Equipment Manufacturing n.e.c. 52.7% 41.9% 2.24 1.73 1.67 1.64 -4.8% -23.0% -1.4%

28410 Computer and Business Machine Manufacturing 80.0% 21.0% 0.89 0.78 1.00 0.99 26.2% -11.8% -1.4%28420 Telecommunication, Broadcasting and Transceiving Equipment Manufacturing 73.9% 37.1% 0.96 0.78 1.00 0.99 27.6% -19.4% -1.4%28490 Electronic Equipment Manufacturing n.e.c. 80.9% 56.3% 0.77 0.73 0.87 0.86 17.4% -4.2% -1.4%

28510 Household Appliance Manufacturing 75.2% 32.1% 2.44 2.13 2.59 2.55 19.4% -12.4% -1.4%28520 Electric Cable and Wire Manufacturing 82.0% 12.3% 1.77 1.69 2.05 2.02 19.9% -4.9% -1.4%

28530 Battery Manufacturing 80.3% 2.0% 1.97 1.84 2.23 2.20 19.7% -6.7% -1.4%28540 Electric Light and Sign Manufacturing 83.0% 20.7% 2.25 2.15 2.64 2.60 21.3% -4.8% -1.4%28590 Electrical and Equipment Manufacturing n.e.c. 85.8% 73.6% 1.68 1.65 2.04 2.01 21.9% -2.1% -1.4%

28610 Agricultural Machinery Manufacturing 69.4% 34.3% 3.04 2.63 2.97 2.93 11.4% -13.3% -1.4%28620 Mining and Construction Machinery Manufacturing 77.4% 100.0% 2.20 1.93 2.40 2.37 22.5% -12.1% -1.4%28630 Food Processing Machinery Manufacturing 68.8% 13.1% 2.42 2.05 2.34 2.31 12.8% -15.2% -1.4%

28640 Machine Tool and Part Manufacturing 62.5% 39.7% 3.24 2.66 2.86 2.82 5.7% -17.7% -1.4%28650 Lifting and Material Handling Equipment Manufacturing 63.9% 52.7% 2.62 2.10 2.36 2.33 11.0% -19.9% -1.4%

28660 Pump and Compressor Manufacturing 59.0% 22.5% 3.00 2.33 2.50 2.47 5.7% -22.3% -1.4%28670 Commercial Space Heating and Cooling Equipment Manufacturing 57.7% 31.0% 2.83 2.10 2.30 2.27 8.0% -25.7% -1.4%28690 Industrial Machinery and Equipment Manufacturing n.e.c. 70.9% 95.7% 2.82 2.55 2.82 2.78 9.1% -9.7% -1.4%

29110 Prefabricated Metal Building Manufacturing 54.7% 39.0% 5.04 3.76 3.89 3.83 1.8% -25.3% -1.4%29190 Prefabricated Building Manufacturing n.e.c. 55.3% 37.4% 4.80 3.45 3.74 3.69 6.8% -28.0% -1.4%29210 Wooden Furniture and Upholstered Seat Manufacturing 68.3% 60.9% 4.21 3.47 4.05 4.00 15.0% -17.4% -1.4%

29220 Sheet Metal Furniture Manufacturing 68.2% 14.0% 5.02 4.31 4.83 4.77 10.7% -14.2% -1.4%29230 Mattress Manufacturing (Except Rubber) 67.5% 26.0% 4.25 3.61 4.05 3.99 10.5% -15.1% -1.4%

Premium Rates


1/05/2009 5:54 PM



48



29290 Furniture Manufacturing n.e.c. 68.6% 60.4% 3.83 3.27 3.71 3.66 11.7% -14.6% -1.4%

29410 Jewellery and Silverware Manufacturing 75.3% 11.2% 3.13 2.82 3.33 3.28 16.4% -10.0% -1.4%29420 Toy and Sporting Good Manufacturing 72.5% 20.6% 4.26 3.60 4.36 4.29 19.5% -15.5% -1.4%29490 Manufacturing n.e.c. 86.9% 41.9% 2.64 2.50 3.24 3.20 27.7% -5.3% -1.4%

D ELECTRICITY, GAS AND WATER

36100 Electricity Supply 56.8% 100.0% 0.85 0.65 0.68 0.67 3.7% -23.8% -1.4%36200 Gas Supply 30.4% 46.7% 0.45 0.40 0.19 0.40 0.0% -10.7% 51.9%

37010 Water Supply 60.6% 100.0% 0.72 0.59 0.61 0.61 2.5% -17.9% -1.4%37020 Sewerage and Drainage Services 52.5% 23.7% 3.05 2.12 2.26 2.23 5.1% -30.5% -1.4%

E CONSTRUCTION

41110 House Construction 58.8% 100.0% 1.52 1.17 1.26 1.24 6.1% -22.9% -1.4%41120 Residential Building Construction n.e.c. 45.8% 100.0% 1.49 0.89 0.96 0.95 5.8% -39.8% -1.4%41130 Non-Residential Building Construction 62.8% 100.0% 2.93 2.32 2.59 2.56 10.5% -21.0% -1.4%

41210 Road and Bridge Construction 57.3% 98.9% 3.00 2.36 2.43 2.39 1.5% -21.5% -1.4%41220 Non-Building Construction n.e.c. 56.5% 100.0% 2.09 1.55 1.67 1.65 6.3% -26.1% -1.4%42100 Site Preparation Services 60.4% 100.0% 3.46 2.99 2.95 2.91 -2.8% -13.6% -1.4%

42210 Concreting Services 51.5% 64.8% 7.15 5.14 5.20 5.13 -0.2% -28.2% -1.4%42220 Bricklaying Services 44.2% 37.2% 8.51 5.67 5.31 5.23 -7.8% -33.3% -1.4%

42230 Roofing Services 53.4% 38.0% 7.19 5.35 5.42 5.34 -0.2% -25.5% -1.4%42240 Structural Steel Erection Services 60.1% 61.2% 4.50 3.32 3.82 3.76 13.4% -26.3% -1.4%42310 Plumbing Services 62.3% 82.9% 3.30 2.13 2.90 2.86 34.1% -35.3% -1.4%

42320 Electrical Services 55.6% 100.0% 2.02 1.65 1.59 1.57 -5.3% -18.3% -1.4%

42330 Air Conditioning and Heating Services 70.7% 75.3% 2.42 2.21 2.41 2.38 8.0% -8.9% -1.4%

42340 Fire and Security System Services 84.6% 67.5% 1.90 1.86 2.27 2.24 20.5% -2.3% -1.4%42410 Plastering and Ceiling Services 59.8% 65.0% 5.91 4.58 4.99 4.92 7.3% -22.5% -1.4%42420 Carpentry Services 68.9% 65.2% 5.71 4.44 5.55 5.48 23.3% -22.3% -1.4%

42430 Tiling and Carpeting Services 64.9% 32.2% 4.56 3.74 4.17 4.11 10.0% -18.0% -1.4%42440 Painting and Decorating Services 62.4% 57.7% 5.20 4.14 4.58 4.52 9.2% -20.5% -1.4%

42450 Glazing Services 69.3% 49.9% 5.14 4.59 5.03 4.96 8.1% -10.8% -1.4%42510 Landscaping Services 57.9% 56.2% 5.11 3.66 4.18 4.12 12.6% -28.4% -1.4%42590 Construction Services n.e.c. 49.9% 100.0% 5.29 3.45 3.73 3.68 6.5% -34.8% -1.4%

Premium Rates


1/05/2009 5:54 PM



49



F WHOLESALE TRADE

45110 Wool Wholesaling 84.0% 25.5% 2.45 2.33 2.90 2.86 23.0% -5.0% -1.4%

45120 Cereal Grain Wholesaling 84.4% 14.8% 3.38 3.26 4.02 3.97 21.7% -3.5% -1.4%45190 Farm Produce and Supplies Wholesaling n.e.c. 58.2% 58.6% 2.70 2.20 2.21 2.18 -0.8% -18.4% -1.4%45191 Livestock Wholesaling 61.7% 8.8% 2.74 2.25 2.38 2.35 4.5% -17.8% -1.4%

45210 Petroleum Product Wholesaling 74.5% 63.4% 1.78 1.55 1.87 1.85 18.8% -12.7% -1.4%45220 Metal and Mineral Wholesaling 55.0% 46.4% 2.64 2.08 2.05 2.02 -2.7% -21.4% -1.4%

45230 Chemical Wholesaling 69.0% 45.7% 1.62 1.41 1.58 1.56 10.7% -13.2% -1.4%45310 Timber Wholesaling 66.2% 24.0% 2.36 1.99 2.20 2.17 9.1% -15.6% -1.4%45390 Building Supplies Wholesaling n.e.c. 72.0% 100.0% 1.95 1.81 1.98 1.96 8.1% -7.4% -1.4%

46110 Farm and Construction Machinery Wholesaling 82.2% 66.5% 1.20 1.11 1.39 1.37 23.4% -7.4% -1.4%46120 Professional Equipment Wholesaling 65.8% 58.0% 0.84 0.73 0.78 0.77 5.9% -13.6% -1.4%46130 Computer Wholesaling 86.6% 48.2% 0.58 0.50 0.71 0.70 39.4% -13.6% -1.4%

46140 Business Machine Wholesaling n.e.c. 65.0% 44.4% 1.20 0.93 1.10 1.08 16.5% -22.3% -1.4%46150 Electrical and Electronic Equipment Wholesaling n.e.c. 55.1% 100.0% 0.75 0.53 0.58 0.57 9.2% -29.8% -1.4%46190 Machinery and Equipment Wholesaling n.e.c. 84.6% 100.0% 1.36 1.25 1.63 1.60 28.0% -8.1% -1.4%

46210 Car Wholesaling 68.6% 18.0% 1.81 1.65 1.76 1.73 5.0% -9.0% -1.4%46220 Commercial Vehicle Wholesaling 58.4% 29.1% 2.13 1.82 1.76 1.73 -4.7% -14.7% -1.4%

46230 Motor Vehicle New Part Dealing 63.8% 83.9% 1.38 1.25 1.24 1.22 -2.2% -9.2% -1.4%46240 Motor Vehicle Dismantling and Used Part Dealing 59.4% 28.6% 2.69 2.23 2.25 2.22 -0.6% -16.9% -1.4%47110 Meat Wholesaling 58.9% 32.9% 3.78 2.97 3.14 3.10 4.1% -21.3% -1.4%

47120 Poultry and Smallgood Wholesaling 78.4% 11.5% 3.41 3.26 3.76 3.71 13.9% -4.3% -1.4%47130 Dairy Produce Wholesaling 64.0% 16.8% 2.85 2.34 2.57 2.53 8.3% -17.8% -1.4%47140 Fish Wholesaling 68.4% 41.7% 3.19 2.60 3.08 3.04 16.9% -18.6% -1.4%

47150 Fruit and Vegetable Wholesaling 57.6% 60.9% 3.41 2.48 2.77 2.73 9.9% -27.1% -1.4%47160 Confectionery and Soft Drink Wholesaling 66.3% 28.3% 2.73 2.15 2.56 2.52 17.1% -21.2% -1.4%47170 Liquor Wholesaling 60.6% 41.7% 2.11 1.65 1.81 1.78 7.9% -21.9% -1.4%

47180 Tobacco Product Wholesaling 69.3% 19.1% 2.81 2.33 2.75 2.71 16.7% -17.3% -1.4%47190 Grocery Wholesaling n.e.c. 78.8% 61.2% 3.00 2.68 3.34 3.29 22.6% -10.5% -1.4%

47210 Textile Product Wholesaling 71.5% 32.2% 1.46 1.20 1.47 1.45 20.8% -17.6% -1.4%47220 Clothing Wholesaling 64.7% 40.1% 1.07 0.82 0.98 0.96 17.6% -23.4% -1.4%47230 Footwear Wholesaling 67.3% 11.0% 1.40 1.10 1.33 1.31 18.7% -21.2% -1.4%

47310 Household Appliance Wholesaling 65.6% 21.7% 2.07 1.55 1.92 1.89 21.6% -25.0% -1.4%47320 Furniture Wholesaling 66.2% 24.3% 2.23 1.72 2.09 2.06 19.8% -23.1% -1.4%47330 Floor Covering Wholesaling 61.4% 19.8% 2.09 1.56 1.81 1.79 14.4% -25.4% -1.4%

47390 Household Good Wholesaling n.e.c. 69.8% 33.2% 2.47 1.87 2.44 2.40 28.4% -24.4% -1.4%47910 Photographic Equipment Wholesaling 69.7% 14.9% 2.08 1.62 2.04 2.01 24.7% -22.3% -1.4%47920 Jewellery and Watch Wholesaling 69.4% 13.2% 2.00 1.51 1.96 1.93 27.7% -24.4% -1.4%

47930 Toy and Sporting Good Wholesaling 76.8% 25.2% 1.91 1.55 2.07 2.05 31.6% -18.8% -1.4%47940 Book and Magazine Wholesaling 71.4% 12.3% 2.20 1.74 2.22 2.19 26.0% -21.2% -1.4%

47950 Paper Product Wholesaling 52.4% 43.8% 2.94 1.95 2.17 2.14 9.6% -33.6% -1.4%47960 Pharmaceutical and Toiletry Wholesaling 82.6% 62.3% 1.27 1.03 1.48 1.46 41.1% -18.6% -1.4%47990 Wholesaling n.e.c. 81.0% 40.6% 3.34 2.75 3.82 3.77 37.0% -17.8% -1.4%

Premium Rates


1/05/2009 5:54 PM



50



G RETAIL TRADE

51100 Supermarket and Grocery Stores 67.2% 100.0% 2.12 1.70 2.01 1.98 16.7% -19.9% -1.4%

51210 Fresh Meat and Poultry Retailing 55.5% 41.0% 3.40 2.68 2.67 2.63 -1.8% -21.4% -1.4%51211 Fish Retailing 70.5% 18.0% 2.89 2.49 2.88 2.84 13.9% -13.8% -1.4%51220 Fruit and Vegetable Retailing 52.4% 36.0% 2.92 2.52 2.16 2.13 -15.4% -13.9% -1.4%

51230 Liquor Retailing 60.6% 36.9% 2.13 1.87 1.82 1.80 -3.9% -12.3% -1.4%51240 Bread and Cake Retailing 71.4% 55.2% 1.88 1.55 1.89 1.87 20.7% -17.7% -1.4%

51250 Takeaway Food Retailing 71.2% 100.0% 1.46 1.23 1.47 1.45 17.9% -16.0% -1.4%51260 Milk Vending 59.5% 20.9% 2.69 2.28 2.26 2.23 -2.1% -15.4% -1.4%51290 Specialised Food Retailing n.e.c. 58.5% 33.0% 1.94 1.63 1.60 1.58 -3.1% -16.0% -1.4%

52100 Department Stores 72.1% 60.5% 1.88 1.59 1.92 1.89 18.9% -15.7% -1.4%52210 Clothing Retailing 64.3% 93.1% 1.33 1.18 1.20 1.19 0.9% -11.4% -1.4%52220 Footwear Retailing 70.3% 42.8% 1.32 1.21 1.31 1.29 7.1% -8.6% -1.4%

52230 Fabrics and Other Soft Good Retailing 84.0% 40.4% 1.89 1.98 2.24 2.21 11.6% 4.8% -1.4%52310 Furniture Retailing 74.8% 66.5% 2.09 2.18 2.20 2.17 -0.4% 4.4% -1.4%52320 Floor Covering Retailing 60.0% 43.9% 2.08 1.78 1.76 1.74 -2.4% -14.5% -1.4%

52330 Domestic Hardware and Houseware Retailing 65.2% 100.0% 1.89 1.49 1.74 1.71 15.0% -21.1% -1.4%52340 Domestic Appliance Retailing 85.7% 96.3% 1.00 0.95 1.21 1.19 25.7% -5.2% -1.4%

52350 Recorded Music Retailing 69.6% 29.8% 1.20 1.05 1.18 1.16 10.7% -12.5% -1.4%52410 Sport and Camping Equipment Retailing 91.9% 53.7% 0.77 0.81 1.00 0.98 22.1% 4.6% -1.4%52420 Toy and Game Retailing 87.6% 24.4% 0.88 0.88 1.09 1.07 21.3% 0.5% -1.4%

52430 Newspaper, Book and Stationery Retailing 75.7% 70.0% 1.01 0.96 1.07 1.06 10.9% -5.1% -1.4%52440 Photographic Equipment Retailing 86.7% 20.3% 0.77 0.80 0.94 0.93 16.5% 3.4% -1.4%52450 Marine Equipment Retailing 82.3% 36.4% 1.10 1.16 1.28 1.26 8.9% 5.2% -1.4%

52510 Pharmaceutical, Cosmetic and Toiletry Retailing 66.6% 98.2% 0.60 0.50 0.57 0.56 11.5% -17.0% -1.4%52520 Antique and Used Good Retailing 67.8% 26.2% 1.41 1.16 1.35 1.33 14.4% -17.5% -1.4%

52530 Garden Supplies Retailing 81.8% 45.9% 2.35 2.11 2.72 2.68 27.0% -10.4% -1.4%52540 Flower Retailing 64.3% 22.2% 1.09 0.91 0.99 0.97 7.3% -16.6% -1.4%52550 Watch and Jewellery Retailing 69.3% 58.6% 0.87 0.71 0.85 0.84 18.8% -18.9% -1.4%

52590 Retailing n.e.c. 77.3% 65.3% 0.98 0.80 1.07 1.05 31.0% -17.9% -1.4%52610 Household Equipment Repair Services (Electrical) 77.2% 30.6% 1.49 1.43 1.63 1.60 11.9% -4.0% -1.4%52690 Household Equipment Repair Services n.e.c. 72.7% 23.9% 1.37 1.28 1.40 1.38 7.7% -6.1% -1.4%

53110 Car Retailing 62.6% 100.0% 1.24 1.04 1.10 1.08 4.3% -16.4% -1.4%53120 Motor Cycle Dealing 57.7% 31.5% 1.13 0.86 0.92 0.90 5.0% -23.6% -1.4%53130 Trailer and Caravan Dealing 55.9% 21.7% 1.31 1.04 1.03 1.02 -2.0% -20.7% -1.4%

53210 Automotive Fuel Retailing 72.7% 69.6% 2.57 2.31 2.64 2.60 12.3% -10.0% -1.4%53220 Automotive Electrical Services 85.2% 42.2% 2.04 1.87 2.45 2.41 29.4% -8.4% -1.4%

53230 Smash Repairing 59.4% 70.6% 2.73 2.23 2.29 2.26 1.2% -18.3% -1.4%53240 Tyre Retailing 85.8% 49.1% 2.83 2.60 3.42 3.37 29.5% -7.9% -1.4%53290 Automotive Repair and Services n.e.c. 72.4% 100.0% 2.57 2.05 2.63 2.59 26.4% -20.3% -1.4%

Premium Rates


1/05/2009 5:54 PM



51



H ACCOMMODATION, CAFES AND RESTAURANTS

57100 Accommodation 69.9% 100.0% 2.59 2.27 2.55 2.52 11.0% -12.4% -1.4%

57200 Pubs, Taverns and Bars 63.6% 100.0% 1.67 1.33 1.50 1.48 11.5% -20.6% -1.4%57300 Cafes and Restaurants 67.8% 100.0% 2.44 2.10 2.33 2.30 9.4% -13.8% -1.4%

57400 Clubs (Hospitality) 62.8% 30.8% 1.70 1.38 1.50 1.48 7.5% -18.7% -1.4%

I TRANSPORT AND STORAGE

61100 Road Freight Transport 77.4% 100.0% 4.43 3.89 4.83 4.76 22.6% -12.2% -1.4%61210 Long Distance Bus Transport 61.3% 33.5% 3.12 2.42 2.70 2.66 9.9% -22.4% -1.4%

61220 Short Distance Bus Transport (Including Tramway) 59.3% 78.8% 2.55 1.98 2.13 2.10 6.0% -22.2% -1.4%61230 Taxi and Other Road Passenger Transport 62.7% 14.3% 2.82 2.27 2.50 2.46 8.5% -19.6% -1.4%

62000 Rail Transport 101.5% 91.6% 1.53 1.61 2.19 2.16 34.1% 5.3% -1.4%63010 International Sea Transport 54.4% 12.0% 2.21 1.63 1.70 1.67 2.4% -26.2% -1.4%63020 Coastal Water Transport 48.2% 44.0% 2.42 1.63 1.65 1.62 -0.4% -32.7% -1.4%

63030 Inland Water Transport 54.2% 15.8% 2.32 1.75 1.78 1.75 0.2% -24.7% -1.4%64010 Scheduled International Air Transport 51.7% 16.6% 2.32 1.63 1.69 1.67 2.0% -29.5% -1.4%64020 Scheduled Domestic Air Transport 84.0% 87.4% 2.11 1.77 2.51 2.47 39.4% -16.1% -1.4%

64030 Non-Scheduled Air and Space Transport 59.4% 52.3% 1.51 1.12 1.27 1.25 12.0% -26.1% -1.4%65010 Pipeline Transport 81.5% 18.8% 1.43 1.28 1.65 1.62 27.2% -10.8% -1.4%65090 Transport n.e.c. 55.4% 41.7% 2.41 1.72 1.88 1.85 8.0% -28.7% -1.4%

66110 Parking Services 93.6% 21.3% 1.98 2.23 2.62 2.58 15.8% 12.5% -1.4%66190 Services to Road Transport n.e.c. 97.4% 24.8% 2.91 3.70 4.00 3.95 6.8% 26.9% -1.4%

66210 Stevedoring 53.9% 63.1% 4.93 3.66 3.75 3.70 1.1% -25.8% -1.4%66220 Water Transport Terminals 56.5% 9.4% 3.31 2.40 2.64 2.60 8.2% -27.4% -1.4%66230 Port Operators 59.6% 48.3% 2.56 1.99 2.16 2.13 6.7% -22.2% -1.4%

66290 Services to Water Transport n.e.c. 62.9% 52.1% 2.70 2.19 2.40 2.36 8.1% -19.1% -1.4%66291 Salvage Service, Marine 68.3% 6.7% 3.27 2.65 3.16 3.11 17.2% -18.9% -1.4%66300 Services to Air Transport 59.5% 56.0% 1.65 1.23 1.38 1.36 11.2% -25.6% -1.4%

66410 Travel Agency Services 57.8% 82.0% 0.46 0.40 0.37 0.40 0.0% -12.2% 7.1%66420 Road Freight Forwarding 60.8% 39.1% 2.45 1.93 2.11 2.08 7.5% -21.3% -1.4%

66430 Freight Forwarding (Except Road) 86.0% 43.4% 1.08 1.10 1.31 1.29 18.0% 1.4% -1.4%66440 Customs Agency Services 99.6% 31.0% 0.96 0.93 1.35 1.33 42.9% -3.0% -1.4%66490 Services to Transport n.e.c. 71.5% 86.6% 1.27 1.08 1.28 1.26 16.4% -14.5% -1.4%

67010 Grain Storage 64.2% 65.7% 2.49 2.02 2.25 2.22 10.1% -18.9% -1.4%67090 Storage n.e.c. 52.9% 53.8% 3.22 2.25 2.41 2.37 5.5% -30.2% -1.4%

J COMMUNICATION SERVICES

71110 Postal Services 77.3% 33.9% 1.58 1.28 1.73 1.70 32.7% -18.9% -1.4%71120 Courier Services 87.1% 50.8% 2.33 2.15 2.87 2.83 31.5% -7.9% -1.4%71200 Telecommunication Services 48.8% 85.9% 0.40 0.40 0.28 0.40 0.0% 0.0% 31.2%

Premium Rates


1/05/2009 5:54 PM



52



K FINANCE AND INSURANCE

73100 Central Bank 37.5% 6.4% 0.40 0.40 0.21 0.40 0.0% 0.0% 47.1%

73210 Banks 32.7% 73.5% 0.40 0.40 0.18 0.40 0.0% 0.0% 53.9%73220 Building Societies 36.8% 29.9% 0.59 0.48 0.31 0.40 -15.9% -19.8% 23.0%

73230 Credit Unions 36.3% 46.7% 0.54 0.40 0.28 0.40 0.0% -26.1% 30.8%73240 Money Market Dealers 32.5% 29.7% 0.40 0.40 0.18 0.40 0.0% 0.0% 54.1%73290 Deposit Taking Financiers n.e.c. 78.6% 13.0% 0.40 0.40 0.44 0.44 9.2% 0.1% -1.4%

73300 Other Financiers 48.3% 32.3% 0.40 0.40 0.27 0.40 0.0% 0.0% 31.8%73400 Financial Asset Investors 27.0% 49.5% 0.40 0.40 0.15 0.40 0.0% 0.0% 62.0%74110 Life Insurance 29.4% 29.0% 0.40 0.40 0.17 0.40 0.0% 0.0% 58.5%

74120 Superannuation Funds 38.1% 35.5% 0.40 0.40 0.22 0.40 0.0% 0.0% 46.2%74210 Health Insurance 67.1% 48.3% 0.40 0.40 0.38 0.40 0.0% 0.0% 5.4%74220 General Insurance 63.8% 100.0% 0.41 0.40 0.37 0.40 0.0% -2.3% 7.9%

75110 Financial Asset Broking Services 3.0% 87.1% 0.40 0.40 0.02 0.40 0.0% 0.0% 95.8%75190 Services to Finance and Investment n.e.c. 15.4% 100.0% 0.40 0.40 0.09 0.40 0.0% 0.0% 78.3%

75200 Services to Insurance 29.1% 84.3% 0.40 0.40 0.16 0.40 0.0% 0.0% 59.0%

L PROPERTY AND BUSINESS SERVICES

77110 Residential Property Operators 62.5% 71.9% 0.80 0.65 0.71 0.70 7.5% -19.1% -1.4%77120 Commercial Property Operators and Developers 64.4% 72.5% 0.93 0.77 0.85 0.83 8.9% -17.7% -1.4%

77200 Real Estate Agents 42.7% 100.0% 0.40 0.40 0.24 0.40 0.0% 0.0% 39.8%77300 Non-Financial Asset Investors 67.2% 9.6% 1.01 0.83 0.96 0.95 14.8% -18.6% -1.4%

77410 Motor Vehicle Hiring 60.7% 44.2% 2.32 1.84 1.98 1.95 6.0% -20.4% -1.4%77420 Other Transport Equipment Leasing 64.1% 11.1% 2.71 2.24 2.45 2.41 7.7% -17.3% -1.4%77430 Plant Hiring or Leasing 67.4% 100.0% 2.98 2.57 2.84 2.80 9.0% -13.9% -1.4%

78100 Scientific Research 50.7% 62.8% 0.58 0.44 0.42 0.41 -7.3% -23.9% -1.4%78210 Architectural Services 39.1% 100.0% 0.40 0.40 0.22 0.40 0.0% 0.0% 44.8%78220 Surveying Services 77.9% 90.3% 0.58 0.50 0.63 0.62 24.9% -13.2% -1.4%

78230 Consulting Engineering Services 48.5% 100.0% 0.40 0.40 0.27 0.40 0.0% 0.0% 31.6%78290 Technical Services n.e.c. 80.6% 100.0% 0.75 0.66 0.85 0.84 26.3% -11.2% -1.4%

78310 Data Processing Services 25.5% 43.4% 0.40 0.40 0.14 0.40 0.0% 0.0% 64.1%78320 Information Storage and Retrieval Services 31.2% 28.1% 0.40 0.40 0.18 0.40 0.0% 0.0% 55.9%78330 Computer Maintenance Services 27.5% 64.9% 0.40 0.40 0.16 0.40 0.0% 0.0% 61.2%

78340 Computer Consultancy Services 25.1% 100.0% 0.40 0.40 0.14 0.40 0.0% 0.0% 64.6%78410 Legal Services 70.0% 100.0% 0.40 0.40 0.40 0.40 0.0% 0.0% 1.2%78420 Accounting Services 25.5% 100.0% 0.40 0.40 0.14 0.40 0.0% 0.0% 64.1%

78510 Advertising Services 57.2% 70.8% 0.40 0.40 0.32 0.40 0.0% 0.0% 19.3%78520 Commercial Art and Display Services 77.6% 46.9% 0.60 0.59 0.65 0.64 10.2% -2.0% -1.4%78530 Market Research Services 90.1% 39.1% 0.52 0.52 0.67 0.66 26.7% -1.1% -1.4%

78540 Business Administrative Services 75.4% 100.0% 0.54 0.48 0.58 0.57 19.2% -12.0% -1.4%78550 Business Management Services 74.9% 100.0% 0.57 0.57 0.61 0.60 4.2% 0.0% -1.4%

78610 Employment Placement Services 87.2% 100.0% 1.76 1.78 2.16 2.13 19.6% 1.5% -1.4%78620 Contract Staff Services - Predominantly Clerical Staff 74.2% 100.0% 3.30 3.03 3.46 3.41 12.6% -8.3% -1.4%78621 Contract Staff Services - n.e.c. (rate as per Industry)

Premium Rates


1/05/2009 5:54 PM



53



78630 Secretarial Services 29.5% 100.0% 0.40 0.40 0.17 0.40 0.0% 0.0% 58.4%

78640 Security and Investigative Services (Except Police) 74.1% 80.8% 3.81 3.37 3.98 3.93 16.6% -11.5% -1.4%78650 Pest Control Services 65.4% 35.2% 3.60 3.17 3.32 3.27 3.3% -11.9% -1.4%78660 Cleaning Services 51.4% 87.2% 5.39 3.93 3.91 3.86 -1.8% -27.2% -1.4%

78670 Contract Packing Services n.e.c. 68.4% 5.7% 2.92 2.44 2.82 2.78 13.8% -16.4% -1.4%78690 Business Services n.e.c. 61.4% 84.4% 1.34 1.00 1.16 1.15 14.3% -25.2% -1.4%

M GOVERNMENT ADMINISTRATION AND DEFENCE

81110 Central Government Administration 59.4% 7.0% 0.59 0.43 0.49 0.48 13.6% -27.3% -1.4%81120 State Government Administration 67.9% 100.0% 0.54 0.42 0.52 0.51 20.5% -21.6% -1.4%81130 Local Government Administration 39.4% 36.1% 1.31 0.74 0.73 0.72 -3.1% -43.4% -1.4%

81200 Justice 57.9% 98.0% 0.40 0.40 0.33 0.40 0.0% 0.0% 18.3%81300 Foreign Government Representation 40.4% 59.6% 0.40 0.40 0.23 0.40 0.0% 0.0% 43.0%82000 Defence 63.6% 17.7% 1.01 0.79 0.90 0.89 13.4% -21.9% -1.4%

N EDUCATION

84100 Preschool Education 77.2% 9.4% 0.86 0.77 0.93 0.92 20.0% -10.5% -1.4%84210 Primary Education 60.8% 100.0% 0.66 0.52 0.56 0.55 5.9% -20.2% -1.4%

84220 Secondary Education 71.2% 99.1% 0.89 0.73 0.90 0.89 21.4% -18.4% -1.4%84230 Combined Primary and Secondary Education 82.3% 100.0% 1.19 1.17 1.38 1.36 16.4% -1.6% -1.4%84240 Special School Education 82.3% 22.1% 1.11 1.11 1.29 1.27 14.1% 0.4% -1.4%

84310 Higher Education 79.1% 100.0% 0.40 0.40 0.45 0.44 12.2% -1.8% -1.4%84320 Technical and Further Education 100.8% 100.0% 0.72 0.82 1.02 1.00 22.4% 14.6% -1.4%

84400 Other Education 73.0% 59.7% 0.78 0.62 0.81 0.80 29.5% -21.6% -1.4%

O HEALTH AND COMMUNITY SERVICES

86110 Hospitals (Except Psychiatric Hospitals) 77.4% 100.0% 1.94 1.72 2.12 2.09 21.9% -11.6% -1.4%86120 Psychiatric Hospitals 70.1% 74.3% 2.49 2.35 2.46 2.43 3.2% -5.6% -1.4%

86130 Nursing Homes 73.3% 100.0% 4.11 3.53 4.25 4.19 18.8% -14.2% -1.4%86210 General Practice Medical Services 73.6% 100.0% 0.43 0.41 0.45 0.45 8.5% -5.6% -1.4%

86220 Specialist Medical Services 61.5% 98.3% 0.58 0.58 0.51 0.50 -13.3% -1.4% -1.4%86230 Dental Services 48.9% 90.6% 0.44 0.40 0.31 0.40 0.0% -9.9% 23.5%86310 Pathology Services 59.7% 100.0% 1.30 1.16 1.09 1.08 -7.0% -10.7% -1.4%

86320 Optometry and Optical Dispensing 35.7% 100.0% 0.40 0.40 0.20 0.40 0.0% 0.0% 49.6%86330 Ambulance Services 95.7% 50.7% 2.36 2.18 3.19 3.15 44.0% -7.5% -1.4%86340 Community Health Centres 82.4% 56.5% 1.55 1.48 1.80 1.78 20.3% -4.7% -1.4%

86350 Physiotherapy Services 97.9% 100.0% 0.50 0.55 0.69 0.68 23.8% 10.0% -1.4%86360 Chiropractic Services 56.4% 100.0% 0.40 0.40 0.32 0.40 0.0% 0.0% 20.4%86390 Health Services n.e.c. 63.2% 80.8% 1.53 1.28 1.36 1.35 5.3% -16.6% -1.4%

86400 Veterinary Services 64.5% 52.7% 1.82 1.52 1.65 1.63 7.1% -16.2% -1.4%87100 Child Care Services 67.1% 92.2% 2.10 1.75 1.99 1.96 12.1% -16.7% -1.4%

87210 Accommodation for the Aged 74.5% 82.5% 4.29 3.85 4.51 4.45 15.7% -10.3% -1.4%87220 Residential Care Services n.e.c. 56.3% 100.0% 3.14 2.30 2.49 2.46 7.1% -26.9% -1.4%87290 Non-Residential Care Services n.e.c. 84.6% 100.0% 2.28 2.07 2.72 2.68 29.3% -8.9% -1.4%

Premium Rates


1/05/2009 5:54 PM



54



P CULTURAL AND RECREATIONAL SERVICES

91110 Film and Video Production 71.4% 31.1% 0.69 0.64 0.70 0.69 7.8% -7.8% -1.4%

91120 Film and Video Distribution 69.1% 14.0% 0.74 0.69 0.72 0.71 2.3% -6.0% -1.4%91130 Motion Picture Exhibition 65.6% 32.3% 0.86 0.79 0.80 0.79 -0.7% -8.0% -1.4%

91210 Radio Services 58.6% 44.3% 0.40 0.40 0.33 0.40 0.0% 0.0% 17.4%91220 Television Services 64.0% 45.7% 0.78 0.75 0.70 0.69 -6.8% -4.5% -1.4%92100 Libraries 70.4% 26.5% 1.58 1.55 1.57 1.55 -0.4% -1.7% -1.4%

92200 Museums 66.5% 31.1% 1.74 1.76 1.63 1.61 -8.7% 1.3% -1.4%92310 Zoological and Botanic Gardens 77.7% 23.8% 2.74 2.99 3.00 2.96 -1.1% 9.3% -1.4%92390 Recreational Parks and Gardens 67.3% 27.2% 2.22 2.13 2.11 2.08 -2.7% -3.9% -1.4%

92410 Music and Theatre Productions 71.8% 33.9% 1.77 1.72 1.80 1.77 3.2% -3.2% -1.4%92420 Creative Arts 71.6% 13.4% 1.51 1.46 1.53 1.51 3.1% -3.4% -1.4%

92510 Sound Recording Studios 76.3% 5.5% 1.30 1.38 1.40 1.38 0.3% 5.8% -1.4%92520 Performing Arts Venues 81.5% 20.4% 1.34 1.59 1.54 1.52 -4.5% 18.7% -1.4%92590 Services to the Arts n.e.c 76.1% 35.1% 1.18 1.20 1.27 1.25 3.9% 2.0% -1.4%

93110 Horse and Dog Racing 60.7% 71.2% 5.94 4.70 5.08 5.01 6.6% -20.9% -1.4%93120 Sports Grounds and Facilities n.e.c. 71.9% 76.8% 1.80 1.63 1.83 1.80 11.0% -9.9% -1.4%93121 Speedway Operation 70.6% 7.5% 2.54 2.24 2.53 2.49 11.3% -11.8% -1.4%

93190 Sports and Services to Sports n.e.c. 65.3% 67.3% 1.89 1.62 1.74 1.72 5.9% -14.2% -1.4%93210 Lotteries 141.8% 25.9% 0.92 1.29 1.84 1.82 40.4% 40.5% -1.4%

93220 Casinos 93.4% 81.9% 1.10 1.01 1.45 1.43 41.0% -7.9% -1.4%93290 Gambling Services n.e.c. 92.7% 25.9% 1.16 1.14 1.52 1.50 32.1% -2.3% -1.4%93300 Other Recreation Services 61.1% 32.5% 2.98 2.38 2.57 2.53 6.6% -20.3% -1.4%

Q PERSONAL AND OTHER SERVICES

95110 Video Hire Outlets 64.8% 31.5% 1.71 1.46 1.57 1.55 6.0% -14.9% -1.4%95190 Personal and Household Goods Hiring n.e.c. 54.1% 24.0% 2.46 1.94 1.88 1.85 -4.7% -21.0% -1.4%

95210 Laundries and Dry-Cleaners (Excluding Industrial Laundries) 63.9% 40.5% 3.82 3.06 3.44 3.40 10.9% -19.9% -1.4%95211 Industrial Laundries 63.8% 14.1% 3.57 3.18 3.22 3.17 -0.1% -11.1% -1.4%95220 Photographic Film Processing 69.6% 18.9% 2.31 2.00 2.27 2.24 11.8% -13.4% -1.4%

95230 Photographic Studios 81.0% 21.7% 2.25 2.11 2.57 2.53 20.1% -6.2% -1.4%95240 Funeral Directors, Crematoria and Cemeteries 70.4% 33.2% 2.83 2.47 2.81 2.77 12.0% -12.6% -1.4%95250 Gardening Services 64.9% 46.6% 5.40 4.46 4.94 4.87 9.3% -17.5% -1.4%

95260 Hairdressing and Beauty Salons 59.9% 81.0% 1.37 1.08 1.16 1.14 5.9% -21.3% -1.4%95290 Personal Services n.e.c. 55.0% 32.9% 2.68 2.18 2.08 2.05 -5.9% -18.8% -1.4%

96100 Religious Organisations 43.1% 62.1% 2.42 1.42 1.47 1.45 2.2% -41.3% -1.4%96210 Business and Professional Associations 81.3% 63.4% 0.74 0.52 0.84 0.83 58.9% -28.8% -1.4%96220 Labour Associations 54.6% 43.8% 0.87 0.61 0.67 0.66 9.1% -30.3% -1.4%

96290 Interest Groups n.e.c. 56.3% 85.3% 1.01 0.78 0.80 0.79 2.2% -23.4% -1.4%96310 Police Services 82.6% 1.4% 3.58 3.28 4.18 4.12 25.7% -8.5% -1.4%96320 Corrective Centres 90.5% 99.5% 4.57 4.51 5.84 5.75 27.5% -1.3% -1.4%

96330 Fire Brigade Services 83.9% 66.8% 2.29 2.02 2.71 2.67 32.6% -11.9% -1.4%96340 Waste Disposal Services 70.2% 62.5% 3.35 2.67 3.32 3.27 22.7% -20.4% -1.4%

97000 Private Households Employing Staff - Permanent Staff 62.1% 27.4% 3.14 2.53 2.75 2.71 7.1% -19.4% -1.4%97001 Private Households Employing Staff - Occasional Staff ($/employee) 2.38 0.93 0.87 0.86 -7.3% -61.0% -1.4%

Premium Rates


1/05/2009 5:54 PM

Attachment B Comparative statistics

and trends

55

B Comparative statistics and trends

B1 Comparative statistics

Reporting period2007/08 2006/07 2005/06 2004/05 2003/04 2002/03 2001/02

Adjusted returned wages $M (a) 47,638 42,397 37,272 32,204 28,520 25,663 24,159% change (b) 12.4% 13.8% 15.7% 12.9% 11.1% 6.2% 3.4%% change in rates (c) -12.7% -8.6% 2.9% -3.8% -5.1% -6.0% -11.6%

Notional premium $M (d) 878.4 907.8 863.6 734.4 675.6 632.9 627.9% change (e) -3.2% 5.1% 17.6% 8.7% 6.7% 0.8% -4.5%Expected % change in notional prem (f) -1.9% 4.0% 19.1% 8.6% 5.5% -0.1% -8.6%

Returned Gross Written Premium (g) 651.6 717.3 707.5 631.2 609.9 567.2 577.1Adjusted Gross Written Premium (h) 748.8 712.1 694.3 620.4 599.8 560.7 572.6% discount by market (i) 17.5% 24.1% 22.2% 18.2% 14.1% 14.2% 11.7%Notional Average Premium Rate (j) 1.84% 2.14% 2.32% 2.28% 2.37% 2.47% 2.60%Insurer's average premium rate (k) 1.57% 1.68% 1.86% 1.93% 2.10% 2.18% 2.37%

Notes : (a) from Form WC11 adjusted to estimated final wages as per Attachment F1.2.1 Prior years change from our 30/04/2008

report due to wage adjustments

(b) % change in (a) from previous year

(c) rate change as decided by RPR

(d) calculated from (a) and the applicable Gazette rates

(e) % change in (d) from previous year

(f) = (1 + b) x (1 + c) - 1

(g) returned by insurers taken from Form WC11

(h) = (g) x (GWP adjustment factor as per Att F1.2.1), increased 2007/08 GWP by 10% to allow for additional burner premiums

(i) = {1 - (h) / (d)} for 2001 but increase (d) x (1 + the rate of commission) from 2002 onwards to add back the brokerage allowance.

Note that ICWA doesn't include brokerage or contingency margin in premium though, so discount overstated but impact immaterial (0.3%)

(j) = (d) / (a)

(k) = (h) / (a)

Up to 2001/02 the returned wages grew by less than the change in AWE. Since thenactual wage growth has been greater than the level of AWE wage inflation. Wagesfor 2006/07 grew by 13.8% compared to 7.7% AWE growth, while 2007/08 wagesgrew by 12.4% compared to 8.0% AWE ie 4.4% real growth in wages. This reflectsthe strong growth of the Western Australian economy. It may also suggest thatinsurers have started to report wages more accurately over the last few years, ie acatch-up from under reporting in previous years.

The expected percentage change in returned notional premiums is reasonably close tothe actual change from 2002/03 onwards.

The premiums charged by insurers increased significantly to 1999/2000 (refer to priorreports) with decreases from 2000/01. The discount level reduced from 15% to 11%between 1999/00 and 2000/2001 and has increased to over 20% over the seven yearssince then. For 2007/08 we have increased premium by 10% as an allowance forburners which appear to have risen in number recently and the deposits have beenreduced down towards the minimum. Note that we increased the notional premium toadd back brokerage from 2002.

As a basis for comparison we have extracted statistics from the Australian Bureau ofStatistics catalogue 6248.0 (Employed Wage and Salary Earners Australia -September 1997 to 2001 inclusive).

From 2002, the ABS converted Cat 6248.0 to be Public Sector only and we had to useCat 6203.0 Labour Force Australia (Private and Public sectors combined) for wageand salary earners and Cat 5676.0 for private sector wages. Cat 6203.0 was renamedCat 6202.0 during 2002/03. Note that Cat 6248 was changed to an annual publicationthis year, previously it has been quarterly.


1/05/2009 5:54 PM


and trends

56

Note also that gross earnings are not directly comparable with returned wages since:

returned wages include the Agriculture private sector, ABS figures do not

ABS gross earnings include all public sector earnings including State,Commonwealth and Local Government, but excluding permanent defenceforces, while returned wages now include all but the Commonwealth figuresand Local Government

ABS gross earnings include self-insurers, while premium rating returns excludeself-insurers (including LGIS - WorkCare).

Adjustments are made for these items for comparison purposes :

deduct 10% for self-insurance

deduct Federal Government and Local Government

add back 7.5% for the Agriculture division.

this gives an adjustment factor = (1 - 0.10 + 0.075) –0.02 = 0.975 – 0.02 (forLGIS - WorkCare)

2007/08 2006/07 2005/06 2004/05 2003/04 2002/03 2001/02 2000/01

Wage & salary earners (000's) (a) 983.5 933.5 903.2 864.2 828.4 813.6 795.4 749.6% change (b) 5.4% 3.3% 4.5% 4.3% 1.8% 2.3% 6.1%Estimated RPR employees (c) 939.3 891.4 862.6 825.3 791.1 776.9 759.6 753.3

Gross ABS earnings $M (d) 47,081 40,549 36,089 32,826 30,486 28,890 26,724 25,844Estimated gross RPR earnings $M (e) 44,962 38,724 34,465 31,348 29,114 27,590 25,522 25,973% change (f) 16.1% 12.4% 9.9% 7.7% 5.5% 8.1% -1.7%

Returned wages % of est gross earnings (g) 106.0% 109.5% 108.1% 102.7% 98.0% 93.0% 94.7% 90.0%

Est RPR employees % of (h) 95.5% 95.5% 95.5% 95.5% 95.5% 95.5% 95.5% 100.5%wage & salary earners

Notes : (a) from ABS Cat 6248.0.55.002 2007-08 Table 1 public sector employees local and state.

ABS Cat 6202.0 Labour Force Australia table 8 (Persons) for private sector July 2008.


(c) = (0.975-0.02) x (a) , except 2001 which is (1.025-0.02) x (a), where the 0.02 reduction is for removal of WALGA as at 30 June 2003

(d) from ABS Cat 6248.0.55.002 2007-08 Table 2 Public sector cash wages and salaries. Table 19 of

'ABS Cat 5676.0 for private sector June Quarter 2008

(e) = (0.975-0.02) x (d) , except 2001 which is (1.025-0.02) x (d), where the 0.02 reduction is for removal of WALGA as at 30 June 2003

(f) % change in (e) from previous year

(g) from previous table take (a) and divide by (e) from this table

(h) = (c) / (a) x 100

Reporting period

In 2007/08 adjusted returned wages increased by 12.4% and by 4.4% after adjustingfor AWE inflation (table on previous page). There was also a 5.4% increase in wageand salary earners in 2007/08. So wages increased by (1.124 - 1.044 x 1.054^0.5) =5.2% more than expected compared to 5.4% more last year.

Returned wages and estimated employees as a % of ABS data are similar to last year,though returned wages have reduced slightly. The returned 2000 to 2003 wages arelow (90% to 95%), 2003/04 and 2004/05 are close to 100% of estimated using theABS figures while 2005/06 to 2007/08 are high (106% to 109%).


1/05/2009 5:54 PM


and trends

57

Claim payments, case estimates and claim numbers have varied as follows :

2007/08 2006/07 2005/06 2004/05 2003/04 2002/03 2001/02 2000/01

Claim payments $M (a) 482.466 442.301 412.304 387.859 348.556 357.266 357.649 373.679% change (b) 9.1% 7.3% 6.3% 11.3% -2.4% -0.1% -4.3%Real claim payments $M (c) 504.930 500.079 502.026 500.869 476.954 515.841 539.469 585.962% change (d) 1.0% -0.4% 0.2% 5.0% -7.5% -4.4% -7.9%Estd incurred claim numbers (e) 38,014 37,664 37,463 39,272 38,418 37,949 38,055 42,870% change (f) 0.9% 0.5% -4.6% 2.2% 1.2% -0.3% -11.2%Claim frequency (g) 4.0% 4.2% 4.3% 4.8% 4.9% 4.9% 5.0% 5.7%Active claims (h) 21,428 20,528 20,501 21,647 21,918 20,870 20,969 26,171% change (i) 4.4% 0.1% -5.3% -1.2% 5.0% -0.5% -19.9%Case estimates outstanding $M (j) 622.134 614.860 590.222 618.100 575.386 554.349 570.865 654.578% change (k) 1.2% 4.2% -4.5% 7.4% 3.8% -2.9% -12.8%

Notes : (a) from Form WC20 returned by insurers


(c) = (a) indexed into 30/06/2008 values

(d) % change in (c) from previous year

(e) = number reported + actuarial estimate of IBNRs

(f) % change in (e) from previous year

(g) = (e) / {row (c) from previous table}

(h) from Form WC20 returned by insurers

(i) % change in (h) from previous year

(j) from Form WC20 returned by insurers

(k) % change in (j) from previous year

Reporting period

Real claim payments increased to their highest level in 1999/2000 (refer prior reports)and declined significantly thereafter to 2008/09. Although 2004/05 has experienced a5% increase, real claim payments have remained stable since.

Estimated incurred claim numbers continued to decline to 2001/02, but stabilised in2002/03 before increasing over the next two years to 2004/05 and has since declinedto below 2002/03 levels in 2005/06 and 2006/07. 2007/08 has increased however isstill below 2001/02.

Claim frequency declined steadily to 2001/02, stabilised over the next three yearsbefore declining in 2005/06 with additional, albeit smaller, declines in 2006/07 and2007/08.

Active claims were stable in the range 26,000 to 28,000 up to 2001 and then declinedto 21,000 at 30 June 2002. Active claims stayed level in 2002/03 then increased by5% in 2003/04 before decreasing over the next two years and stabilising in 2006/07.2007/08 has increased by 4.4% though is still lower than 2003/04 and 2004/05.

Case estimates outstanding decreased each year to 2002/03. Case estimates thenincreased over the next two years to 2004/05, before declining by 4.5% in 2005/06followed by increases in 2006/07 and 2007/08.


1/05/2009 5:54 PM


and trends

58

B2 Statistical trends

B2.1 Aggregate incurred cost of claims in current values before 2004 Reform Act

Estimated incurred cost of claims in current values as at 30/06/2008, by financial yearof accident, and using the benefit of hindsight, are as follows:

Accidentyear Cumulative Estimated Estimated Estimated Average Returned Claim cost

ending payments outstanding incurred no of claims claim wages in c/ % of30 June $M (a) $M (b) $M (c) incurred (d) size $ (e) values $M (f) wages (g)

2008 131.924 431.937 563.861 38,014 14,833 49,856.2 1.13%2007 293.200 230.981 524.180 37,664 13,917 47,935.4 1.09%2006 360.235 128.092 488.327 37,463 13,035 45,382.6 1.08%2005 424.886 97.727 522.613 39,272 13,308 41,587.9 1.26%2004 444.402 66.350 510.752 38,418 13,295 39,026.1 1.31%2003 426.614 35.234 461.848 37,949 12,170 37,054.5 1.25%2002 429.810 15.444 445.254 38,055 11,700 36,441.5 1.22%2001 489.148 13.632 502.779 42,870 11,728 36,646.5 1.37%

Notes : (a) cumulative actual claim payments indexed to current values

(b) from Attachment G4.4

(c) = (a) + (b)

(d) from Attachment G1.15

(e) = (c) in $ / (d)

(f) from Form WC11 indexed to current values adjusted to est final wages as in Attachment F1.2.1

(g) = (c) / (f) .

Estimated Incurred Costs in Current Values as at 30/06/2008 - excluding 2004 Reform Act impact

The 2007/08 average claim size is 6.5% higher than 2006/07 in real terms. Estimatedclaim cost as a % of wages decreased from 1.26% for 2004/05 to 1.08% in 2005/06where it remained stable in 2006/07 before an increase to 1.13% for 2007/08.

Our estimates in the table above make realistic allowance for current trends tocontinue in future.

Analysis of claim trends over the six months to 31 December 2008 confirms theabove trends, while some level of superimposed inflation also is continuing andcommon law experience has stabilised.

The table below shows the wage adjustment factors adopted at the most recent fourvaluations. Returned wages are developed to ultimate levels for wage adjustmentsadvised by insured employers after expiry of the risk period.

Wage Year30/06/2008 30/06/2007 30/06/2006 30/06/2005

2008 1.0562 1.0817 1.0771 1.06912007 1.0161 1.0117 1.0068 1.0049

2006 1.0039 1.0032 0.9994 0.99912005 1.0022 1.0022 0.9998 0.9980earlier 1.0007 1.0016 0.9997 0.9983

Wage adjustment factors


1/05/2009 5:54 PM


and trends

59

It is important to realise that returned wages have been subject to significantinaccuracy in the past. There is some evidence that insurers are reporting wages moreaccurately over the last two years.

Spurious understatement of returned wages can lead to erroneous increases inpremium rates and vice versa. The accuracy of the returned wages is still an area forcareful attention.

Claim frequency has been as follows:

Accident yearending 30 June Number of employees (a) $64,333 of real wages (b)

2008 4.0% 4.9%2007 4.2% 5.1%2006 4.3% 5.3%2005 4.8% 6.1%2004 4.9% 6.3%2003 4.9% 6.6%2002 5.0% 6.7%2001 5.7% 7.5%

Notes : (a) item (g) from the last table in Attachment B1

(b) = number of claims incurred / (real wages / ave real wages {$64,333}) from first table in this section

Claim frequency as % of :

Claim frequency per $64,333 wages has declined by an equivalent 6% per year over2000 to 2007 and also by 5% per year per employee. Note the $64,333 figure adoptedis the annualised figure from ABS Cat 6302.0 Average Weekly Earnings for WesternAustralia (persons full-time adult ordinary time earnings).

B2.2 Claim numbers and sizes and estimated incurred costs

Accident year Estimated number Average claim size Estimated inflated incurredending 30 June of claims incurred (a) in 30/06/2008 values (b) cost of claims $M (c)

2008 38,014 14,833 621.0352007 37,664 13,917 536.8052006 37,463 13,035 463.2262005 39,272 13,308 465.7422004 38,418 13,295 427.7172003 37,949 12,170 361.7692002 38,055 11,700 327.1182001 42,870 11,728 354.635

Notes : (a) from Attachment G1.15. Now includes GIFU

(b) from attachment G4.4, before 2004 Reform Act allowance

(c) actual cumulative past payments plus inflated projected future payments(from Attachment G4.5 but without claims expenses), including 2004 Reform Act allowance

Comments:

the number of claims had significant decreases to 2002, was stable in 2003 andhad slight increases to 2004/05 before decreasing in 2005/06 and increasingover 2006/07 and 2007/08

average claim size has increased by 27% in real terms since 2000/01 or 3% pa

inflated incurred cost increased by 75% ($266M) between 2001 and 2008, iefrom $354M to $621M in actual terms including GST and both the October1999 and the 2004 Reform Act impacts.


1/05/2009 5:54 PM


and trends

60

B2.3 Reserving and loss ratios

Some overall market reserving and loss ratios which may assist insurers to judge therelative strength of their reserves are as follows :

Inflated Total case Ultimate UltimateAccident Cumulative Total actuarial estimates incurred incurred Loss

year claim case incurred to claim costs/claim costs/total ratiosending payments estimates cost ests payments payments case ests30 June $M (a) $M (b) $M (c) (d) (e) (f) (g)

2008 126.055 365.017 621.035 290% 493% 170% 81%2007 271.238 418.639 536.805 154% 198% 128% 73%2006 316.335 397.577 463.226 126% 146% 117% 66%2005 355.370 406.638 465.742 114% 131% 115% 75%2004 353.606 386.438 427.717 109% 121% 111% 74%2003 322.264 337.405 361.769 105% 112% 107% 62%2002 309.111 320.855 327.118 104% 106% 102% 56%2001 338.487 347.935 354.635 103% 105% 102% 57%

Notes : (a) cumulative actual claim payments

(b) = (a) + insurer's case estimates outstanding

(c) = (c) from previous table

(d) = (b) / (a) x 100

(e) = (c) / (a) x 100

(f) = (c) / (b) x 100

(g) = (c) in $ / earned premium returned by insurers

By applying the ratios in columns (d), (e) and (f) above, insurers can obtain a measureof the strength of their own case estimates and total incurred claim cost, relative tooverall market levels.

Since last year, the case reserving ratio (d) at the same stage of development hasdecreased or remained stable for all accident years, and the ultimate incurred costratio to payments (e) and to total case estimates (f), decreased for all accident years.

The inflated loss ratio (g) is a measure of the cost of claims to earned premium. Thehigher the loss ratio, the less profitable the portfolio of risks. The loss ratio estimatesfor all accident years have either improved or stabilised since last year.

A target inflated loss ratio including all expense and profit loadings would be 78%.All accident year’s loss ratios are profitable except 2008, though early estimatesshould not be relied on because of the high uncertain projected outstanding portion.Around 77% of projected ultimate cost is still outstanding for 2007/08.


1/05/2009 5:54 PM


and trends

61

B2.4 Case estimates, expenses and discount levels and margins

Insurers' Discount ImplicitFinancial case Total level by margin

year estimates expense insurers in Gazetteending outstanding levels against rates30 June $M % Gazette

2008 622.134 18.5% 17.5% 0%2007 614.860 17.8% 24.1% 0%2006 590.222 16.9% 22.2% 0%2005 618.100 19.0% 18.2% 0%2004 575.386 18.7% 14.1% 0%2003 554.349 18.0% 14.3% 0%2002 570.865 16.0% 11.7% 0%2001 654.578 15.6% 10.7% 0%2000 662.187 14.2% 0%

Comments:

outstanding case estimates increased by 1% in 2008

total expense levels increased to 18.5% from 17.8% last year (and increased by0.7% excluding brokerage to 15.2% from 14.5% last year)

insurer premium discounts to Gazette rates have increased for all years shownexcept 2008. Note however that we have included a 10% adjustment factor toaccount for an increase in burner policies in 2007/08. Before this adjustmentdiscount levels were higher than last year at 25%

a significant implicit margin in the Gazette rates was removed in 1998. Themargin arose in 1994 on introduction of the industry based premium ratingclasses.

B2.5 Comparison of workers' compensation costs and wages by industry division

The charts below show:

the comparative cost of workers' compensation claims as a percentage ofaggregate wages over the past four years by industry, and

the composition of wages by industry for 2007/08.

The cost of claims is estimated as follows:

by year of accident

using the actuarial basis and methods in this report

allowance is made for expenses and margins (as per section 3.1.2)

cost estimates include all development data up to 30/06/2008

a higher proportion of cost is estimated for 2007/08 than for the earlier accidentyears.


1/05/2009 5:54 PM


and trends

62

Western Australia - Workers' compensation costs as a percentage of total

aggregate wages by Industry

4 . 10

1. 0 9

2 . 31

0 . 52

1. 6 0

1. 46

1. 3 1

1. 4 7

2 . 5 0

1. 17

0 . 11

0 . 5 3

0 . 36

0 . 73

1. 3 3

1. 18

1. 7 7

1. 3 0

2 . 9 5

1. 15

2 . 0 8

0 . 9 7

1. 58

1. 16

1. 17

1. 6 5

1. 95

0 . 6 2

0 . 15

0 . 4 3

0 . 4 0

0 . 8 6

1. 5 9

0 . 9 5

1. 8 1

1. 2 7

3 . 2 7

1. 11

1. 9 9

0 . 2 2

1. 5 6

1. 2 7

1. 16

1. 41

1. 9 1

0 . 68

0 . 11

0 . 5 1

0 . 36

0 . 7 7

1. 67

1. 3 6

1. 24

3 . 4 4

1. 3 4

2 . 4 2

0 . 69

1. 8 6

1. 2 0

1. 2 2

1. 6 0

2 . 2 0

0 . 7 4

0 . 0 9

0 . 6 0

0 . 4 4

0 . 8 6

1. 7 2

1. 2 7

2 . 4 0

1. 4 5

1. 7 8

0 1 2 3 4 5 6

Agriculture,Forestry& Fishing

Mining

Manufacturing

Electricity,Gas,Water

Construction

WholesaleTrade

Retail Trade

Accommodation,Cafes & Restaurants

Transport &Storage

CommunicationServices

Finance &Insurance

Property& Business Services

Government Administration &Defence

Education

Health &CommunityServices

Cultural &Recreational Services

Personal &Other Services

Total

% of Total Aggregate Wages

AYR 2007/08 AYR 2006/07 AYR 2005/06 AYR 2004/05

PERCENTAGE OF WAGES BY INDUSTRY FOR THE 2007/2008 ACCIDENT YEAR

ONLY

0.5%

1.5%

1.5%

1.7%

2.2%

2.5%

2.7%

2.7%

4.5%

4.4%

6.8%

8.8%

9.9%

10.3%

11.4%

16.3%

12.4%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0%

Communication Services

Agriculture, Forestry & Fishing

Cultural & Recreational Services

Electricity, Gas, Water

Personal & Other Services

Finance & Insurance

Government Administration & Defence

Accommodation, Cafes & Restaurants

Wholesale Trade

Transport & Storage

Retail Trade

Education

Health & Community Services

M anufacturing

M ining

Construction

Property & Business Services

Percentage of Wages


1/05/2009 5:54 PM

Attachment C Summary of Forms WC101 and

WC20

63

C Summary of Forms WC101 and WC20

YEAR TO DATE SUMMARY OF FORM WC101 RETURNS

2007/08

QUARTERLY AND CUMULATIVE TOTALS AND PERCENTAGE OF CUMULATIVE TOTALS

Quarterly Totals Cumulative Totals Percentage of Cumulative TotalsPayment Type 30 September 31 December 31 March 30 June 30 September 31 December 31 March 30 June 30 September 31 December 31 March 30 June

Private Insurers

By Weekly Payments 32,497,895 32,599,961 34,883,446 37,847,610 32,497,895 65,097,857 99,981,303 137,828,913 30.67% 32.15% 33.55% 33.62%Redemptions 12,756,757 13,160,240 11,879,768 12,275,009 12,756,757 25,916,996 37,796,764 50,071,774 12.04% 12.80% 12.68% 12.21%For Specific Injuries (Schedule 2) 3,602,355 3,556,137 3,139,847 3,492,656 3,602,355 7,158,492 10,298,339 13,790,995 3.40% 3.54% 3.46% 3.36%Fatal (including funeral expenses) 945,667 -46,996 507,690 292,077 945,667 898,672 1,406,362 1,698,439 0.89% 0.44% 0.47% 0.41%Medical Practitioners and Specialists 12,318,399 10,965,999 11,625,671 14,586,977 12,318,399 23,284,398 34,910,070 49,497,047 11.63% 11.50% 11.71% 12.07%Hospital Expenses 5,775,454 5,426,104 5,314,374 7,114,907 5,775,454 11,201,557 16,515,931 23,630,838 5.45% 5.53% 5.54% 5.76%All Other Treatment 4,427,130 4,211,689 4,363,032 5,595,894 4,427,130 8,638,819 13,001,851 18,597,745 4.18% 4.27% 4.36% 4.54%Vocational Rehabilitation 3,164,133 2,790,136 2,839,244 3,695,299 3,164,133 5,954,269 8,793,513 12,488,812 2.99% 2.94% 2.95% 3.05%Miscellaneous (eg. transport, maintenance) 4,463,444 4,285,396 4,242,923 5,673,077 4,463,444 8,748,841 12,991,763 18,664,840 4.21% 4.32% 4.36% 4.55%Legal Expenses 4,882,524 3,986,828 4,865,803 5,572,853 4,882,524 8,869,351 13,735,154 19,308,008 4.61% 4.38% 4.61% 4.71%Common Law and Other Acts 21,125,525 15,562,062 11,904,982 15,791,244 21,125,525 36,687,587 48,592,570 64,383,813 19.94% 18.12% 16.30% 15.70%

Total 105,959,283 96,497,556 95,566,781 111,937,604 105,959,283 202,456,839 298,023,620 409,961,224 100.00% 100.00% 100.00% 100.00%

Self Insurers

By Weekly Payments 11,444,807 9,291,661 9,723,874 14,046,491 11,444,807 20,736,468 30,460,342 44,506,833 40.24% 39.99% 38.61% 39.48%Redemptions 3,263,788 3,240,776 3,763,840 3,141,819 3,263,788 6,504,565 10,268,404 13,410,223 11.47% 12.54% 13.02% 11.90%For Specific Injuries (Schedule 2) 1,074,763 1,154,234 695,897 972,470 1,074,763 2,228,997 2,924,895 3,897,364 3.78% 4.30% 3.71% 3.46%Fatal (including funeral expenses) 218,435 212,264 8,034 234,368 218,435 430,699 438,733 673,101 0.77% 0.83% 0.56% 0.60%Medical Practitioners and Specialists 2,364,653 1,922,471 2,185,754 2,213,733 2,364,653 4,287,124 6,472,878 8,686,611 8.31% 8.27% 8.20% 7.71%Hospital Expenses 1,382,314 1,265,673 1,424,915 1,429,346 1,382,314 2,647,987 4,072,902 5,502,248 4.86% 5.11% 5.16% 4.88%All Other Treatment 2,784,150 2,192,025 2,828,307 2,841,125 2,784,150 4,976,175 7,804,482 10,645,606 9.79% 9.60% 9.89% 9.44%Vocational Rehabilitation 1,162,978 879,662 980,363 1,129,228 1,162,978 2,042,640 3,023,003 4,152,231 4.09% 3.94% 3.83% 3.68%Miscellaneous (eg. transport, maintenance) 1,615,092 1,371,516 1,248,966 1,490,146 1,615,092 2,986,608 4,235,575 5,725,720 5.68% 5.76% 5.37% 5.08%Legal Expenses 1,162,605 1,132,561 1,308,904 1,673,376 1,162,605 2,295,166 3,604,069 5,277,445 4.09% 4.43% 4.57% 4.68%Common Law and Other Acts 1,971,057 749,623 2,863,850 4,665,113 1,971,057 2,720,680 5,584,530 10,249,644 6.93% 5.25% 7.08% 9.09%

Total 28,444,642 23,412,467 27,032,704 33,837,213 28,444,642 51,857,109 78,889,813 112,727,027 100.00% 100.00% 100.00% 100.00%

Other

By Weekly Payments 68,170 38,762 47,220 46,709 68,170 106,932 154,152 200,861 8.21% 10.80% 10.02% 9.28%Redemptions 97,626 48,813 147,626 162,864 97,626 146,439 294,065 456,929 11.76% 14.80% 19.12% 21.10%For Specific Injuries (Schedule 2) 0 0 0 0 0 0 0 0 0.00% 0.00% 0.00% 0.00%Fatal (including funeral expenses) 0 0 0 0 0 0 0 0 0.00% 0.00% 0.00% 0.00%Medical Practitioners and Specialists 5,966 2,990 7,126 6,015 5,966 8,956 16,082 22,097 0.72% 0.90% 1.05% 1.02%Hospital Expenses 19,518 6,103 24,313 53,075 19,518 25,621 49,934 103,009 2.35% 2.59% 3.25% 4.76%All Other Treatment 10,214 4,985 7,782 18,797 10,214 15,199 22,981 41,778 1.23% 1.54% 1.49% 1.93%Vocational Rehabilitation 0 759 109 1,744 0 759 868 2,612 0.00% 0.08% 0.06% 0.12%Miscellaneous (eg. transport, maintenance) 6,964 5,050 3,086 18,661 6,964 12,014 15,100 33,761 0.84% 1.21% 0.98% 1.56%Legal Expenses 53,977 19,210 21,930 43,571 53,977 73,187 95,117 138,688 6.50% 7.39% 6.18% 6.41%Common Law and Other Acts 568,018 32,641 289,263 275,598 568,018 600,659 889,922 1,165,520 68.40% 60.69% 57.85% 53.83%

Total 830,453 159,313 548,455 627,034 830,453 989,766 1,538,221 2,165,255 100.00% 100.00% 100.00% 100.00%


1/05/2009 5:54 PM

Attachment C Summary of Forms

WC101 and WC20

64


2007/08



GRAND TOTAL

By Weekly Payments 44,010,872 41,930,385 44,654,540 51,940,810 44,010,872 85,941,257 130,595,797 182,536,607 32.54% 33.66% 34.51% 34.78%Redemptions 16,118,171 16,449,829 15,791,234 15,579,692 16,118,171 32,568,000 48,359,233 63,938,925 11.92% 12.76% 12.78% 12.18%For Specific Injuries (Schedule 2) 4,677,118 4,710,371 3,835,745 4,465,125 4,677,118 9,387,489 13,223,234 17,688,359 3.46% 3.68% 3.49% 3.37%Fatal (including funeral expenses) 1,164,102 165,268 515,724 526,445 1,164,102 1,329,371 1,845,095 2,371,540 0.86% 0.52% 0.49% 0.45%Medical Practitioners and Specialists 14,689,018 12,891,460 13,818,552 16,806,725 14,689,018 27,580,479 41,399,030 58,205,755 10.86% 10.80% 10.94% 11.09%Hospital Expenses 7,177,286 6,697,880 6,763,602 8,597,328 7,177,286 13,875,166 20,638,767 29,236,095 5.31% 5.43% 5.45% 5.57%All Other Treatment 7,221,494 6,408,698 7,199,121 8,455,815 7,221,494 13,630,192 20,829,314 29,285,129 5.34% 5.34% 5.50% 5.58%Vocational Rehabilitation 4,327,111 3,670,557 3,819,716 4,826,271 4,327,111 7,997,668 11,817,384 16,643,655 3.20% 3.13% 3.12% 3.17%Miscellaneous (eg. transport, maintenance) 6,085,500 5,661,963 5,494,975 7,181,884 6,085,500 11,747,463 17,242,438 24,424,322 4.50% 4.60% 4.56% 4.65%Legal Expenses 6,099,105 5,138,599 6,196,637 7,289,801 6,099,105 11,237,704 17,434,341 24,724,141 4.51% 4.40% 4.61% 4.71%Common Law and Other Acts 23,664,600 16,344,326 15,058,095 20,731,955 23,664,600 40,008,927 55,067,022 75,798,977 17.50% 15.67% 14.55% 14.44%

Total 135,234,378 120,069,336 123,147,940 146,401,851 135,234,378 255,303,715 378,451,655 524,853,506 100.00% 100.00% 100.00% 100.00%

Notes: 1. RiskCover, Municipal WorkCare and the Government Insurance Funds (Funded and Unfunded) of the Insurance Commission of Western Australia are grouped under "Self-Insurers" .

2. The group "Other " includes the ICGF Fund of the Insurance Commission of Western Australia as well as the Industrial Diseases, Standard Insurance, General Fund and Community Insurance managed by them.


1/05/2009 5:54 PM


WC101 and WC20

65

YEAR TO DATE SUMMARY OF FORM WC101 RETURNS2007/08

PERCENTAGE OF PREVIOUS YEAR

Quarterly Totals Cumulative TotalsPayment Type 30 September 31 December 31 March 30 June 30 September 31 December 31 March 30 June

Private Insurers

By Weekly Payments 106% 114% 114% 118% 106% 110% 111% 113%Redemptions 89% 98% 110% 108% 89% 93% 98% 100%For Specific Injuries (Schedule 2) 90% 91% 109% 110% 90% 90% 95% 99%

Fatal (including funeral expenses) 196% 121% 85% 779% 196% 203% 135% 158%Medical Practitioners and Specialists 108% 107% 104% 132% 108% 108% 106% 113%Hospital Expenses 105% 114% 101% 141% 105% 109% 106% 115%

All Other Treatment 106% 110% 107% 142% 106% 108% 108% 116%Vocational Rehabilitation 83% 90% 86% 121% 83% 86% 86% 94%

Miscellaneous (eg. transport, maintenance) 91% 100% 99% 123% 91% 95% 96% 103%Legal Expenses 90% 66% 101% 119% 90% 77% 84% 92%Common Law and Other Acts 133% 109% 104% 103% 133% 121% 117% 113%

Total 105% 104% 107% 119% 105% 105% 106% 109%

Self Insurers


Fatal (including funeral expenses) 10402% 10200% 81% 103% 10402% 10301% 3101% 278%Medical Practitioners and Specialists 125% 99% 107% 117% 125% 112% 110% 112%

Hospital Expenses 125% 119% 126% 125% 125% 122% 123% 124%All Other Treatment 117% 96% 111% 122% 117% 107% 108% 112%Vocational Rehabilitation 123% 96% 104% 137% 123% 109% 108% 114%

Miscellaneous (eg. transport, maintenance) 104% 100% 88% 100% 104% 102% 97% 98%Legal Expenses 92% 77% 107% 112% 92% 84% 91% 97%Common Law and Other Acts 154% 28% 136% 239% 154% 68% 92% 127%

Total 113% 98% 102% 134% 113% 106% 105% 112%

Other


Fatal (including funeral expenses) 0% 0% 0% 0% 0% 0% 0% 0%Medical Practitioners and Specialists 60% 108% 109% 363% 60% 70% 83% 106%

Hospital Expenses 107% 16% 61% 307% 107% 46% 52% 91%All Other Treatment 39% 23% 35% -69% 39% 32% 33% 98%Vocational Rehabilitation 0% 73% 3% 2456% 0% 18% 11% 32%

Miscellaneous (eg. transport, maintenance) 90% 218% 18% 1217% 90% 119% 56% 119%Legal Expenses 469% 18% 521% 232% 469% 63% 79% 99%Common Law and Other Acts 0% 3% -60% 377% 0% 59% 169% 194%

Total 236% 12% -228% 228% 236% 60% 110% 129%


1/05/2009 5:54 PM


WC101 and WC20

66




GRAND TOTAL

By Weekly Payments 109% 114% 106% 125% 109% 111% 109% 113%Redemptions 87% 100% 114% 102% 87% 93% 99% 100%For Specific Injuries (Schedule 2) 95% 99% 102% 113% 95% 97% 98% 102%Fatal (including funeral expenses) 241% -450% 85% 198% 241% 297% 175% 180%Medical Practitioners and Specialists 111% 106% 104% 130% 111% 108% 107% 113%Hospital Expenses 108% 115% 105% 139% 108% 111% 109% 116%All Other Treatment 110% 104% 109% 135% 110% 107% 108% 115%Vocational Rehabilitation 91% 92% 90% 125% 91% 91% 91% 99%Miscellaneous (eg. transport, maintenance) 94% 100% 96% 118% 94% 97% 97% 102%Legal Expenses 91% 68% 102% 118% 91% 79% 86% 93%Common Law and Other Acts 138% 91% 115% 120% 138% 114% 114% 116%

Total 107% 102% 107% 122% 107% 105% 105% 110%

Notes: 1. RiskCover, Municipal WorkCare and the Government Insurance Funds (Funded and Unfunded) of the Insurance Commission of Western Australia

are grouped under "Self-Insurers".

2. The group "Other " includes the ICGF Fund of the Insurance Commission of Western Australia as well as the Industrial Diseases,

Standard Insurance and General Funds managed by them.


1/05/2009 5:54 PM


WC101 and WC20

67


2008/09



Private Insurers

By Weekly Payments 38,227,558 41,711,273 38,227,558 79,938,831 34.35% 34.87%Redemptions 12,918,365 14,668,448 12,918,365 27,586,812 11.61% 12.03%For Specific Injuries (Schedule 2) 4,170,884 3,742,183 4,170,884 7,913,068 3.75% 3.45%Fatal (including funeral expenses) 493,168 1,044,905 493,168 1,538,072 0.44% 0.67%Medical Practitioners and Specialists 13,388,882 12,961,084 13,388,882 26,349,966 12.03% 11.49%Hospital Expenses 6,659,786 6,166,449 6,659,786 12,826,235 5.98% 5.59%All Other Treatment 5,303,495 4,956,352 5,303,495 10,259,847 4.77% 4.48%Vocational Rehabilitation 3,709,076 3,469,370 3,709,076 7,178,446 3.33% 3.13%Miscellaneous (eg. transport, maintenance) 5,664,906 5,582,777 5,664,906 11,247,682 5.09% 4.91%Legal Expenses 5,151,533 5,961,939 5,151,533 11,113,472 4.63% 4.85%Common Law and Other Acts 15,605,584 17,706,749 15,605,584 33,312,332 14.02% 14.53%

Total 111,293,237 117,971,528 111,293,237 229,264,764 100.00% 100.00%

Self Insurers

By Weekly Payments 11,095,217 12,003,563 11,095,217 23,098,780 34.94% 32.90%Redemptions 3,316,498 4,154,867 3,316,498 7,471,364 10.44% 10.64%For Specific Injuries (Schedule 2) 1,525,679 1,415,461 1,525,679 2,941,140 4.80% 4.19%Fatal (including funeral expenses) 453,169 4,023 453,169 457,192 1.43% 0.65%Medical Practitioners and Specialists 2,485,868 2,432,103 2,485,868 4,917,971 7.83% 7.00%Hospital Expenses 1,550,315 1,651,857 1,550,315 3,202,172 4.88% 4.56%All Other Treatment 3,371,632 3,027,444 3,371,632 6,399,076 10.62% 9.11%Vocational Rehabilitation 1,291,936 1,253,436 1,291,936 2,545,372 4.07% 3.63%Miscellaneous (eg. transport, maintenance) 1,724,007 1,525,649 1,724,007 3,249,656 5.43% 4.63%Legal Expenses 1,557,659 2,195,887 1,557,659 3,753,545 4.91% 5.35%Common Law and Other Acts 3,380,361 8,790,552 3,380,361 12,170,913 10.65% 17.34%

Total 31,752,340 38,454,841 31,752,340 70,207,181 100.00% 100.00%

Other

By Weekly Payments 60,047 31,850 60,047 91,897 30.78% 17.30%Redemptions 149,804 201,026 149,804 350,830 76.79% 66.04%For Specific Injuries (Schedule 2) 0 0 0 0 0.00% 0.00%Fatal (including funeral expenses) 0 0 0 0 0.00% 0.00%Medical Practitioners and Specialists 2,294 877 2,294 3,171 1.18% 0.60%Hospital Expenses 17,889 17,924 17,889 35,813 9.17% 6.74%All Other Treatment 10,809 5,927 10,809 16,736 5.54% 3.15%Vocational Rehabilitation 3,654 704 3,654 4,358 1.87% 0.82%Miscellaneous (eg. transport, maintenance) 3,626 8,469 3,626 12,095 1.86% 2.28%Legal Expenses 45,183 31,921 45,183 77,104 23.16% 14.51%Common Law and Other Acts -98,227 37,494 -98,227 -60,733 -50.35% -11.43%

Total 195,079 336,192 195,079 531,271 100.00% 100.00%


1/05/2009 5:54 PM


WC101 and WC20

68


2008/09



GRAND TOTAL

By Weekly Payments 49,382,822 53,746,686 49,382,822 103,129,508 34.48% 34.38%Redemptions 16,384,666 19,024,340 16,384,666 35,409,006 11.44% 11.80%For Specific Injuries (Schedule 2) 5,696,563 5,157,644 5,696,563 10,854,208 3.98% 3.62%Fatal (including funeral expenses) 946,337 1,048,928 946,337 1,995,265 0.66% 0.67%Medical Practitioners and Specialists 15,877,044 15,394,064 15,877,044 31,271,108 11.08% 10.42%Hospital Expenses 8,227,990 7,836,231 8,227,990 16,064,221 5.74% 5.35%All Other Treatment 8,685,936 7,989,723 8,685,936 16,675,659 6.06% 5.56%Vocational Rehabilitation 5,004,666 4,723,510 5,004,666 9,728,176 3.49% 3.24%Miscellaneous (eg. transport, maintenance) 7,392,539 7,116,894 7,392,539 14,509,433 5.16% 4.84%Legal Expenses 6,754,375 8,189,746 6,754,375 14,944,121 4.72% 4.98%Common Law and Other Acts 18,887,717 26,534,794 18,887,717 45,422,512 13.19% 15.14%

Total 143,240,656 156,762,561 143,240,656 300,003,217 100.00% 100.00%

Notes: 1. RiskCover, Municipal WorkCare and the Government Insurance Funds (Funded and Unfunded) of the Insurance Commission of Western Australia are grouped under "Self-Insurers" .

2. The group "Other " includes the ICGF Fund of the Insurance Commission of Western Australia as well as the Industrial Diseases, Standard Insurance, General Fund and Community Insurance managed by them.


1/05/2009 5:54 PM


WC101 and WC20

69




Private Insurers

By Weekly Payments 118% 128% 118% 123%Redemptions 101% 111% 101% 106%For Specific Injuries (Schedule 2) 116% 105% 116% 111%

Fatal (including funeral expenses) 52% -2223% 52% 171%Medical Practitioners and Specialists 109% 118% 109% 113%Hospital Expenses 115% 114% 115% 115%

All Other Treatment 120% 118% 120% 119%Vocational Rehabilitation 117% 124% 117% 121%

Miscellaneous (eg. transport, maintenance) 127% 130% 127% 129%Legal Expenses 106% 150% 106% 125%Common Law and Other Acts 74% 114% 74% 91%

Total 105% 122% 105% 113%

Self Insurers


Fatal (including funeral expenses) 207% 2% 207% 106%Medical Practitioners and Specialists 105% 127% 105% 115%

Hospital Expenses 112% 131% 112% 121%All Other Treatment 121% 138% 121% 129%Vocational Rehabilitation 111% 142% 111% 125%

Miscellaneous (eg. transport, maintenance) 107% 111% 107% 109%Legal Expenses 134% 194% 134% 164%Common Law and Other Acts 171% 1173% 171% 447%

Total 112% 164% 112% 135%

Other


Fatal (including funeral expenses) 0% 0% 0% 0%Medical Practitioners and Specialists 38% 29% 38% 35%

Hospital Expenses 92% 294% 92% 140%All Other Treatment 106% 119% 106% 110%Vocational Rehabilitation 0% 93% 0% 574%

Miscellaneous (eg. transport, maintenance) 52% 168% 52% 101%Legal Expenses 84% 166% 84% 105%Common Law and Other Acts -17% 115% -17% -10%

Total 23% 211% 23% 54%


1/05/2009 5:54 PM


WC101 and WC20

70




GRAND TOTAL

By Weekly Payments 112% 128% 112% 120%Redemptions 102% 116% 102% 109%For Specific Injuries (Schedule 2) 122% 109% 122% 116%Fatal (including funeral expenses) 81% 635% 81% 150%Medical Practitioners and Specialists 108% 119% 108% 113%Hospital Expenses 115% 117% 115% 116%All Other Treatment 120% 125% 120% 122%Vocational Rehabilitation 116% 129% 116% 122%Miscellaneous (eg. transport, maintenance) 121% 126% 121% 124%Legal Expenses 111% 159% 111% 133%Common Law and Other Acts 80% 162% 80% 114%

Total 106% 131% 106% 118%

Notes: 1. RiskCover, Municipal WorkCare and the Government Insurance Funds (Funded and Unfunded) of the Insurance Commission of Western Australia

are grouped under "Self-Insurers".

2. The group "Other " includes the ICGF Fund of the Insurance Commission of Western Australia as well as the Industrial Diseases,

Standard Insurance and General Funds managed by them.


1/05/2009 5:54 PM


WC101 and WC20

71

Consolidated Form WC20 – 2007/08

YEAR OF NUMBER OF CLAIMS AMOUNT OF CLAIMS PAID NUMBER OF REPORTED PROVISION FOR CLAIMS OUTSTANDINGACCIDENT REPORTED IN CURRENT DURING CURRENT YEAR CLAIMS OUTSTANDING AT AT THE END OF CURRENT YEAR

YEAR (CLASSIFIED BY YEAR (CLASSIFIED BY YEAR OF END OF CURRENT YEAR (CLASSIFIED BY YEAR OF ACCIDENT)OF ACCIDENT) ACCIDENT) (CLASSIFIED BY YEAR OF AND FURTHER SUBDIVIDED INTO:

ACCIDENT)(a) (b) (c) (d) (e)

CASE DEVELOPMENTESTIMATES AND IBNR ESTIMATES

$ $ $

2008 34,370 126,054,701 13,054 238,962,370 297,900,4292007 3,326 160,220,642 3,903 147,401,185 178,159,7882006 107 74,923,840 1,655 81,241,928 104,077,5592005 27 47,740,172 882 51,268,129 59,082,3972004 17 27,043,002 503 32,831,356 37,561,5322003 21 12,361,926 330 15,140,920 22,921,2742002 22 8,231,601 229 11,744,053 12,778,7442001 14 5,419,448 153 9,447,975 7,641,5112000 18 4,260,665 123 5,672,347 5,170,2821999 11 2,147,151 90 4,639,560 3,359,9791998 15 1,829,632 83 3,925,752 3,102,566All earlier yrs 166 12,233,440 423 19,858,012 91,838,086

Total 38,114 482,466,220 21,428 622,133,586 823,594,14538,114 482,466,220 21,428 622,133,586 823,594,145


1/05/2009 5:54 PM


WC101 and WC20

72

YEAR TO DATE SUMMARY OF FORM WC20A (QUARTERLY) Quarter Number 4 FINALFOR THE YEAR TO 30 JUNE 2008 30 JUNE 2008 VERSIONINSURANCE CO:.............RPR returning entities: (Private Insurers & the Insurance Commission of Western Australia (GIFF, GIFU, RiskCover and ICGF funds ))

TO THE END OF THE CURRENT QUARTER (CLASSIFIED BY YEAR OF ACCIDENT) (a)

No. Elections >16% but <30% No. Elections 30% or greater No. 93D Writs No. Claims Raised

by Insurer

Schedule 92(f) TOTAL No. Elections >16%

but <30%

No. Elections 30% or

greater

No. 93D Writs Schedule 92(f) TOTAL No. Elections >16% but

<30%

No. Elections

30% or greater

No. 93D Writs No. Claims

Raised by

Insurer

TOTAL No. Elections >16%

but <30%

No. Elections 30%

or greater

No. 93D Writs No. Claims Raised

by Insurer

TOTAL

YEAR OF ACCIDENT $ $

CURRENT YEAR

2007/2008 0 0 0 0 0 0 $0 $0 $0 $0 -$ 0 0 0 0 0 $0 $0 $0 $0 -$2006/2007 0 0 0 0 0 0 $0 $0 $0 $0 -$ 0 0 0 0 0 $0 $0 $0 $0 -$

2005/2006 42 21 1 31 8 103 $2,006,500 $2,144,350 $0 $454,373 4,605,223$ 3 6 0 10 19 $850,000 $3,980,000 $0 $1,318,446 6,148,446$2004/2005 128 87 5 106 10 336 $3,156,319 $11,661,340 $0 $2,899,733 17,717,392$ 20 20 0 28 68 $2,325,459 $4,430,075 $0 $4,738,203 11,493,737$

2003/2004 103 108 5 132 20 368 $1,875,566 $6,994,605 $1,897,000 $2,371,225 13,138,396$ 9 11 1 28 49 $1,711,400 $2,691,007 $400,000 $8,553,727 13,356,134$

2002/2003 83 106 7 94 10 300 $780,571 $3,963,026 -$21,000 $744,379 5,466,975$ 7 5 0 10 22 $1,174,325 $850,010 $0 $1,156,000 3,180,335$2001/2002 85 89 10 94 7 285 $524,320 $3,732,017 $0 $410,292 4,666,628$ 2 7 0 11 20 $529,157 $1,948,499 $0 $2,048,448 4,526,104$

2000/2001 57 97 10 112 4 280 $448,000 $1,920,547 $36,622 $337,500 2,742,669$ 2 7 1 8 18 $780,000 $1,860,000 $50,000 $1,091,974 3,781,974$1999/2000 38 83 16 52 2 191 $193,403 $1,596,996 $375,000 $149,000 2,314,399$ 1 6 1 1 9 $47,000 $1,699,464 $75,000 $54,000 1,875,464$

1998/1999 17 41 30 27 2 117 $95,335 $0 $480,940 $420,000 996,274$ 0 1 1 3 5 $0 $680,000 $260,000 $548,281 1,488,281$

1997/1998 19 35 23 28 1 106 $0 $164,070 $270,616 $104,709 539,395$ 2 1 1 1 5 $270,000 $500,000 $200,000 $350,000 1,320,000$

ALL EARLIER YEARS 37 132 95 258 5 527 $37,206 $4,243,719 $3,654,637 $220,991 8,156,554$ 4 23 22 24 73 $405,000 $3,325,000 $2,478,500 $2,629,843 8,838,343$

TOTAL 609 799 202 934 69 2613 $9,117,219 $36,420,669 $6,693,815 $8,112,202 60,343,905$ 50 87 27 124 288 $8,092,341 $21,964,055 $3,463,500 $22,488,922 56,008,818$

DATE: ...............................................

SIGNATURE: .............................................................. NAME (In block letters): ............................................

NUMBER OF CUMULATIVE COMMON LAW CLAIMS RAISED SINCE 01.07.2001 AMOUNT OF COMMON LAW CLAIMS PAID IN THE YEAR-TO-DATE NUMBER OF COMMON LAW CLAIMS OUTSTANDING AT END OF PROVISION FOR COMMON LAW CLAIMS OUTSTANDING AT THE END OF THE

(CLASSIFIED BY YEAR OF ACCIDENT) (b) CURRENT QUARTER (CLASSIFIED BY YEAR OF ACCIDENT) (c) CURRENT QUARTER (CLASSIFIED BY YEAR OF ACCIDENT) (d) Case Estimates

YEAR TO DATE SUMMARY OF FORM WC20B (QUARTERLY) Quarter Number 4 FINALFOR THE YEAR TO 30 JUNE 2008 30 JUNE 2008 VERSIONINSURANCE CO:.............PRC returning entities: (Private Insurers & the Insurance Commission of Western Australia (GIFF, GIFU, RiskCover and ICGF funds ))

(CLASSIFIED BY YEAR OF ACCIDENT) (a)

No. Elections >15% but <25% 25% or gretaer Raised by Insurer Sect 92(f) TOTAL No. Elections >15% but

<25%

25% or gretaer Sect 92(f) TOTAL No. Elections >15% but

<25%

25% or gretaer Raised by Insurer TOTAL No. Elections >15%

but <25%

25% or gretaer Raised by Insurer TOTAL

YEAR OF ACCIDENT $ $ $ $

2007/2008 6 1 32 6 45 42,000 0 584,289 $626,289 4 1 29 34 500,000 390,000 8,080,038 $8,970,0382006/2007 25 15 56 43 139 747,887 1,878,131 1,840,983 $4,467,001 11 9 46 66 1,397,075 8,118,076 8,335,502 $17,850,6532005/2006 55 20 35 20 130 1,121,613 2,609,292 1,696,231 $5,427,136 21 9 21 51 2,837,732 2,850,368 4,457,130 $10,145,230

Total 86 36 123 69 314 1,911,500 4,487,423 4,121,503 $10,520,426 36 19 96 151 4,734,807 11,358,444 20,872,670 $36,965,921

(CLASSIFIED BY YEAR OF ACCIDENT) (b) (CLASSIFIED BY YEAR OF ACCIDENT) (c) (CLASSIFIED BY YEAR OF ACCIDENT) (d) Case Estimates

NUMBER OF COMMON LAW CLAIMS INCURRED AND RAISED SINCE 14/11/2005 TO THE END OF THE CURRENTQUARTER

AMOUNT OF COMMON LAW CLAIMS PAID IN THE CURRENT QUARTER NUMBER OF COMMON LAW CLAIMS OUTSTANDING AT END OF THE CURRENTQUARTER

PROVISION FOR COMMON LAW CLAIMS OUTSTANDING AT THE ENDOF CURRENT QUARTER


1/05/2009 5:54 PM


WC101 and WC20

73

YEAR TO DATE SUMMARY OF FORM WC20 (QUARTERLY) Quarter Number 2 FINALFOR THE YEAR TO 31 DECEMBER 2008 31 DECEMBER 2008 VERSIONINSURANCE CO:.............Private Insurers & the Insurance Commission of Western Australia (RiskCover and ICGF funds )

NUMBER OF CLAIMS AMOUNT OF CLAIMS PAID FOR NUMBER OF REPORTED PROVISION FOR CLAIMS OUTSTANDINGREPORTED FOR THE THE YEAR TO DATE CLAIMS OUTSTANDING AT AT THE END OF CURRENT QUARTER

YEAR TO DATE (CLASSIFIED BY YEAR OF END OF THE CURRENT QUARTER (CLASSIFIED BY YEAR OF ACCIDENT)(BY YEAR OF ACCIDENT) ACCIDENT) (CLASSIFIED BY YEAR AND FURTHER SUBDIVIDED INTO:

OF ACCIDENT)

(a) (b) (c) (d) (e)CASE DEVELOPMENT AND

YEAR OF ACCIDENT ESTIMATES IBNR ESTIMATES *$ $ $

CURRENT YEAR01/07/08 TO 30/06/09 15883 $40,253,248 9053 $145,188,322

NOT01/07/07 TO 30/06/08 3138 $107,128,103 6650 $227,563,356 REQUIRED

TO BE01/07/06 TO 30/06/07 73 $54,941,183 2578 $124,994,811 SUBMITTED

FOR01/07/05 TO 30/06/06 25 $28,812,662 1193 $61,422,510 QUARTERLY

PERIODS01/07/04 TO 30/06/05 14 $20,916,890 662 $36,643,393

01/07/03 TO 30/06/04 7 $7,170,249 399 $29,073,206

01/07/02 TO 30/06/03 6 $3,675,964 255 $12,889,985

01/07/01 TO 30/06/02 8 $2,601,161 181 $8,703,726

01/07/00 TO 30/06/01 9 $2,356,742 129 $6,960,868

01/07/99 TO 30/06/00 14 $1,390,262 99 $4,575,462

01/07/98 TO 30/06/99 10 $790,722 79 $4,284,775

ALL EARLIER YEARS 87 $5,793,725 450 $23,205,565

TOTAL 19,274 $275,830,912 21,728 $685,505,980

Private Ins, ICWA(RiskCover & ICGF) - WC101's 276,070,469excl. Bishopsgate, NEM, Palmdale & WWF (do not return WC20) 239,567 (a) * Note : Prudential Margins - % Margin of Central Estimate ...........................%

275,830,902


1/05/2009 5:54 PM


WC101 and WC20

74

YEAR TO DATE SUMMARY OF FORM WC101 RETURNS BY ACCIDENT YEAR

2007/08

FOR THE YEAR TO 30 JUNE 2008

Summary - PRIVATE INSURERS

Accident YearPayment Type All Earlier Years 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 TOTAL

By Weekly Payments 32,241 180,383 15,488 -174,094 26,099 40,844 475,786 1,758,061 6,850,421 17,836,291 59,893,408 50,893,985 137,828,913

Redemptions 860,389 166,930 221,900 445,937 783,955 540,514 2,577,821 2,960,147 7,970,057 15,246,258 16,168,046 2,129,821 50,071,774

For Specific Injuries (Schedule 2) 302,123 114,183 87,939 171,044 325,845 441,068 493,025 1,015,758 1,761,248 4,676,225 4,021,035 381,501 13,790,995

Fatal (including funeral expenses) 22,984 10,553 17,404 2,175 14,865 4,350 7,390 21,156 7,500 6,608 1,043,605 539,851 1,698,439

Medical Practitioners and Specialists 78,575 60,930 36,163 14,961 139,814 148,189 355,767 640,379 1,660,005 4,059,454 16,406,853 25,895,958 49,497,047

Hospital Expenses 55,655 12,376 26,307 -5,507 3,392 56,130 61,656 291,679 572,333 1,552,518 7,861,446 13,142,855 23,630,838

All Other Treatment 82,524 40,135 54,688 74,362 19,233 57,426 105,283 209,439 575,069 1,696,482 7,002,301 8,680,803 18,597,745

Vocational Rehabilitation 10,629 1,421 -2,964 -8,489 19,023 4,760 51,338 79,349 460,419 1,824,620 6,794,791 3,253,917 12,488,812

Miscellaneous (eg. transport, maintenance) 111,413 39,537 15,065 128,174 108,961 191,831 263,999 601,632 1,136,507 2,909,637 7,858,123 5,299,960 18,664,840

Legal Expenses 1,124,675 362,719 296,892 667,712 656,612 832,760 1,410,978 2,038,745 3,285,891 3,871,623 3,874,672 884,729 19,308,008

Common Law and Other Acts 4,952,985 539,395 996,274 2,314,399 2,706,048 4,444,128 4,890,476 11,752,132 17,362,328 9,981,359 3,818,001 626,289 64,383,813

TOTAL 7,634,191 1,528,562 1,765,157 3,630,674 4,803,845 6,761,999 10,693,518 21,368,476 41,641,778 63,661,074 134,742,279 111,729,671 409,961,224


2007/08

FOR THE YEAR TO 30 JUNE 2008

Summary - RPR RETURNING ENTITIES (ie Private Insurers, Insurance Commission of WA - Funded, Unfunded, Riskcover and ICGF)


By Weekly Payments 291,708 222,105 179,063 14,021 170,267 440,334 806,043 3,420,465 9,342,392 23,117,914 74,035,849 58,461,382 170,501,544

Redemptions 1,218,819 244,729 291,539 695,312 927,285 834,880 2,737,052 3,934,254 9,026,202 17,175,612 18,508,156 2,318,076 57,911,913

For Specific Injuries (Schedule 2) 399,544 162,497 113,607 212,709 340,554 561,141 685,200 1,423,381 2,174,549 4,955,173 4,300,544 412,388 15,741,287

Fatal (including funeral expenses) 32,972 10,553 17,404 2,175 19,215 4,350 7,390 21,156 7,500 6,608 1,473,741 762,611 2,365,674

Medical Practitioners and Specialists 136,163 73,145 49,475 27,658 149,374 214,862 420,068 801,788 1,925,276 4,537,057 17,852,880 27,245,792 53,433,537

Hospital Expenses 227,296 18,928 31,487 -2,849 16,675 149,459 73,974 407,428 921,450 1,935,644 8,829,949 14,262,594 26,872,034

All Other Treatment 287,019 82,944 97,494 118,808 82,393 184,197 244,542 556,085 1,058,176 2,620,402 9,740,554 10,981,940 26,054,554

Vocational Rehabilitation 27,514 6,342 787 -4,107 35,299 27,729 74,111 206,746 689,734 2,334,276 8,136,219 3,744,024 15,278,674

Miscellaneous (eg. transport, maintenance) 214,544 56,162 22,450 161,247 153,782 252,347 315,828 792,560 1,437,126 3,366,058 9,010,691 6,156,440 21,939,235

Legal Expenses 1,358,152 412,831 347,576 721,291 781,932 895,672 1,532,369 2,364,364 3,637,636 4,376,849 4,456,295 1,082,171 21,967,138


TOTAL 12,777,336 1,829,630 2,147,156 4,260,663 5,419,445 8,231,600 12,363,553 27,041,386 47,962,671 75,026,951 160,242,878 126,053,706 483,356,975


1/05/2009 5:54 PM


WC101 and WC20

75


2008/09

FOR THE YEAR TO 31 DECEMBER 2008

Summary - PRIVATE INSURERS


By Weekly Payments 54,936 18,931 -34,840 -208,685 -68,649 169,635 430,133 1,284,847 3,434,786 15,425,808 43,708,492 15,723,437 79,938,831

Redemptions 178,577 56,828 89,958 128,112 -33,082 789,629 1,239,914 1,767,307 5,100,980 9,966,449 8,040,070 262,070 27,586,812

For Specific Injuries (Schedule 2) 108,572 27,991 85,855 59,995 67,017 114,369 171,593 575,868 1,520,409 3,674,205 1,351,820 155,373 7,913,068

Fatal (including funeral expenses) 82,684 10,008 1,158 6,415 2,316 3,473 3,336 -2,226 82,294 147,970 910,470 290,173 1,538,072

Medical Practitioners and Specialists 31,969 -23,525 3,989 21,286 66,914 72,429 142,643 371,091 893,212 2,943,546 12,267,173 9,559,239 26,349,966

Hospital Expenses 2,688 -15,952 -5,000 19,259 25,694 1,518 96,009 77,648 207,193 1,285,392 6,087,876 5,043,911 12,826,235

All Other Treatment 55,096 -10,357 -1,012 -3,043 30,891 35,901 38,580 142,592 424,311 1,317,886 5,547,498 2,681,504 10,259,847

Vocational Rehabilitation 4,253 -14,038 0 -5,501 -311 5,526 -2,532 75,686 305,288 1,657,727 4,567,189 585,159 7,178,446

Miscellaneous (eg. transport, maintenance) 54,823 1,414 24,474 21,432 50,602 112,233 167,235 372,317 806,396 2,413,708 5,726,140 1,496,909 11,247,682

Legal Expenses 368,918 123,049 217,979 259,976 319,481 428,843 942,476 1,397,598 2,155,575 2,540,545 2,188,255 170,777 11,113,472


TOTAL 3,469,871 324,349 1,056,858 1,330,410 2,161,976 3,022,110 5,821,687 13,273,112 23,870,248 46,584,873 92,282,095 36,067,177 229,264,764


2008/09

FOR THE YEAR TO 31 DECEMBER 2008

Summary - RPR RETURNING ENTITIES (ie Private Insurers, Insurance Commission of WA - Funded, Unfunded, Riskcover and ICGF)


By Weekly Payments 160,875 124,264 145,981 -50,892 82,093 361,365 923,887 1,963,968 5,203,346 19,335,663 51,657,380 17,439,096 97,347,026

Redemptions 396,184 61,992 119,958 180,234 7,877 975,969 1,387,453 2,455,056 6,024,995 11,447,267 8,577,701 263,839 31,898,523

For Specific Injuries (Schedule 2) 145,322 47,408 124,013 74,652 117,359 166,874 329,430 838,778 1,798,186 4,054,050 1,423,875 171,296 9,291,243

Fatal (including funeral expenses) 301,937 10,008 1,158 8,731 2,316 3,473 3,336 -2,226 82,294 151,444 911,628 290,173 1,764,273

Medical Practitioners and Specialists 62,878 -15,437 14,031 31,012 100,563 84,400 196,113 443,237 1,049,634 3,325,691 13,271,748 10,100,071 28,663,942

Hospital Expenses 52,874 -12,014 16,446 20,156 59,383 30,731 145,139 126,764 375,658 1,536,035 7,021,095 5,606,379 14,978,648

All Other Treatment 151,021 1,644 22,718 38,378 96,934 134,871 183,328 363,208 770,733 2,019,920 7,606,075 3,555,529 14,944,360

Vocational Rehabilitation 14,181 -10,623 1,398 6,836 5,594 20,957 36,851 134,256 447,987 2,113,638 5,443,590 772,464 8,987,128

Miscellaneous (eg. transport, maintenance) 126,843 11,150 32,320 37,567 76,343 139,713 222,952 474,642 978,462 2,855,581 6,485,262 1,734,220 13,175,057

Legal Expenses 690,846 147,330 237,941 406,905 345,399 469,055 1,054,456 1,806,819 2,496,561 2,876,236 2,552,959 221,555 13,306,062


TOTAL 6,033,293 790,723 1,390,261 2,356,738 2,601,162 3,675,963 7,170,247 20,916,889 28,812,660 54,941,181 107,128,106 40,253,246 276,070,469


1/05/2009 5:54 PM

Attachment D Data

76

D Data

D1 Data supplied

The data is supplied to WorkCover WA by all applicable insurers, being all approvedprivate insurers, and the Insurance Commission of WA for RiskCover, theGovernment Insurance Fund (Funded and Unfunded) and for its pre - 1987 privatesector risks. Data is also required from former insurers running off their workers'compensation claims. Self-insurers (except RiskCover) and some InsuranceCommission funds did not previously supply annual premium rating returns.

From 2002/03 year onwards the LGIS - WorkCare data was excluded from thepremium rating process and LGIS - WorkCare is no longer regarded as aRecommended Premium Rates (RPR) returning entity.

After initial validation, WorkCover WA forwarded the data to us.

The data is in the form of both hard and electronic copies. The form of the data wasconsiderably enhanced over the last ten years to include subdivision by accident yearon Forms WC11 and WC101 (from 1 July 1997), and to include prudential marginson Form WC20. A self-audit form was also introduced for the first time in 1995/96and was enhanced in the previous year to perform a more comprehensive checklist.Nine years ago the claim payment definition was changed to cumulative payments byaccident year on Form WC11. Eight years ago, Form WC11 was expanded to includethe number of policies issued and gross written premium.

Note that 1997/98 is the first year that annual premium rating returns were suppliedfor:

Government Insurance Fund and

LGIS - WorkCare (removed from 2002/03 data onwards)

The significant problems initially experienced with completing the new forms werelargely solved in prior years and the cumulative wages and claim payments has lead toincreased accuracy of the data provided. Certain insurers are still finding it difficultto present accurate returns. The Statement of Premiums and Expenses form wasexpanded to clarify the requirement to separate the Supplementation Fund Levy fromstatutory charges.

Previously there were several instances of inconsistencies within a single insurerbetween their Form WC11 and WC20 data. These problems were referred toWorkCover WA as part of the data validation process and resolved. WorkCover WAhas now introduced a check list to quickly identify these inconsistencies. Insurers areexpected to review the checklist before submitting their returns and/or revisions toWorkCover WA.


1/05/2009 5:54 PM

Attachment D Data

77

Because of the renewal process adopted by RiskCover, initial declared wages remainunchanged until pool closure. This can take 3 to 4 years. So there will be apermanent lag in wage adjustments, leading to:

lower aggregate wages

higher premium rates and

a discontinuity in rates when the first adjustments are processed but resulting ina more accurate rating.

D2 Data used

The data used comprises the following returns:

Form WC11

This form is the only source of claim data by rating class and it contains the followingdata for each applicable industry class:

industry class

number of policies

gross written premium

cumulative wage declarations including initial declarations and subsequentadjustments separately for each reporting year

cumulative number of claim reports

cumulative claim payments to 30 June

case estimate outstanding reserves on active claims.

This form was supplied completely on new industry codes for the fourteenth time.The form remained the same length this year with claim payment and case estimatedata subdivided by accident year for the eleven most recent accident years and atwelfth category being 'all prior years'. For cumulative wages, payments and reportedclaims, insurers had to show the eleven most recent accident years and only completethe 'all prior years' row for case estimates outstanding (column H).


1/05/2009 5:54 PM

Attachment D Data

78

Form WC20

This form contains similar data as collected by the Australian Prudential RegulationAuthority (APRA) and contains the following information, all sub-divided byfinancial year of accident:

number of claim reports in the year

amount of claim payments in the year

number of active claims at year end

case estimates of active claims at year end

IBNR and development estimates at year end.

From the 1991/92 year the form was extended from sub-division by eight accidentyears to 11 accident years and ‘all earlier years’.

The instructions for IBNR and development estimates were clarified and data on theprudential margins were included. From 1 July 1997, this form has been supplied ona quarterly basis, instead of annually.

A common law only version of this form called Form WC20A commenced in1999/2000. Some insurers supplied this new form for 1998/99 also. There were somesignificant problems getting accuracy and consistency in this new form. Most ofthese data issues are now resolved. We note that the form contains a necessarysubjective element being the item ‘common law claims raised by insurer’.

The content of Form WC20A has been substantially revised by WorkCover WA toincorporate the requirements of the October 1999 amendments. Further refinementfor the 2004 Reform Act has been made and this lead to an supplementary version ofthis form called Form WC20B. This form commenced in the December 2005 quarter.

In the 2006/07 reporting year an additional column, Schedule 92 (f) claims, wereadded to the WC20A and WC20B. Only some of these claims are related to commonlaw claims and so a review will be undertaken over the next year as to whether theseclaims should be included.

Form WC101

Form WC101 is a quarterly form (from 1 July 1997) showing total claim paymentssub-divided by type of payment. This form is supplied by all insurers, including self-insurers, the Insurance Commission and the Industrial Diseases Fund.

The categories for payments are:

weekly payments

redemptions

Schedule 2 payments

fatalities

medical practitioners and specialists


1/05/2009 5:54 PM

Attachment D Data

79

hospital expenses

all other treatment

vocational rehabilitation

miscellaneous (e.g. transport, maintenance)

legal expenses

common law and other acts.

From 1 July 1997 this form was enhanced to include subdivision by 11 accident years.

Election application data

Two composite data files were supplied as at 31 January 2009, for pre-November2005 and post-November Act changes, as follows:

Agreements data showing for each election application

application number

application year

date lodged

date of injury

termination date

agreed disability degree

date extension requested

date extension granted

worker disability degree

insurer number

claim number

date of birth

gender

a claim status

election status and category

claim payments and outstanding estimates

days lost, ANZSIC codes and several other data items.

The pre-November 2005 Act change file contains 7,498 records of which 1,372multiple lodgements were identified, 478 lodgements had no associated claim record,411 were self insured claims, both of which were reported separately and 1,730lodgements were removed due to being rejected, withdrawn, less than 16%impairment or industrial disease claims.

The post-November 2005 Act file contains 1050 records of which 4 multiplelodgements were identified, 1 lodgement had no associated claim record, 71 were selfinsured claims, both of which were reported separately and 382 lodgements wereremoved due to being rejected or extension lapsed.

Not all data fields are used or complete.


1/05/2009 5:54 PM

Attachment D Data

80

We note that application numbering re-commences at 1 from the start of eachcalendar year.

Reports summarising the election option data were also supplied. The data tabulatedalso includes:

a monthly summary of dispute applications lodged to 31 January 2009

a monthly summary of Schedule 2 and Redemption registrations to 31 January2009.

Large claims

A file of large claims (>$0.5M) as at 31 January 2009 was supplied containing 577records excluding self-insurance claims, including:

insurer ID

claim number

name

occurrence date

total estimate, paid and outstanding

common law paid

finalised date.

The ANZSIC premium rating class was supplied on all claims over $2M.

Last year, it was identified this year that self-insurance claims were previouslyincluded in the large claims data. Self insurance claims are no longer included in theanalysis. Attachment I contains the large claims data without self-insurers andAttachment J3 contains commentary and comparisons.

Noise – induced hearing loss (NIHL) claims

This year we were supplied with an Excel file containing this data and narrativedescribing the data fields provided for each hearing loss claim with a confirmedassessment.

NIHL data has been provided separately for the 1st and 2nd elections. 1st electionclaims are the first time a claimant is assessed and require a hearing loss of greaterthan 10% to be successful. The 2nd election claims are those claims which weresuccessful 1st election claims and are for those claimants who are being assessed foradditional hearing loss after further exposure. 2nd election claims require a loss ofgreater than 5% and a worker can have more than one of these. Only claims that havecompleted the process are included in the file.

The NIHL data contains self-insurance claims however they are unable to be removeddue to the fact that one claim could have multiple insurers/self-insurers and thisinformation is hidden within the text string of a claim. We estimate thatapproximately 10% of NIHL claims and 8% of the total cost of NIHL claims relate toself-insurance claims.


1/05/2009 5:54 PM

Attachment D Data

81

D3 Asbestos-related claim data

In 2005, we specified the data requirements for asbestos-related claims and this datawas supplied for the first time.

The intention was to obtain an understanding of how insurers are treating theirasbestos-exposures from a data collection, valuation and premium rating returnsperspective. The actual data on asbestos-related claims will assist to quantify theimpact of these claims on the financial position of insurers and on the WA worker’scompensation system itself.

This data has not been collected since 2005.

D4 Data quality

The overall quality of the data this year was acceptable for our premium rateprojections, once the data validation process was completed.

The initial data is screened by WorkCover WA using a fairly comprehensive set ofvalidation tests complementary to the insurer self-audit tests. We then subject thedata to more comprehensive and detailed checking.

Each insurer form is checked to ensure:

hardcopy and diskette versions agree

all columns add

that they are reasonable and internally consistent

that they are consistent across the forms, ie:

claims paid: WC11 = WC20 = WC101 case estimates: WC11 = WC20 reported claims : WC11 = WC20.

A range of ratios were also calculated for each insurer, being:

notional loss ratio

outstanding claim ratio

expense ratios.

In summary, of 20 (21) returns received :

2 (5) required no further action

13(5) insurers had to clarify specific issues or do a first revision

3 (9) insurers had to do a second revision

2 (1) insurers required a third revision.

0 (1) insurers required a fourth revision.


1/05/2009 5:54 PM

Attachment D Data

82

The numbers in brackets are last year’s. This year’s data quality and revisions wereslightly better than last year, with a large majority of first revisions not requiring theprovision of an amended return. However, some insurers had difficulty in correctlysplitting multi-year policies across the relevant reporting years.

D5 Data enhancements

The form and detail of the returns should suffice the actuarial requirements for severalyears to come, provided the structure of the Western Australian workers'compensation system remains relatively unchanged. The premium ratingclassification system will be reviewed during 2009/10, and the possibility of usingANZSIC 2006 as a base for the classifications will be considered. If the classificationsystem is changed, there would be data conversion requirements.

A move to unit claim data will assist with the transition and is essential to the futuresound financial management of the WA workers' compensation system in the mediumterm.

Seven years ago, Form WC11 was extended by two new items:

the number of policies written as a column on WC11 a sub-division of gross written premium at class on industry division level

At this time self-insurers were also requested to submit premium rating returns.

Data enhancements for consideration by WorkCover WA:

clarify treatment of multi year policies and (estimated ultimate) gross writtenpremium on burner in Form WC11 for inclusion in the 2008/09 rating returns

have insurers supply unit claim and policy data or use WorkCover WA’s Q1database

consider converting wage definition to an earned basis collect separate asbestos-related data on an ongoing basis.

D6 General data considerations

D6.1 Former insurers

Even though insurers may surrender their licences to renew policies or write newpremiums, they will generally have outstanding and IBNR claims to manage. Theseclaims are a cost to the system and hence need to be reported on.

There are guidelines in place for data provision during the claim run-off period andwe are advised that supervisory control of the claim run-off continues once the licenceto write premiums is surrendered.


1/05/2009 5:54 PM

Attachment D Data

83

D6.2 Mergers/takeovers

Where one insurer takes over another on the basis that it manages the claims on a100% recovery basis, the cost of these managed claims still need to be returned sincethey are a cost to the system. There was one example of an insurer who did notinclude the cost of these claims because of the 100% recovery situation. Thetreatment of this is similar to reinsurance. The premium rating process is concernedwith the cost of the primary workers' compensation system, not with how insurersspread this risk between themselves and their reinsurers or the parent of any insurerthey purchase.

D6.3 Administrative issues

WorkCover WA assists us with the efficient administration of the quarterly andannual statutory returns, by advising us of any changes to the licensing situation ofinsurers/self-insurers as they occur e.g.:

new insurer licences granted

insurer licences surrendered

new self-insurer licences issued

self-insurer licences surrendered

purchase/merger of insurers.

Such advice should include full details of effective dates etc and any relevantbackground detail.

For example, to properly analyse the recent reduction in claim numbers, it isnecessary to account for claims removed by the new self-insurers.

D6.4 Insurance Commission of Western Australia Data

The impact of the introduction of RiskCover on the Insurance Commission fundswhich supply RPR data was considered in 1999. This lead to the provision of data forthe General Insurance Fund Unfunded (GIFU) from 1997/98. From 1998/99, theInsurance Commission's public sector workers' compensation risks were consolidatedunder the RiskCover fund and reported as part of self-insurers. RiskCover continuesto supply annual RPR returns.

D6.5 Self-Insurers

Self-insurers now supply all the statutory returns submitted by insurers. Also self-insurers renew their licences annually.

To avoid inappropriate and volatile premium rates, RiskCover and LGIS - WorkCarecommenced supplying RPR returns from 1997/98 onwards. The requirement toinclude LGIS - WorkCare ceased from the 2002/03 data.


1/05/2009 5:54 PM

Attachment D Data

84

However premium rates could still be affected for classes in which a major self-insurer commences during the reporting periods covered by the RPR data.


1/05/2009 5:54 PM

Attachment E Assumptions

85

E Assumptions

E1 Financial assumptions

The financial assumptions of future interest and inflation rates are given below:

Years Interest rate pa Inflation paahead 28/02/2009 28/02/2009 28/02/2009 31/01/2007 28/02/2006

1 2.7% 4.0% -1.3% 1.8% 1.4%2 3.2% 4.0% -0.8% 1.7% 1.3%3 4.0% 4.0% 0.0% 1.6% 1.3%4 4.5% 4.0% 0.5% 1.5% 1.3%5 4.9% 4.0% 0.9% 1.5% 1.4%6 5.2% 4.0% 1.2% 1.4% 1.4%7 5.3% 4.0% 1.3% 1.4% 1.4%8 5.4% 4.0% 1.4% 1.4% 1.4%9 5.4% 4.0% 1.4% 1.4% 1.4%

10 & onwards 5.5% 4.0% 1.5% 1.4% 1.4%

Real Rates p.a.

The 28/02/2009 real rates are significantly lower than the 31/01/2008 real rates for thefirst five years. In the first projection year they are 3.3% lower, gradually narrowingto be only 0.2% lower in the fifth projection year. From the sixth projection yearonwards the real rates at 28/02/2009 are higher than that at 31/01/2008, from 0.1%higher for the sixth year increasing to 0.4% higher for the tenth year onwards. Thisvariation in rates led to a 4.7% increase in the inflated and discounted liability and a5.1% increase in premium rates.

Forward interest rates are those estimated to be anticipated over future years by theCommonwealth bond market as it stood at 28/02/2009. This assumption was taken at31/01/2008 last year and at 31/01/2007 the previous year.

The discount rates are obtained by fitting a curve to the 28/02/2009 CommonwealthGovernment Bond yield curve, to derive the one year forward rates of interest whichare then independent of the cash flows of a particular portfolio of risks. A cubicspline with four knots is used to do the curve fit.

The central estimate of the outstanding claims liability is calculated as its "marketvalue" ie the value it might attract in a hypothetical open market, in insurance claimliability portfolios. This is done by discounting the projected future cash flows at themarket related future rates of interest calculated as described above. In this way thediscounted value of the projected liability cash flows equals the market value of anabsolutely matched hypothetical portfolio of Commonwealth Government Securities.

The interest rates assumed are therefore consistent with a market value approach toasset valuation and with the requirements of accounting standard AASB1023 forgeneral insurers, the Institute of Actuaries Australia reserving guidelines and APRA’sprudential valuation standards. The application of this approach is theoreticallycorrect for both reserving and premium rating.


1/05/2009 5:54 PM


86

The inflation and discount rates are chosen to be consistent with those currently usedin our actuarial assessments for long tail classes.

The wage inflation assumptions have decreased to 4.00%, compared with 4.75% lastyear. Since 2001 we have adopted wage inflation as supplied by the Economic PolicyDivision of the WA Treasury following instructions by the WorkCover WA Board.Generally our standard approach is to base future wage inflation on AccessEconomics five year forecasts, as an equivalent uniform rate (3.92% but currently weare using 4.00%).

Financial year ending Access PwC30 June ABS (a) WA Treasury (b) Economics (c) assumed (d)

2009 n/a 4.50% 5.38% 4.00%2010 3.00% 3.85% 4.00%2011 5.50% 2.20% 4.00%2012 5.50% 2.39% 4.00%2013 4.12% 4.00%2014 3.88% 4.00%

and laterEquivalent Uniform annual rate 4.39% 3.92% 4.00%

Note : (a) the ABS do not provide forecasts of wage inflation

(b) AWE from the WA Treasury Mid - Year Financial Projections Statement (December 2008)

(c) from Access Economics 5 year economic forecasts : December 2008 survey

(d) as assumed by PwC for actuarial valuations of long tail classes. Takes into account marketrates of interest and hence the real rate of interest above wage inflation.

Forecasts of Future Wage Inflation

A comment from WA Treasury follows from the WA Government’s December 2008Mid-year Financial Projections Statement which outlines developments in the State’sfinancial position and economic outlook since the Pre-election Financial ProjectionsStatement (PFPS), released on 16 August 2008:

In recent quarters growth in the State’s Wage Price Index has been high by nationaland historical standards due to tight labour market conditions, with lowunemployment, a high labour force participation rate, and strong economicconditions.

In the year to the September quarter 2008 Western Australia’s Wage Price Index roseby 5.1%, down from a peak of 5.9% growth two quarters earlier. The 5.1% growthrate was one percentage point above the national rate – the sixth consecutive quarterfor which Western Australia’s wages growth has been a percentage point or morehigher than Australia’s.

Above-average wages growth of 5.0% is forecast over 2008-09, with Wage PriceIndex growth forecast to slow to 4.25% in 2009-10 as a result of weaker employmentdemand.

Growth in Average Weekly Earnings is forecast to slow more markedly than theWage Price Index, due to a reversal of the compositional factors that have untilrecently generated relatively high earnings growth (e.g. full-time relative to part-timeemployment growth, and employment growth in higher paying industries such asmining and construction).


1/05/2009 5:54 PM


87

We note that WPI is a lower measure than AWE, which is used to index prior years’payments in our actuarial analysis. Therefore we have used AWE in the comparisontable above for consistency.

Past wage inflation for bringing past payments and case estimates into current valuesis taken from ABS Cat 6302.0 Average Weekly Earnings for Western Australia(persons full-time adult ordinary time earnings), as shown below:

AverageYear to Weekly Change For For case30-Jun Earnings (a) per year payments estimates

1992 595.10 4.97% 2.196 2.0991993 594.50 0.91% 2.177 2.0801994 612.30 1.99% 2.134 2.0391995 645.80 4.73% 2.038 1.9471996 684.80 6.64% 1.911 1.8261997 695.20 2.30% 1.868 1.7851998 734.90 4.23% 1.792 1.7121999 757.80 3.98% 1.724 1.6472000 803.00 4.44% 1.650 1.5772001 830.40 5.24% 1.568 1.4982002 863.00 3.96% 1.508 1.4412003 915.30 4.47% 1.444 1.3802004 955.00 5.52% 1.368 1.3072005 1,032.20 5.96% 1.291 1.2342006 1,074.10 6.06% 1.218 1.1632007 1,171.50 7.69% 1.131 1.0802008 1,270.90 8.03% 1.047 1.000

Claims escalation factors (c)

To determine the minimum premium for householders and other policies we haveused the movement in the Perth CPI Index as shown below:

FinancialYear Perth Index Rate

1993/94 108.51994/95 112.3 3.5%1995/96 116.7 3.9%1996/97 118.3 1.4%

1997/98 118.0 -0.3%1998/99 120.1 1.8%1999/00 122.9 2.4%2000/01 129.6 5.4%2001/02 133.1 2.7%

2002/03 136.8 2.7%2003/04 139.6 2.1%2004/05 144.0 3.2%2005/06 150.1 4.3%

2006/07 156.1 3.9%2007/08 161.7 3.6%2008/09 167.5 3.6%2009/10 (b) 173.5 3.6%

Note: (a) from ABS Cat. 6401.0 Table 1 CPI All Groups Index Numbers forPerth as at 31 December 2008, extrapolated to 30 June 2010

CPI


1/05/2009 5:54 PM


88

A realistic level of superimposed inflation is allowed for in the outstanding claimreserves and premium rating.

The recent trends in real growth, ie superimposed inflation, are shown in the chartsbelow:

Payments per Claim Incurred (PPCI)

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

13,000

14,000

15,000

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

DY1-5totalDY0-5fitted 1fitted 2

Payment per Claim Finalised (PPCF)

-

4,000

8,000

12,000

16,000

20,000

24,000

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

DY1-5totalDY0-5fittedfitted 2

Payment Per Claim Handled (PPCH)

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

DY1-5totalAll Yearsfitted1fitted2


1/05/2009 5:54 PM


89

This analysis of trends over development years 1 to 5 leads to the following assumedrates of superimposed inflation shown together with those used in the previous threevaluations :

Method2008 2007 2006 2005

PPCI - overall 1.9% 2.5% 3.7% 2.7%

PPCI - statutory 3.6% 3.3% 4.1% 2.7%PPCI - com law 1.9% 2.5% 3.7% 2.7%PPCF 2.2% 2.3% 4.3% 4.3%PPCH 1.8% 1.9% 3.9% 3.9%

Analysis for period ending 30 June

PPCI – overall and PPCI – common law have experienced a decrease in superimposedinflation whilst PPCI – statutory increased over the past year. PPCF and PPCH haveremained stable.

Superimposed inflation trends are implicit in the PCE methods analysis and bases.

The PPCI pay type analysis in 4.2 above shows superimposed inflation indevelopment years 0 to 2 for most pay types with stable real payment patterns for thelater development years. Common law and legal declined significantly after theOctober 1999 amendments but has been stable over the past three years with somerecent increases.

Employment growth

This year we considered including employment growth as an additional factor into therates. Wage growth is the combination of wage inflation and employment growth.The table below outlines the expected employment growth:

Financial year ending WA Access PwC30 June Treasury (a) Economics (b) assumed

2009 4.25% 4.14% 4.19%2010 1.25% 1.48% 1.37%2011 2.50% 0.61% 1.56%2012 2.50% 0.83% 1.67%2013 2.34% 1.17%2014 3.06% 1.53%

and later

Notes : (a) AWE from the WA Treasury Mid - Year Financial

Projections Statement (Dec 2008)

(b) from Access Economics 5 year economic forecasts :

December 2008 survey

Forecasts of Employment Growth

The current economic conditions are very uncertain on the level of employmentgrowth, overtime and part time hours and bonuses. Hence no allowance has beenmade until further trend data is available.


1/05/2009 5:54 PM


90

E2 Management and other expenses

The overall level of expenses is analysed below:

Year ending 30 June

Development Year 2008 2007 2006 2005 2004 2003 2002 2001 2000

$000's $000's $000's $000's $000's $000's $000's $000's $000's

Commission/Brokerage 25,771 24,952 23,263 21,586 20,580 19,102 20,655 19,760 19,885

Statutory Charges 15,127 14,394 14,076 11,078 11,150 11,813 11,796 11,941 9,610

Management Expenses 101,080 92,683 83,110 85,418 76,216 75,778 64,712 67,150 58,692

TOTAL 149,140 139,273 127,583 124,239 115,493 106,693 97,163 98,857 88,187

Earned Premium 764,946 734,888 701,619 617,083 575,865 587,328 596,510 633,134 602,953

Claim Payments 482,466 442,301 412,304 387,859 348,556 357,266 365,702 387,452 456,367

Commission and Statutory 5.3% 5.4% 5.3% 5.3% 5.5% 5.3% 5.4% 5.0% 4.9%Charges as % of Earned Premium

75% of Management Expenses 15.7% 15.7% 15.1% 16.5% 16.4% 15.9% 13.3% 13.0% 9.6%as % of claim payments

The commission/statutory charge ratio increased to 5.0% in 2001 and to 5.4% in2002, remaining at that level to 2008. The claims related expense rate increased to13% in 2001 and further to 16.5% by 2005 before decreasing to 15.1% in 2006, risingto 15.7% in 2007 where it remained stable in 2008.

The target overall level of claims related expenses is 9%. Against this benchmark the2000 experience is acceptable, but in the other years the claim related expense rateappears high. The reserving allowance is currently at 5% which is lower than the 9%benchmark because certain costs are excluded from future expense provisioning e.g.

(i) the initial cost of recording claims (except IBNRs)(ii) the cost of finalising claims in the same year they are reported(iii) unusual and non-recurrent items of expenditure.

Claims management expenses equal to 5% of the projected future claim paymentshave been allowed for. This allowance is consistent with the allowance made in othersimilar assessments and seems to be justified by expense levels in 2000, but not by themuch higher 13.0% to 16.5% over 2001 to 2008. The higher 2001 is due to both a 9%real growth in management expenses and the 19% real reduction in claim payments,and while management expenses declined by 7% real in 2002, earned premiumdeclined by 9% in real terms, leading to the increase in expense ratio. The increase inexpense ratio for 2004 is due to a 9% real decline in claim payments combined with a5% real decline in management expenses. The reduction in the expense ratio for 2006was due to stable real claim payments combined with a 3% real reduction inmanagement expenses. Management expenses increased in 2007 which resulted in ahigher expense ratio than 2006 though still lower than 2005. They remained stable asa proportion of payments in 2008.


1/05/2009 5:54 PM


91

E3 Contingency margin

This year we undertook a review of the contingency margin adopted in therecommended premium rates. A contingency margin of 8% has been adopted inprevious recommended premium rates and the has remained unchanged for at least thepast decade.

Our actuarial review of the contingency margin recommended :

(a) a margin of 10% allowing for the cost of extra capital required if reinsurance is notpurchased

(b) a margin of 8% if reinsurance is purchased

(c) if the margin in (b) is adopted, a separate allowance for the cost of reinsurance isappropriate in the recommended premium rates.

As the recommended premium rates are gross of reinsurance we have adopted a 10%contingency margin throughout the report.

Increasing the contingency margin by two percentage points to 10%, increases the2009/10 aggregate premium rate by 2.7%. This is a one-off influence in the rates.

Our review included a range of contingency margin scenarios and while we havetaken a view on which to adopt, the contingency margins from the other scenariosmay also be reasonable and appropriate. However, given the effect of rounding andthe impact when insurers add brokerage to the recommended premium rates, theeffective contingency margins reflect a stronger level of capital than adopted.

The adopted basis uses the following parameters:

Results

Assumptions

Capital required MCR x 1.5Return on equity 11.8%Return on assets 5.8%

where:

MCR = APRA’s Minimum Capital Requirement

Return on equity = weighted average risk free (3.8%) + 8%

Return on assets = weighted average risk free (3.8%) + 2%

The average risk free rate is based on market interest rates at 31 January 2009,weighted by the future cashflows.

The 8% in the return on equity (ROE) formula is the difference between the ROEfrom the pre-global financial crisis (15%) and risk free rate (7%). The 2% in thereturn on assets (ROA) formula is based on analysis of the ROA from APRA’s halfyearly statistics.


1/05/2009 5:54 PM


92

While the 11.8% ROE is lower than the 15% return on capital required by mostinsurers surveyed required it is more realistic in light of the current economicsituation. We ran our contingency margin model with 15% ROE and pre-globalfinancial crisis ROA and found a marginal increase in results (0.5 to 0.8 percentagepoints).

For further details, see our ‘Actuarial Review of the Contingency Margin for 2009/10Recommended Premium Rates’ report dated 19 March 2009.

The overall total management expense and contingency loadings in the recommendedpremium rates is 25.2% excluding brokerage. This equates to 28.5% includingbrokerage.

E4 WA Legislative changes

In the Recommended Rates for 2005/06 we phased-out the allowance for the October1999 legislation changes, since the claim data now largely includes the Act changeimpact as our modelling is generally on a three year weighted average basis.

On 22 December 2004 the Executive Council of the Western Australian StateParliament agreed to proclaim the Workers’ Compensation Reform Act 2004 (the2004 Reform Act) in two stages.

Stage one commenced on 4 January 2005 and dealt with the increase in the cap onweekly benefits from 1.5 x AWE to 2 x AWE, the extension of the period on fullweekly benefits from 4 weeks to 13 weeks and the increased fatality benefit.

Stage two commenced on 14 November 2005 and implemented the balance of thestatutory benefit changes and also changes to common law, injury management anddispute resolution.

Based on theoretical studies we did, we estimate that the changes could impact claimcosts as follows:

outstanding claim provisions could increase by around 5% for a portfolio with amaterial level of liabilities in the older accident years, and from 7% to 12% for anewer developing portfolio or one with outstanding liabilities concentrated in thefour most recent accident years. This is because some of the enhanced statutorybenefits apply retrospectively and impact the recent accident years to a far greaterextent than older years.

for new claims incurred after the proclamation dates an increase of around 14%initially is estimated, rising to 21% after three to five years, allowing for someerosion and behavioural change by system participants.

For this valuation we have increased the pre-Act change payment rates by:

1.56% for the prospective part of stage 1 on one-half of the 2005 accident yearand on all of the 2006 and later accident years

2.8% for the prospective portion of stage 2 on 7.5 months of the 2006 accidentyear and all of the 2007 and later accident years.


1/05/2009 5:54 PM


93

Note that the retrospective changes were assumed to have an impact for the twopayment years after proclamation. In addition the retrospective elements of stage 1and stage 2 changes were assumed to impact the two and four accident yearsrespectively prior to proclamation.

At this valuation no allowance for the retrospective changes are necessary as the twoyear impact period has expired.

Note that at this valuation we have reduced the prospective Act change allowances asStage 1 has two and a half years of post Act change payments and Stage 2 has 16.5months of post Act change payments. The prospective Stage 1 allowance is 15% ofthe original 10.4% allowance while the prospective Stage 2 allowance is 35% of theoriginal 8.0% allowance.

E5 GST

In 2004 the estimated GST impact on claim costs only (1.25%) was phased-out as ouradopted bases rely on data which includes GST. The 10% GST on the workers’compensation premium itself (which employers will generally be able to recover viaan input tax credit) is not included in our analysis or the recommended premium rates.


1/05/2009 5:54 PM

Attachment F Methods

94

F Methods

F1 Methods used

F1.1 Conversion of prior years data

Previously, wage, premium and claim data for years up to and including 1993/94required conversion from the old occupation based codes to the new industry codes.Some 1994/95 data was provided on the old codes and this also required conversion.The method adopted for this conversion and mapping was a refined application of themethod used over the prior two years. See our 2/5/97 report for a full description ofthe conversion process.

F1.2 Relative rates

F1.2.1 Calculate weighted average rates (WARs)

Calculate the raw premium rate per accident year for 1997/98 to 2007/08 using theformula:

(claim payments + outstanding case estimates) x development factorreturned wages

This is done by industry division, subdivision, group and class/code.

This year we reduced the accident year weightings for the four oldest developmentyears.

The adjustment factor used is uniform across insurers and industry classes and isderived from past total case estimate development experience. Also the wages andgross written premiums are adjusted to allow for future wage and gross writtenpremium adjustments. The relevant adjustment factors are:

Development

Year

30/06/2008 30/06/2007 30/06/2006 30/06/2005 30/06/20040 1.70 1.76 2.06 1.70 1.631 1.28 1.31 1.47 1.31 1.352 1.17 1.24 1.28 1.25 1.273 1.15 1.13 1.19 1.23 1.114 1.11 1.13 1.18 1.12 1.135 1.07 1.08 1.08 1.11 1.036 1.02 1.03 1.04 1.05 1.057 1.02 1.03 1.03 1.06 1.03

Adjustment Factors for

Total Case Estimates


1/05/2009 5:54 PM


95

Development

Year

30/06/2008 30/06/2007 30/06/2006 30/06/2005 30/06/20040 1.0562 1.0817 1.0771 1.0691 1.06291 1.0161 1.0117 1.0068 1.0049 1.0053

2 1.0039 1.0032 0.9994 0.9991 0.99923 1.0022 1.0022 0.9998 0.9980 0.99694 1.0007 1.0016 0.9997 0.9983 0.99705 0.9995 1.0002 1.0002 0.9993 0.9987

Adjustment Factors for

Wages

DevelopmentYear

30/06/2008 30/06/2007 30/06/2006 30/06/2005 30/06/20040 1.0447 1.0543 1.0453 1.05551 0.9927 0.9718 0.9638 0.9764

2 0.9813 0.9611 0.9532 0.96573 0.9830 0.9706 0.9656 0.97354 0.9836 0.9797 0.9762 0.98715 0.9886 0.9857 0.9826 0.9924

Adjustment Factors forGross written premiums

The weighted average rates (WARs) are calculated from the raw rates using thefollowing weightings:

Financial Year 30/06/2008 30/06/2007 30/06/2006 30/06/2005 30/06/2004 30/06/2003

1997/98 0.0000 0.0000 0.0000 0.0000 0.2000 0.20001996/97 0.0000 0.0000 0.0000 0.0000 0.2000 0.20001995/96 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000

Development Yr Weightings

0 0.6000 0.6000 0.6000 0.6000 0.6000 0.60001 0.9000 0.9000 0.9000 0.9000 0.9000 0.90002 1.0000 1.0000 1.0000 1.0000 1.0000 1.00003 1.0000 1.0000 1.0000 1.0000 1.0000 1.00004 1.0000 1.0000 1.0000 1.0000 1.0000 1.00005 0.4000 0.5000 0.6000 0.7000 0.8000 0.80006 0.2000 0.3000 0.4000 0.5000 0.6000 0.80007 0.0000 0.1000 0.2000 0.3000 0.5000 0.70008 0.0000 0.0000 0.1000 0.2000 0.4000 0.7000

Wage weightings

The aggregate experience is not available after 1997/98. Because of the low level ofdevelopment, the current accident year experience is given only 60% weight anddevelopment year 1 gets 90% weight. Note that this year the financial yearweightings have been scaled down to zero, as discussed above.

This year the WARs are based on ten years of industry class data which is similar tolast year.


1/05/2009 5:54 PM


96

F1.2.2 Partial credibility rates (PCRs)

Partial Credibility Rates (PCRs) are then calculated from the WARs using aggregateweighted wages as the exposure measure. PCRs are calculated by industry division,sub-division, group and class progressively, using a system of hierarchical credibility.

The application of credibility theory to experience rating was developed as follows:

Estimated number of applicable WA wage earners 2007/08 (a) 983,525

Estimated average wages (b) 52,133

Estimated number of claims incurred (c) 38,000

Estimated claim frequency (d) 4.8%

Notes: (a) from Attachment B1

(b) = estimated average full time adult ordinary time earnings over 2007/08

= (1185.8 + 1214.4 + 1260.5 + 1270.9) /4 x 52.18 (ABS Cat 6302.0)/ 3 year inflation factor

(=1.234) to adjust to the same base as weighted average wages

(c) = rounded to nearer 100

(d) from Attachment B being an average of 2002 to 2006.

If p = probability that the PCR estimate is within k% of thetrue expected value

k = range of the PCR estimate around the true expectedvalue

and if

p = 99% (99% last year) and k = 10% (10% last year) areregarded as reasonable.

then the number of claims for full credibility is:

nf = 720 x (1+ (m)2 )

if m = is taken as 0.175 (0.175 last year), then

nf = 720 x 1.0306

= 742 claims

So the number of employees for full credibility is then:

742 / 0.048 = 15,554


1/05/2009 5:54 PM


97

and the estimated indexed wages on average for full credibility:

= 15,554 x 52,133 = $810.9M being 11% higher thanlast year.

This is referred to as the self-rating point. Last year the self-rating point was$732.8M.

The formula for the partial credibility factor Z is:

Z = fnn /1

where: n1 = returned wages for the industry class

nf = returned wages for full credibility, where returned wagesare substituted as a surrogate measure for number ofclaims.

The partial credibility rate is then calculated as:

PCR = Z x WAR + (1 - Z) x DWAR

Where: WAR = weighted average rate per class

DWAR = weighted average rate per division, sub-division,group.

For full credibility, we get Z = 1 and the formula reduces to:

PCR = WAR

ie: PCR = weighted average rate

= full credibility premium rate.

All industry divisions, attained full credibility under this method, using the ten yearweighted returned wages used to calculate the WAR. Similarly 39 (40) of the 53rating sub-divisions achieve full credibility, as do 61 (63) of the 158 industry ratinggroups with the revised $810.9M self-rating point and 61 (66) of the 480 ratingclasses. Some 101 (105) of the rating classes achieved at least 75% credibility.Figures in brackets are last years.

Instead of using the full credibility premium rate (FCR) at divisional level, FCR's arebuilt-up from group level, progressively through sub-division and division level, ifnecessary. In this way a finer distinction is made to better approach homogeneity inthe full credibility grouping of the premium rating classes. Classes with credibilityclose to unity will be largely unaffected, while those with low credibility levels shouldexperience greater equity and appropriateness in their rates.


1/05/2009 5:54 PM


98

Notwithstanding this, wages for the following classes were aggregated to calculate thecredibility factor Z :

Group Rating Classes Z based on

Aggregated Wages

A 78610 - Employment Placement Services 1.00

78620 - Contract Staff Serviced mainly clerical 1.00

78630 - Secretarial Services 1.00

B 86310 - Pathology Services 1.00

86320 - Optometry and Optical Dispensing 1.00

86350 - Physiotherapy Services 1.00

86360 - Chiropractic Services 1.00

C 47140 - Fish wholesaling 0.49

47170 – Liquor wholesaling 0.49

D 81200 – Justice 1.00

81300 – Foreign government representation 0.75

E 93110 – Horse and dog racing 0.75

This is done to promote homogeneity of experience. The above rating classes haveclaim experience vastly different from the other classes in the same group e.g. GroupA has Security and Pest Control in the ANZSIC group and Group B has AmbulanceServices.

In Group C the wages of the two codes are joined for setting credibility factors only.

Group D is joined with half of class 78620 for setting credibility factors only.

Group E is joined with half of class 93120 for setting credibility factors only.

Note that the rates for ANZSIC classes; 22110 Wool Scouring and 93220 Casinosexclude the 2006/07 reporting year due to the declared wages being zero as theinsurance cover was for greater than 12 months. ANZSIC class 13141 UndergroundGold Mining also excludes the 2006/07 reporting year due to spurious data. Weinvestigated the cause of the dramatic reduction in wages while the claims experienceremained stable and were unable to determine the exact cause.

F1.2.3 Capping large claims

Following a policy decision by the former Premium Rates Committee, large claimsabove $3M are capped when calculating the weighted average rates (WARs) in F1.2.1above. We were also asked to report on any rate increases over 25% which might beinfluenced by claims between $1M to $2M.

Capping is done by:

deducting the total estimate for each claim over $3M from ‘claim payments andoutstanding case estimates’

apply the development factor to the reduced total

add back $3M and then

divide by returned wages.


1/05/2009 5:54 PM


99

This implies that:

unusually large claims are capped at $3M when calculating relative rates

no further development is added to insurer’s estimates of these claims

the cost above the cap is in effect respread over the whole scheme.

The impact on premium rates of respreading the excess over the whole scheme isminimal (around 0.30%)

It is common to cap large claims in order to limit the influence of abnormally largeitems on relative rates at class level. This year eight large claims over $3M wereidentified and seven were capped, since one was outside this year’s accident yearrange.

F1.2.4 Normalise PCR

The PCRs are normalised such that when they are applied to adjusted accident yearreturned wages for 2007/08 by class, the aggregate notional premiums are equal to theaggregate notional premiums, based on the same wage data , calculated using the2008/09 Gazette rates.

The normalised PCRs (NPCRs) are subjected to the following tolerance limits:

absolute minimum and maximum rates of $0.40 and $20.00 respectively.

Having applied these limits, the NPCRs are normalised once again to the aggregatenotional premiums at Gazette rates.

F1.3 Weighted loss ratio

The weighted loss ratio in Attachment A, is calculated as follows:

= (full credibility weighted average premium rate * normalisation factor *weighted aggregate wages) / (previous years gazette rate * weighted aggregatewages)

= (full credibility weighted average premium rate * normalisation factor) /(previous years gazette rate)

= normalised risk premium rate / previous years gazette rate

= estimated risk cost of claims / premium on last year’s gazette rates.

The weighted loss ratio is a benchmark statistic and isn’t used as part of the actualGazette rate calculation.


1/05/2009 5:54 PM


100

F2 Projection methods

F2.1 Payments per claim incurred method

All claim payments were brought to current values and divided by the numbers ofclaims incurred in their respective accident years. By this means a pattern of pastpayments per claim incurred was derived in respect of each accident year. Thesepayment patterns were then extended into future years and used to project futurepayments.

F2.2 Payments per claim finalised method

All payments were brought to current values and divided by the numbers of claimsfinalised in their respective accident years and years of payment. Averages ofpayments per claim finalised were formed from these figures. These averages werethen combined with a projection of future numbers of claims finalised to produceprojected future payments.

F2.3 Payments per Claim Handled Method

As described for the payments per claim finalised method, but with a denominator ofnumbers of claims handled in each period, defined as numbers of claims outstandingat beginning of period plus numbers reported in period.

F2.4 Projected case estimates method

Details of case estimates established at the end of each accounting period wereavailable, subdivided by accident period. Each of these estimates was brought tocurrent values and examined in comparison with payments made in the subsequentaccounting period and the case estimates established at the end of the period (also incurrent values). In this way there was derived an average pattern of the extent towhich past case estimates had proven to be too high or too low in relation to the claimpayments subsequently made. This pattern was used to project the futuredevelopment of the case estimates held at 30/06/2008, and to project the future claimpayments corresponding to these estimates.


1/05/2009 5:54 PM

Attachment G Outstanding claim

valuation

101

G Outstanding claim valuation

G1 Claims experience and analysis

G1.1 Numbers of claims reported

DEVYEAR DY0 DY1 DY2 DY3 DY4 DY5 DY6 DY7 DY8 DY9 DY10 (a) TOTAL

0 1 2 3 4 5 6 7 8 9 10

RPR:

YEAR ENDING30 JUNE

198619871988

1989 01990 68,774 68,7741991 62,709 9,419 599 260 150 141 102 41 23 9 90 73,5431992 59,060 6,250 409 132 85 65 74 47 26 11 91 66,250

1993 59,311 6,837 487 234 98 72 60 30 22 7 74 67,2321994 55,759 6,203 358 165 100 70 46 30 10 5 57 62,8031995 55,425 6,023 249 139 81 55 40 30 16 10 82 62,150

1996 54,152 5,649 214 61 42 42 34 21 17 6 62 60,3001997 54,142 5,629 251 96 33 25 30 12 13 7 47 60,2851998 52,869 5,388 161 34 23 13 19 8 2 1 56 58,574

1999 49,297 5,241 141 45 29 23 13 8 5 3 56 54,8612000 44,307 4,722 163 43 31 15 17 8 7 8 44 49,3652001 38,506 4,721 179 61 35 20 12 7 17 13 77 43,648

2002 34,036 3,898 139 34 34 20 11 16 9 12 93 38,3022003 34,066 3,666 187 48 25 32 14 5 22 4 106 38,1752004 34,672 3,566 111 47 24 26 22 12 17 10 147 38,6542005 35,527 3,415 96 38 40 16 12 13 17 7 162 39,343

2006 33,959 3,445 100 35 31 22 13 15 11 20 110 37,7612007 34,020 3,173 76 48 23 23 24 13 20 12 162 37,5942008 34,370 3,326 107 27 17 21 22 14 18 11 181 38,114

Notes: (a) Development year 10 and onwards.

G1.2 Cumulative claims reported

Year to 30 June DY0 DY1 DY2 DY3 DY4 DY5 DY6 DY7 DY8 DY9 DY10 TotalCumulative claims reported onwards

1996 54,152 61,074 61,996 65,824 66,436 69,734 79,025 81,054 78,646 77,575 74,979 770,495

1997 54,142 59,781 61,325 62,092 65,857 66,461 69,764 79,037 81,067 78,653 77,622 755,801

1998 52,869 59,530 59,942 61,359 62,115 65,870 66,480 69,772 79,039 81,068 78,709 736,753

1999 49,297 58,110 59,671 59,987 61,388 62,138 65,883 66,488 69,777 79,042 81,124 712,905

2000 44,307 54,019 58,273 59,714 60,018 61,403 62,155 65,891 66,495 69,785 79,086 681,146

2001 38,506 49,028 54,198 58,334 59,749 60,038 61,415 62,162 65,908 66,508 69,862 645,708

2002 34,036 42,404 49,167 54,232 58,368 59,769 60,049 61,431 62,171 65,920 66,601 614,148

2003 34,066 37,702 42,591 49,215 54,257 58,400 59,783 60,054 61,453 62,175 66,026 585,722

2004 34,672 37,632 37,813 42,638 49,239 54,283 58,422 59,795 60,071 61,463 62,322 558,350

2005 35,527 38,087 37,728 37,851 42,678 49,255 54,295 58,435 59,812 60,078 61,625 535,371

2006 33,959 38,972 38,187 37,763 37,882 42,700 49,268 54,310 58,446 59,832 60,188 511,507

2007 34,020 37,132 39,048 38,235 37,786 37,905 42,724 49,281 54,330 58,458 59,994 488,913

2008 34,370 37,346 37,239 39,075 38,252 37,807 37,927 42,738 49,299 54,341 58,639 467,033

Notes: (a) From summary of Form WC20 up to 30 June 2008.


1/05/2009 5:54 PM


valuation

102

G1.3 Active claims

Year to 30 June DY0 DY1 DY2 DY3 DY4 DY5 DY6 DY7 DY8 DY9 DY10 Total TotalActive Claims onwards finalised

1996 19,878 4,877 2,626 1,415 872 528 378 271 216 137 548 31,746 738,7491997 19,846 4,698 2,655 1,586 830 524 353 249 175 144 511 31,571 724,2301998 19,515 4,762 2,453 1,432 912 514 338 204 167 123 489 30,909 705,8441999 20,292 5,055 2,681 1,442 933 616 384 232 156 121 516 32,428 680,4772000 16,177 4,849 2,517 1,495 842 606 398 254 147 101 485 27,871 653,2752001 14,560 4,737 2,488 1,470 909 544 391 252 167 121 532 26,171 619,5372002 11,494 3,671 1,932 1,200 808 498 304 242 153 109 558 20,969 593,1792003 12,103 3,494 1,687 997 701 550 325 190 159 107 557 20,870 564,8522004 13,139 3,564 1,658 977 642 458 396 219 142 121 602 21,918 536,4322005 12,831 3,711 1,662 931 595 438 306 261 161 95 656 21,647 513,7242006 12,121 3,556 1,649 897 589 391 266 198 174 101 559 20,501 491,0062007 12,357 3,488 1,645 914 530 358 243 184 128 117 564 20,528 468,3852008 13,054 3,903 1,655 882 503 330 229 153 123 90 506 21,428 445,605


G1.4 Claim payments

Yr to 30 June DY0 DY1 DY2 DY3 DY4 DY5 DY6 DY7 DY8 DY9 DY10 Total TotalClaim Payments onwards Cumulative

1996 71,217,180 78,370,322 45,983,245 37,664,869 25,389,365 19,348,828 10,846,744 8,172,090 4,653,221 1,773,740 6,529,631 309,949,235 309,949,2351997 79,718,442 90,137,067 66,652,929 45,274,335 28,362,335 15,246,793 8,153,521 6,787,274 4,401,455 3,648,869 8,093,434 356,476,455 666,425,6901998 83,866,137 103,954,605 75,841,448 55,219,909 32,710,155 11,273,515 7,179,242 4,245,414 3,517,038 2,523,300 7,794,617 388,125,380 1,054,551,0701999 85,706,342 118,527,183 87,236,278 53,948,260 37,139,970 20,749,667 6,501,835 4,127,953 3,191,449 1,871,721 6,765,887 425,766,545 1,480,317,6162000 78,998,903 121,574,118 97,369,387 67,340,483 35,183,803 21,524,683 12,012,257 4,593,531 3,197,599 1,545,026 6,798,225 450,138,015 1,930,455,6302001 72,604,919 107,196,183 66,254,119 48,661,562 34,233,233 15,586,157 10,446,614 8,772,996 3,612,038 1,129,420 5,181,436 373,678,678 2,304,134,3082002 71,868,061 107,835,584 71,156,846 39,732,777 22,746,928 18,884,824 7,846,240 5,458,377 3,521,948 2,229,212 6,367,736 357,648,533 2,661,782,8422003 75,848,425 104,820,505 65,714,308 45,730,554 22,544,887 12,651,247 8,258,077 4,804,080 4,652,835 2,680,993 9,559,676 357,265,587 3,019,048,4282004 86,354,155 108,506,037 60,774,078 36,531,076 19,314,245 11,954,197 7,757,032 3,154,725 1,958,842 2,601,418 9,650,423 348,556,227 3,367,604,6562005 95,801,953 123,895,694 65,919,174 30,886,084 24,353,160 14,245,385 7,718,187 9,406,637 2,543,796 1,150,235 11,938,714 387,859,020 3,755,463,6762006 102,042,198 134,607,808 73,951,974 36,117,141 18,610,686 14,031,162 10,148,078 5,220,449 5,726,131 2,323,566 9,524,826 412,304,019 4,167,767,6952007 111,017,092 139,369,021 77,220,263 42,361,612 23,511,785 13,919,511 11,997,244 5,864,661 2,938,388 2,953,865 11,147,609 442,301,052 4,610,068,7472008 126,054,701 160,220,642 74,923,840 47,740,172 27,043,002 12,361,926 8,231,601 5,419,448 4,260,665 2,147,151 14,063,071 482,466,220 5,092,534,966


G1.5 Case estimates outstanding

Yr to 30 June DY0 DY1 DY2 DY3 DY4 DY5 DY6 DY7 DY8 DY9 TotalCase Estimates Outstanding

1996 125,978,802 108,551,663 87,333,094 56,145,038 33,862,378 19,310,175 15,979,982 10,035,391 7,163,295 19,429,109 483,788,9281997 138,463,954 114,828,329 96,372,701 67,759,186 32,939,129 17,873,915 12,043,006 9,638,943 5,835,387 15,565,427 511,319,9781998 174,164,485 151,205,865 103,748,223 68,740,891 43,809,381 19,908,146 11,380,404 7,709,331 6,341,020 14,358,380 601,366,1271999 217,870,833 181,352,904 145,609,883 76,085,725 48,356,984 28,825,024 15,433,992 7,335,759 4,012,580 13,893,308 738,776,9922000 195,900,899 159,922,065 110,110,950 83,495,073 39,515,669 26,498,032 18,515,056 11,318,955 4,366,025 12,544,204 662,186,9282001 202,971,484 163,151,035 104,197,457 63,924,394 46,855,846 23,218,961 17,141,257 11,043,313 7,262,095 14,812,486 654,578,3292002 172,908,208 139,715,324 89,054,959 56,255,077 38,739,739 23,212,462 13,366,047 10,158,587 7,327,992 20,126,323 570,864,7182003 175,144,443 120,999,038 90,880,889 49,225,179 34,985,671 28,406,320 16,760,625 7,745,187 6,923,757 23,278,268 554,349,3782004 198,592,496 121,571,275 69,004,593 59,904,663 34,133,738 21,193,913 24,319,678 10,996,139 5,996,441 29,672,854 575,385,7892005 211,762,685 150,115,387 80,134,847 43,285,010 39,728,576 23,931,389 16,372,485 14,877,051 8,215,231 29,677,836 618,100,4972006 193,735,863 138,499,546 86,876,868 52,458,537 31,617,607 26,001,260 14,625,521 9,578,485 8,498,901 28,329,864 590,222,4522007 225,367,855 133,353,304 85,250,103 60,228,971 28,481,280 18,586,197 13,402,549 9,678,242 7,181,759 33,330,034 614,860,2932008 238,962,370 147,401,185 81,241,928 51,268,129 32,831,356 15,140,920 11,744,053 9,447,975 5,672,347 28,423,323 622,133,586



1/05/2009 5:54 PM


valuation

103

G1.6 Claim notification pattern

Accident year

ending 1 2 3 4 5 6 7 8 9 1030 June

1996 1.102 1.003 1.001 1.001 1.001 1.000 1.000 1.000 1.000 1.0011997 1.104 1.004 1.002 1.001 1.000 1.000 1.000 1.000 1.000 1.001

1998 1.100 1.003 1.001 1.000 1.000 1.000 1.000 1.000 1.000 1.0011999 1.099 1.002 1.001 1.000 1.000 1.000 1.000 1.000 1.000 1.001

2000 1.096 1.003 1.001 1.001 1.000 1.000 1.000 1.000 1.000 1.0012001 1.107 1.003 1.001 1.001 1.000 1.000 1.000 1.000 1.000 1.001

2002 1.101 1.003 1.001 1.001 1.000 1.000 1.000 1.000 1.000 1.0012003 1.108 1.004 1.001 1.000 1.001 1.000 1.000 1.000 1.000 1.002

2004 1.105 1.003 1.001 1.000 1.000 1.000 1.000 1.000 1.000 1.0022005 1.098 1.003 1.001 1.001 1.000 1.000 1.000 1.000 1.000 1.003

2006 1.097 1.003 1.001 1.001 1.001 1.000 1.000 1.000 1.000 1.0022007 1.093 1.002 1.001 1.001 1.001 1.001 1.000 1.000 1.000 1.003

2008 1.098 1.003 1.001 1.000 1.001 1.001 1.000 1.000 1.000 1.003Adopted (b) 1.097 1.002 1.001 1.001 1.001 1.000 1.000 1.000 1.000 1.003

Chain ladder ratio (a) for development year:

Notes: (a) Using cumulative claim report numbers from data

(b) See G3.1 for derivation

G1.7 Claim finalised per handled rate

Accident year

ending 0 1 2 3 4 5 6 7 8 930 June

1996 0.633 0.809 0.473 0.464 0.464 0.466 0.429 0.460 0.331 0.2751997 0.633 0.816 0.482 0.417 0.427 0.416 0.367 0.362 0.384 0.314

1998 0.631 0.811 0.495 0.467 0.433 0.390 0.378 0.435 0.335 0.3101999 0.588 0.796 0.453 0.423 0.361 0.341 0.271 0.329 0.254 0.240

2000 0.635 0.806 0.518 0.451 0.428 0.361 0.371 0.352 0.385 0.3072001 0.622 0.773 0.505 0.430 0.406 0.369 0.367 0.378 0.384 0.207

2002 0.662 0.801 0.604 0.524 0.463 0.464 0.452 0.405 0.414 0.2792003 0.645 0.770 0.563 0.496 0.428 0.345 0.365 0.385 0.398 0.286

2004 0.621 0.773 0.540 0.437 0.371 0.370 0.308 0.350 0.314 0.2622005 0.639 0.776 0.546 0.451 0.415 0.334 0.349 0.362 0.318 0.274

2006 0.643 0.782 0.567 0.471 0.388 0.366 0.410 0.383 0.360 0.3672007 0.637 0.772 0.547 0.461 0.424 0.415 0.414 0.341 0.413 0.324

2008 0.620 0.751 0.540 0.472 0.460 0.401 0.397 0.405 0.391 0.405Adopted (b) 0.633 0.768 0.552 0.468 0.411 0.376 0.378 0.378 0.378 0.378

Finalisation rate (a) for development year:

Notes: (a) Defined as: Number of claims finalised / number of claims handled.

(b) See G3.2 for derivation.


1/05/2009 5:54 PM


valuation

104

G1.8 Development of Case estimates outstanding

Accident yearending 1 2 3 4 5 6 7 8 930 June

1996 1.655 1.468 1.100 1.036 1.081 1.042 1.015 1.055 0.9671997 1.623 1.496 1.289 1.090 0.977 1.042 1.024 1.017 1.0241998 1.802 1.530 1.260 1.105 0.924 1.014 0.968 0.998 1.1281999 1.686 1.507 1.229 1.220 1.109 1.074 0.985 0.917 1.0652000 1.262 1.119 1.012 0.961 0.971 1.033 1.000 1.007 1.1382001 1.336 1.031 0.991 0.941 0.951 1.007 1.038 0.927 1.2032002 1.197 0.964 0.903 0.941 0.882 0.894 0.891 0.959 1.2692003 1.277 1.094 1.044 0.997 1.029 1.048 0.915 1.111 1.2582004 1.272 1.039 1.023 1.046 0.913 1.082 0.808 0.985 1.3332005 1.330 1.158 1.034 1.027 1.074 1.089 0.959 0.934 1.1482006 1.244 1.032 1.062 1.113 0.966 0.995 0.866 0.918 1.0132007 1.338 1.113 1.118 0.940 0.974 0.927 1.004 0.994 1.2122008 1.294 1.108 1.099 0.940 0.913 1.014 1.044 0.969 1.037

Adopted (b) 1.300 1.100 1.065 1.011 0.997 0.997 0.997 0.997 1.145

Case estimate development (a) for development year:

Notes: (a) Defined as: (Case estimates at end of year + payments in the year) / Case estimates at

beginning of year adjusted for normal inflation.


G1.9 Payment factors for case estimates outstanding

Accident yearending 1 2 3 4 5 6 7 8 930 June

1996 0.712 0.522 0.454 0.456 0.553 0.433 0.467 0.427 0.2991997 0.732 0.628 0.530 0.517 0.461 0.432 0.435 0.449 0.4521998 0.754 0.663 0.575 0.485 0.344 0.403 0.354 0.366 0.4841999 0.685 0.581 0.523 0.544 0.477 0.329 0.365 0.417 0.4202000 0.559 0.538 0.463 0.463 0.446 0.418 0.298 0.437 0.4672001 0.544 0.412 0.439 0.408 0.392 0.392 0.471 0.317 0.3712002 0.535 0.439 0.384 0.358 0.406 0.340 0.321 0.321 0.3922003 0.607 0.471 0.514 0.401 0.327 0.356 0.360 0.459 0.4472004 0.614 0.498 0.399 0.389 0.339 0.271 0.187 0.251 0.4022005 0.616 0.536 0.442 0.402 0.412 0.360 0.382 0.228 0.3622006 0.627 0.486 0.445 0.424 0.349 0.418 0.315 0.380 0.3092007 0.699 0.542 0.474 0.436 0.428 0.448 0.390 0.298 0.3722008 0.689 0.544 0.542 0.435 0.420 0.429 0.392 0.426 0.388

Adopted (b) 0.648 0.525 0.456 0.423 0.398 0.414 0.369 0.319 0.365

Payments to case estimates (a) for development year:

Notes: (a) Defined as: Payments made in the year / case estimates at beginning of the year.



1/05/2009 5:54 PM


valuation

105

G1.10 Average real payment per claim incurred

Accident yearending 0 1 2 3 4 5 6 7 8 9 10 Total30 June

1996 2,261 2,430 1,410 1,090 728 529 262 192 113 44 166 9,227

1997 2,482 2,797 2,020 1,357 802 428 218 160 101 87 195 10,6481998 2,557 3,105 2,258 1,606 941 306 193 109 80 56 177 11,3881999 2,711 3,475 2,506 1,545 1,039 574 170 107 79 41 144 12,390

2000 2,637 3,683 2,733 1,852 965 576 318 115 79 36 142 13,1372001 2,656 3,400 1,907 1,298 895 406 266 221 86 27 116 11,2772002 2,849 3,794 2,171 1,100 584 475 197 134 85 51 144 11,583

2003 2,886 3,977 2,213 1,336 598 311 199 115 109 62 209 12,0142004 3,076 3,912 2,185 1,166 535 300 181 72 45 58 212 11,7412005 3,150 4,165 2,243 1,048 734 372 183 207 55 25 250 12,4312006 3,317 4,173 2,344 1,159 595 399 250 117 119 47 193 12,712

2007 3,333 4,206 2,223 1,247 700 414 316 134 61 57 210 12,9012008 3,470 4,452 2,093 1,272 737 341 226 132 90 41 250 13,106

Adopted (b) 3,374 4,400 2,286 1,262 697 396 265 127 91 49 217 13,164

PPCI (a) for development year:

Notes: (a) & (b) See G3.1 for derivation.

G1.11 Average real payment per claim closed

Accident year

ending 0 1 2 3 4 5 6 7 8 930 June

1996 3,971 7,231 37,344 58,707 64,261 80,379 72,983 67,603 83,102 61,0271997 4,342 8,091 50,340 74,444 85,725 76,353 74,293 89,915 75,427 73,112

1998 4,506 9,100 56,492 78,727 84,105 61,410 62,762 48,461 75,036 67,2411999 5,093 10,369 67,665 88,049 121,233 112,107 78,363 62,408 103,783 74,065

2000 4,635 9,949 59,491 90,423 92,017 103,864 84,355 54,932 57,358 53,1612001 4,754 10,401 40,903 68,868 86,443 76,857 72,164 89,914 54,462 58,212

2002 4,809 11,000 36,458 45,334 49,297 66,092 47,152 49,899 49,189 50,2612003 4,986 12,973 43,704 67,170 62,121 62,988 63,762 58,289 63,981 66,443

2004 5,488 12,266 42,713 66,034 69,734 60,810 60,310 36,583 41,237 65,2342005 5,451 12,458 42,606 52,138 74,524 83,618 60,775 82,077 43,800 59,727

2006 5,690 12,885 41,649 54,971 60,752 75,595 66,791 51,679 71,145 37,7662007 5,794 13,347 43,939 61,169 68,162 61,960 78,863 69,798 36,914 48,757

2008 6,189 14,234 40,419 63,244 66,126 58,541 57,052 54,536 56,444 41,889Adopted (b) 5,889 13,922 43,404 61,762 67,280 67,454 52,141 52,141 52,141 52,141

PPCF (a) for development year:


G1.12 Average real payment per claim handled

Accident yearending 0 1 2 3 4 5 6 7 8 9 1030 June

1996 2,513 5,853 17,648 27,253 29,820 37,423 31,310 31,108 27,529 16,863 16,7711997 2,750 6,601 24,278 31,068 36,587 31,750 27,294 32,508 28,949 30,564 20,6531998 2,843 7,383 27,973 36,802 36,434 23,967 23,695 21,076 25,112 25,694 19,6471999 2,996 8,252 30,665 37,222 43,813 38,248 21,264 20,562 26,318 18,976 17,4572000 2,942 8,021 30,794 40,797 39,418 37,470 31,317 19,338 22,079 15,547 16,4742001 2,957 8,044 20,663 29,599 35,086 28,353 26,507 33,968 20,900 11,069 12,2552002 3,185 8,812 22,012 23,764 22,813 30,662 21,324 20,229 20,354 18,785 12,8752003 3,215 9,983 24,594 33,348 26,573 21,746 23,288 22,448 25,447 24,656 17,8562004 3,408 9,476 23,068 28,828 25,885 22,500 18,557 12,810 12,949 21,063 16,2832005 3,482 9,665 23,258 23,517 30,923 27,958 21,206 29,700 13,919 9,969 17,4212006 3,659 10,070 23,628 25,914 23,556 27,690 27,398 19,802 25,633 15,631 13,470

2007 3,690 10,303 24,038 28,224 28,895 25,715 32,685 23,766 15,240 17,956 15,3332008 3,838 10,692 21,811 29,882 30,400 23,480 22,671 22,069 22,074 16,166 17,074

Adopted (b) 3,729 10,627 23,787 28,741 28,300 26,391 19,720 19,720 19,720 19,720 19,720

PPCH (a) for development year:



1/05/2009 5:54 PM


valuation

106

G1.13 Average real payment per claim incurred – statutory benefits plus legals (usedfor 2000 to 2008 accident years only)


2003 2,879 3,822 1,946 895 377 184 116 71 51 41 96 10,479

2004 3,069 3,774 2,005 858 403 177 116 51 39 44 85 10,6222005 3,148 4,030 1,942 835 395 209 100 93 42 20 98 10,9112006 3,315 4,000 2,033 918 398 183 103 44 50 28 85 11,157

2007 3,329 4,051 1,891 881 415 250 138 69 32 24 83 11,1632008 3,453 4,344 1,797 799 379 190 98 65 41 22 88 11,277

Adopted (b) 3,551 4,357 2,013 913 419 218 120 68 37 23 86 11,805

Statutory and legal PPCI (a) for development year:

G1.14 Average real payment per claim incurred – Common law benefits only (used for2000 to 2008 accident years only)


Adopted (b) 958 18,234 39,116 44,935 35,005 44,148 36,790 29,432 22,074 14,716 8,913 294,322

Average pattern (c) 0.4% 8.7% 18.4% 20.8% 16.2% 10.5% 8.9% 4.0% 2.9% 1.4% 7.7% 100.0%Adopted Average 0.3% 6.2% 13.3% 15.3% 11.9% 15.0% 12.5% 10.0% 7.5% 5.0% 3.0% 100.0%pattern (d)

Est no. of common 369 257 226 367 362 326 330claims incurred (e)

Notes : (a) the adopted average claim size for common law claims, weighted by the assumed number of 16% to 29% and30%+ disability claims

(b) = post Oct 1999 Act change PPCI for DY0 to DY4= [(a) total weighted average common law claim size] x [(d) adopted payment pattern] from DY5 onwards, ave claim size from L.2

(c) = average payment pattern over the past three financial years

(d) = adopted payment pattern based on the actual post October 1999 experience for development years 0 to 4

and using our common law knowledge and judgement thereafter

(e) from Attachment L.1, table 1 in this report.

Common law PPCI (a) for development year:


1/05/2009 5:54 PM


valuation

107

G1.15 Numbers of claims incurred

Accident Number of claimsyear Reported to IBNR at Incurred

ending 30-Jun-08 30-Jun-08

30 June (a) (b) (c)

1990 79,042 - 79,0421991 69,785 - 69,7851992 66,601 - 66,601

1993 66,026 - 66,0261994 62,322 - 62,3221995 61,625 - 61,6251996 60,188 - 60,1881997 59,994 - 59,994

1998 58,639 149 58,7881999 54,341 138 54,4792000 49,299 138 49,4372001 42,738 132 42,8702002 37,927 128 38,055

2003 37,807 142 37,9492004 38,252 166 38,4182005 39,075 197 39,2722006 37,239 224 37,4632007 37,346 318 37,664

2008 34,370 3,644 38,014

Notes: (a) From number reported in Attachment G1.1

(b) From pattern in Attachment G1.6

(c) Sum of the 2 previous columns.


1/05/2009 5:54 PM


valuation

108

G2 Actual and projected claims experience during 2007/08

G2.1 Numbers of claims reported

Accident yearended 30 June

Actual Projected (a)

2007 3,326 3,2772006 107 882005 27 422004 17 302003 21 182002 22 132001 14 11

2000 18 141999 and earlier 192 152

Total 3,744 3,644

Number of claims reported

during 2007/08

127%

103%

118%173%129%

131%

101%122%65%56%

Ratio of actual toprojected number

reported

%

Notes: (a) From our 30/04/2008 actuarial report.

G2.2 Proportions of claims finalised

Accident year Proportion of claims finalised (a) during 2007/08ended 30 June Actual /

Actual Projected (b) expected (c )

2007 75.1% 77.7% 96.7%2006 54.0% 55.4% 97.5%2005 47.2% 46.1% 102.4%2004 46.0% 40.9% 112.5%2003 40.1% 37.1% 108.1%2002 39.7% 34.8% 114.2%2001 40.5% 34.8% 116.3%

2000 and earlier 40.2% 34.8% 115.6%

Total 65.5% 67.3% 97.3%

Notes: (a) Defined as:

number of claims finalised during year

number outstanding at beginning of year + number reported during year

(b) according to PPCF model in Attachment G3.2 of our 30/04/2008 report

(c) = (a) / (b) %.


1/05/2009 5:54 PM


valuation

109

G2.3 Claim payments

Accidentyear Actual Expected Actual/

ending payments payments expected30-Jun (a) (b) (c)

$M $M %2007 160.22 169.60 94%2006 74.92 88.44 85%2005 47.74 47.41 101%2004 27.04 27.17 100%2003 12.36 21.46 58%2002 8.23 13.54 61%2001 5.42 4.99 109%Earlier 20.47 18.66 110%

Total 356.41 391.27 91%

Notes: (a) From data supplied by RPR returning entities. Expected payments adjusted to remove LGIS -

WorkCare.

(b) Adopted weights as in Attachment G4.4 and adopted pattern as in Attachment G3 to report

dated 30/04/2008

(c) (a) / (b) x 100.

G2.4 Changes in case estimates

Accident Expected Actual Expectedyear Dev'ment Dev'ment Ultimate

ending Over Over Dev'ment30-Jun Year (a) Year (b) (c)

2007 1.290 1.294 1.7342006 1.079 1.108 1.554

2005 1.051 1.099 1.7892004 1.020 0.940 1.6122003 0.994 0.913 2.2582002 0.994 1.014 2.0432001 0.994 1.044 1.431

Earlier 1.184 1.024 1.667

Total 1.147 1.138 1.733

Notes: (a) According to PCE model described in Attachment G3.4 to report dated 30/04/2008

(b) Analysed from RPR returns data

(c) Ratio of adopted estimates to case estimates from Attachment G4.5 to 30/04/2008 report.


1/05/2009 5:54 PM


valuation

110

G3 Projection models

G3.1 Payments per claim incurred model

Section 4.2 and Attachment E.1 of this report detail the analysis of past superimposedinflation trends and the adopted bases for SI.

The following model has been adopted as indicated below:

Development Adopted reportingyear rates (d)

0 3,374 (b)1 4,400 1.09672 2,286 1.00253 1,262 1.00104 697 1.00075 396 1.00066 265 1.00047 127 1.00038 362 (c) 1.0003

9 1.000210 & later 1.0025

Total 13,169

$

Payments per claimincurred (a)

Notes: (a) in 30 June 2008 values, calculated using a 3 year weighted average with DY1 to DY5 adjusted

for past SI but before future and forward superimposed inflation

(b) not used in projection

(c) a decay factor of 74% has been assumed after DY7. The aggregate for DY8 onwards is shown

(d) calculated using a 4 year weighted average for DY1 to 4 and DY6 and a 3 year weighted

average for DY5 and DY7 onwards.

The above model is used for the pre-October 1999 amendments accident years.

The composite PPCI model documented in G1.13 and G1.14 is used for the 2000 to2008 accident years. The composite model projects the statutory and common lawbenefit costs separately.


1/05/2009 5:54 PM


valuation

111

G3.2 Payments per claim finalised model


Development yearPayments per claim Probability of

finalised (a) finalisation (b)

$ %

1 13,922 76.82 43,404 55.2

3 61,762 46.84 67,280 41.15 67,454 37.6

52,141 (c) 37.8 (c)67 & later 52,141 (c) 37.8 (c)

Notes: (a) in 30 June 2008 values, calculated using a 3 year weighted average with years DY1 to DY5

adjusted for past SI before the future and forward superimposed inflation

(b) calculated using a 3 year weighted average with years DY1 to 3 and 4 year weighted average

for DY4 and 5.

(c) adopted for the longer term run-off as three year average over development years 6 and later.

G3.3 Payments per claim handled model


28,300

19,720 (b)6

4

7 & later 19,720 (b)

5 26,391

2 23,7873 28,741

$

1 10,627

Development yearPayments per claim

handled (a)

Notes: (a) in 30 June 2008 values, using a 3 year weighted average with DY1 to DY5 adjusted for past SI

before the future and forward superimposed inflation

(b) adopted for longer term run-off as three year average of DY6 and later

(c) Claim handling rates are not required as the number of claims handled is derived directly from

the number open and future projected claim reports (PPCI) and claim closures (PPCF).


1/05/2009 5:54 PM


valuation

112

G3.4 Projected case estimates model


Development Payment to

factor (a) provision factor (b)

1.300 0.6481.100 0.5251.065 0.4561.011 0.423

0.997 (c) 0.3980.997 (c) 0.4140.997 (c) 0.3690.997 (c) 0.3191.145 0.365

Development year

1234

56

9 & later

78

Notes: (a) adopted using a 4 year weighted average for DY1 and 2 and a 5 year weighted average for

DY3, 4 and 9 onwards

(b) adopted using a 5 year weighted average for DY1, 3 and 8 onwards and a 4 year weighted

average for DY2 and DY4 to 7

(c) DY5 to 8 a 5 year weighted average across DY5 to 8, excluding outliers where necessary


1/05/2009 5:54 PM


valuation

113

G4 Adopted estimates of outstanding claims

G4.1 Estimates from models

Accident Estimates of Outstanding Claims

Year at 30/06/2008 (a)(b)Ending30-Jun PPCI PPCF PCE PPCH

$M $M $M $M

2008 451.159 405.234 335.657 400.9762007 232.960 228.861 170.993 227.1622006 133.299 120.411 89.759 120.151

2005 116.804 68.883 54.597 69.3402004 83.685 40.308 35.816 40.3852003 53.147 26.334 17.520 26.0232002 35.857 19.832 14.972 19.692

2001 23.801 15.808 13.632 15.6652000 29.821 64.252 56.517 63.855

& earlier

Total 1160.533 989.923 789.463 983.248

Notes: (a) From models described in Attachment G3

(b) In 30 June 2008 values and includes superimposed inflation but excludes 2004 Reform Act

allowance.

G4.2 Average claim sizes

Accident Average Claim Size atYear 30/06/2008 (a)

Ending30 June PPCI PPCF PCE PPCH

$ $ $ $2008 15,339 14,130 12,300 14,018

2007 13,970 13,861 12,324 13,8162006 13,174 12,830 12,012 12,8232005 13,793 12,573 12,209 12,5852004 13,746 12,617 12,500 12,6192003 12,642 11,936 11,703 11,9272002 12,237 11,816 11,688 11,812

2001 11,965 11,779 11,728 11,775

Notes: (a) In 30 June 2008 values, from results in Attachment G4.1, includes superimposed inflation but

excludes 2004 Reform Act allowance


1/05/2009 5:54 PM


valuation

114

G4.3 Relationship to case estimates

Accident Ratio of Outstandings to CaseYear Estimates at 30/06/2008

Ending30 June PPCI PPCF PCE PPCH

2008 189% 170% 140% 168%2007 158% 155% 116% 154%2006 164% 148% 110% 148%2005 228% 134% 106% 135%2004 255% 123% 109% 123%2003 351% 174% 116% 172%2002 305% 169% 127% 168%2001 252% 167% 144% 166%2000 526% 1133% 166% 1126%

Total 187% 159% 127% 158%

G4.4 Adopted estimates in 30/06/2008 values

Accident Estimate Average RatioYear of claim to Case

Ending outstanding size Estimates

30-Jun claims (a)(a)(b)

$M $2008 431.937 14,833 181%2007 230.981 13,917 157%

2006 128.092 13,035 158%2005 97.727 13,308 191%2004 66.350 13,295 202%

2003 35.234 12,170 233%2002 15.444 11,700 132%

2001 13.632 11,728 144%2000 56.517 - 166%

& earlier

Total 1,075.912 173%

AccidentYear

Ending30-Jun PPCI PPCF PCE PPCH TOTAL

2008 0.60 0.20 0.00 0.20 1.002007 0.60 0.20 0.00 0.20 1.002006 0.60 0.20 0.00 0.20 1.002005 0.60 0.20 0.00 0.20 1.002004 0.60 0.20 0.00 0.20 1.002003 0.40 0.20 0.20 0.20 1.002002 0.00 0.00 0.90 0.10 1.002001 0.00 0.00 1.00 0.00 1.00

2000 0.00 0.00 1.00 0.00 1.00

Weights Adopted For Estimates

Method

Note: (a) In 30 June 2008 values, includes superimposed

inflation but excludes 2004 Reform Act allowance.

(b) The adopted model is a composite weighted average of

the statistical models. The weights attached to the

models reflect the extent to which they are considered

to appropriately reflect the experience of each accident

year.

The PPCI method usually provides the most reliable

estimate for the early stage of development. The PPCF

method is generally most appropriate for the interim

development years. The PPCH method is most often a

good gauge of the interim to the tail of the experience.

The PCE method is based on projected future

development of case estimates rather than payments,

and as such is the best indicator of the tail of the

experience. The adopted weights per method are

shown in the table below:


1/05/2009 5:54 PM


valuation

115

G4.5 Gross of Reinsurance Estimates with allowance for AWE Inflation, Discountingand Claims Expenses

Estimates at 30/06/2008Acc. year - Gross of Reinsurance

ending 30/06/2008 Inflated Inflated Case Ratio30-Jun values values & discntd estimates (c)

(a) (b) values (b)

$M $M $M $M %

2008 431.937 519.729 476.918 238.962 180.82007 230.981 278.846 254.992 147.401 156.72006 128.092 154.236 139.935 81.242 157.72005 97.727 115.890 104.182 51.268 190.62004 66.350 77.816 70.202 32.831 202.12003 35.234 41.480 37.253 15.141 232.72002 15.444 18.908 16.207 11.744 131.52001 13.632 16.955 14.278 9.448 144.3

earlier 56.517 70.303 59.198 34.096 165.8

Total 1,075.912 1,294.163 1,173.165 622.134 172.9

Notes: (a) From Attachment G4.4

(b) Includes 5% claims expenses and 2004 Reform Act allowance

(c) Ratio of actuarial estimates in 30 June 2008 values to case estimates.


1/05/2009 5:54 PM

Attachment H Analysis of election

option experience

116

H Analysis of election option experience

H1 Data used

WorkCover WA supplied a 31 January 2009 file containing details for each electionapplication lodged, including date of injury, level of disability, category and electionstatus. Some tables with aggregate statistics concerning election options, redemptionsand Schedule 2 benefits were also supplied.

A number of issues associated with the election option data have been identified inrecent years. WorkCover WA will undertake further work to ensure that in the futurecommon law claims are accurately captured. This will assist with our analysis ofclaim frequency and average claim size of common law claims.

WorkCover WA identified and removed duplicate lodgements and reported themseparately. As detailed above it was identified that previous year’s data included self-insurance claims which have been removed from this year’s analysis for consistencywith other data. The total number of lodgements for the pre November 2005 changesare 5,237 + 1,372 (multiples) + 478 (no associated claim record) + 411 (self-insurance) = 7,498. This is 132 higher than last year’s 7,366 and represents anaverage of 11 lodgements per month in the year ending 31 January 2009. The totalnumber of lodgements for the post November 2005 changes are 974 + 4 (multiples) +1 (no associated claim record) + 71 (self-insurance) = 1,050. This is 517 higher thanlast year’s 533 and represents an average of 43 lodgements per month in the yearending 31 January 2009. This gives a combined total of 54 lodgements per monthcompared to 54 last year and 49 the year before.

H2 Base analysis

Pre November 2005 election option experience

We have analysed the election option experience separately before and after stage 2 ofthe 2004 Reform Act (effective 14 November 2005). Stage 2 of the reformimplementation included changes specific to the common law benefits and therefore,it is best to analyse claims separately to examine the impact of the 2004 Reform Act.

The election option lodgement data is tabulated on the following page by accidentyear after first removing duplicates, rejected, withdrawn and industrial diseaselodgements and those with determination of less than 16% disability.


1/05/2009 5:54 PM


option experience

117

Number of Applications lodged by accident year upto 31/01/2009 with rejections, withdrawns, duplicates, ID and

<16% impairment claims excluded

Accident

Year All appli- Deter- Others without

cations minations with F22 w/o F22 Settled Ongoing F23REF Ongoing Total

(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)

2009 0 0 0 0 0 0 0 0 0 0

2008 0 0 0 0 0 0 0 0 0 0

2007 0 0 0 0 0 0 0 0 0 0

2006 110 32 34 20 6 16 0 2 0 110

2005 327 113 90 48 38 21 1 16 0 327

2004 336 109 111 45 47 14 0 10 0 336

2003 315 96 89 51 66 8 0 5 0 315

2002 323 104 90 33 84 4 0 8 0 323

2001 331 98 115 35 70 4 0 9 0 331

2000 383 111 119 52 83 1 0 17 0 383

1999 474 76 185 89 105 0 0 19 0 474

1998 406 63 166 68 93 2 0 14 0 406

1997 231 45 93 36 49 1 0 7 0 231

older 276 39 112 54 57 2 0 12 0 276

Total 3512 886 1204 531 698 73 1 119 0 3512

Notes : (a) total applications lodged from the 'Extract - Civil Proceedings PriorNov05 - Jan 2009' file supplied

as at 31 January 2009 by WorkCover WA after removing rejections, withdrawns (done by WorkCover this year), duplicates and ID claims

(b) the number of applications which have gone through the review process

and been assigned a disability level or dismissed

(c) the number of applications with Form 22 referral and disability levels agreed

via Form 24 or default agreement (employer does not return Form 23) or agreed at review

(d) the number of applications without Form 22 referral, includes parties directly agreeing and lodging Form 24

(e), (f) all other cases with Form 23 referred to employer and which do not fall in the groups above. Includes

ongoing cases at Review (g), settled externally (e), Form 25 lodged but still to be decided etc

(g) applications which did not have Form 23 referred to employer and no agreement made. For cases on which Form 22 is ongoing

where Form 22 just received, extension requests granted but no further forms received etc

(h) applications where the file has been closed adminstratively due to lack of activity.

These files are considered finalised however may re-open as the dispute was never formally determined or discontinued.

(i) applications are ongoing without Form 22 as extension may have been requested. These applications were formally included under (g)

(j) = (a) = (b) + (c) + (d) + (e) + (f) + (g) + (h) + (i)

Number of Applications as at 31/01/2009

Agreements Others with F23REF Ongoing

w/o F22

File

Closed

Here we see that 73 + 1 + 0 = 74 (2%) of the net applications lodged (3,512) are notyet decided (ongoing), 119 (3%) applications have been administratively closed dueto no activity however could be reopened and 95% have been determined, agreed orsettled. Last year 3% of net lodgements were ongoing.

The number of lodgements per removal status is:

determinations under 16% 124

rejections (category 11 and 13) 1,174

withdrawns (category 8 and 10) 361

multiples identified and industrial disease 1,921

Total 3,580

Plus multiples of above statuses -5

Plus self-insurance claims 411

Net Removal Total 3,986

The 3,986 (53%) lodgements removed reduced the total 7,498 lodgements analysed to3,512 net. Last year 52% of actual lodgements were removed.


1/05/2009 5:54 PM


option experience

118

Removing rejected, withdrawn, duplicate and industrial disease lodgements producedsome interesting observations:

a high proportion of lodgements removed (39%) are withdrawn/rejectedlodgements

multiple lodgements for the same claim arise

1,372 multiples, 478 lodgements with no associated claim record were removedand separately reported by WorkCover WA

some 30% or more disability elections relate to claims for which a less than30% disability election has already been approved.

Election Option Status by accident year upto 31/01/2009

Election

Year No election Election Election not options %

registered registered required no election election not reqd of total(a) (b) (c) (d) (e) (f) (g)

2009 0 0 0 0% 0% 0% 0%2008 0 0 0 0% 0% 0% 0%2007 0 0 0 0% 0% 0% 0%2006 35 38 37 32% 35% 34% 68%2005 99 108 120 30% 33% 37% 70%2004 100 77 159 30% 23% 47% 70%2003 107 70 138 34% 22% 44% 66%2002 116 75 132 36% 23% 41% 64%2001 100 77 154 30% 23% 47% 70%2000 120 78 185 31% 20% 48% 69%1999 145 195 134 31% 41% 28% 69%1998 123 177 106 30% 44% 26% 70%1997 66 106 59 29% 46% 26% 71%older 85 119 72 31% 43% 26% 69%

Total 1096 1120 1296 31% 32% 37% 69%

Notes : (a) number of applications with election status = "N" ie election not registered due to timeframes, not lodged,

disability not recorded

(b) number of applications with election status = "Y" ie election registered for 16% or more but <30% claims

(c) number of applications with election status = "C" ie election not required for claims with 30% or more disability

(d) = (a) / (a) from table above (the total number of applications lodged)

(e) = (b) / (a) from table above (the total number of applications lodged)

(f) = (c) / (a) from table above (the total number of applications lodged)

(g) = {(b) + (c)} / (a) from table above (the total number of applications lodged)

Number of Net Election Options as at 31/01/2009

% of all applications

This table shows 69% of all applications lodged have been registered, with 68% to71% of applications for the 1997 to 2001 accident years having been registered,falling to 64% for 2002 before increasing to 66% to 70% for 2003 to 2006. Last year67% of all applications were registered.


1/05/2009 5:54 PM


option experience

119

Split of Election Options by Level of Disability (as at 31/01/2009)

Accident

Year

30% or more >=16% but <30% under 16% not recorded(a) (b) (c) (d)

2009 0 0 0 0

2008 0 0 0 0

2007 0 0 0 02006 37 49 0 242005 120 131 0 762004 159 106 0 712003 138 98 0 792002 132 95 0 962001 154 94 0 832000 185 97 0 1011999 134 216 0 1241998 106 191 0 1091997 59 115 0 57older 72 133 0 71

Total 1296 1325 0 891

Notes : (a) number of applications with disability level recorded as not less than 30%

(b) number of applications with disability level recorded as not less than 16% but less than 30%

(c) number of applications with disability level of less than 16%

(d) number of applications with disability level not recorded

Level of disability Level of disability


Number of election options at 31/01/2009

0

25

50

75

100

125

150

175

200

225

250

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

Accident year

nu

mb

er

of

ap

plic

ati

on

s

>= 16% but less than 30% 30% or more

This table and chart reflect the analysis by level of disability, as recorded onWorkCover WA’s case management system. Here we note that while the number ofelection options with disability of 30% or more (1,296) balances to the number forwhich election is not required, the 1,325 with not less than 16%, but less than 30%disability exceeds the 1,120 elections registered by 205 applications, for which anelection has not been registered within the required timeframe or not registered at all.Since last year there are 66 (5%) additional 30% or more disability claims and 5 more16% to 30% claims.


1/05/2009 5:54 PM


option experience

120

We note that 49% of all claims with a recorded disability level of 16% or more, havea disability level of 30% or more (serious injury) compared to 48% of all claims lastyear. Currently the 2000 to 2004 accident years have over 50% of all claims with adisability level of 16% or more are serious injury claims (disability level of 30% ormore).

The transitional application lodgements (claims incurred prior to 1 July 1999) areuseful in estimating the ultimate common law frequency of claims incurred before theOctober 1999 amendments. These accident years represent a mix of pre and post-Actchange conditions.

However it is the new lodgements (claims incurred after 30 June 1999) that are themain post - October Act amendment indicator of common law frequency in WesternAustralia for establishing premium rates for future underwriting.

Post November 2005 election option experience

Under Stage 2 of the 2004 Reform Act, the methodology used to assess injurieschanged from disability assessment to impairment assessment. Access to commonlaw is based on the level of Permanent Whole of Person Impairment (PWPI), withdual gateways of 15% to less than 25% and 25% or more PWPI.

The election option lodgement data is tabulated below by accident year after firstremoving duplicates, rejected, withdrawn, lapsed and those with determination of lessthan 15% PWPI.

Number of Applications lodged by accident year upto 31/01/2009 with rejections, withdrawns, duplicates, ID and

<15% impairment claims excluded

Accident

Year All Agreements Assessments Agree/Assess Extension

ended applications Recorded Recorded Ongoing Ongoing Total

30-Jun (a) (b) (c) (d) (e) (f)

2009 2 0 0 0 2 2

2008 240 5 26 1 208 240

2007 251 14 107 1 129 251

2006 99 9 85 0 5 99

2005 0 0 0 0 0 0

Total 592 28 218 2 344 592

Notes : (a) total applications lodged from the 'Extract - Civil Proceeding Post Nov2005 - Jan 2009' file supplied

as at 31 January 2009 by WorkCover WA after removing rejections, withdrawns (done by WorkCover this year), duplicates and ID claims

(b) the number of applications which have gone through the review process

and an agreement on the Permanent Whole Person Impairment (PWPI) recorded by the Director

(c) the number of applications which have filed an Assessment by an Approved Medical Specialist

(d) the number of applications where the agreement or assessment has been filed however a % of PWPI is yet to be recorded

(e) the number of applications where a request for an extension has been granted and this time hasn't lapsed

but an agreement or assessment is yet to be recorded

(f) = (a) = (b) + (c) + (d) + (e)

Number of Applications as at 31/01/2009

Here we see that 346 (58%) of the net applications lodged are not yet decided(ongoing) and 246 (42%) have been determined, agreed or settled. This is expected asall of these claims have been lodged for less than 38 months. Last year 73% of netlodgements were ongoing.


1/05/2009 5:54 PM


option experience

121

The number of lodgements per removal status is:

Rejections (category 3) 61

Extension lapsed (category 4) 320

Multiples and disease 6

Plus self-insurance claims 71

Net Removal Total 458

The 458 (44%) lodgements removed reduced the total 1050 lodgements analysed to592 net. Last year 33% of actual lodgements were removed.

Election Option Status by accident year upto 31/01/2009


Accident No election Election Ongoing case - no

Year ended registered registered election registered no election election ongoing30-Jun (a) (b) (c) (d) (e) (f)

2009 0 0 2 0% 0% 100%

2008 2 30 208 1% 13% 87%

2007 5 110 136 2% 44% 54%

2006 4 88 7 4% 89% 7%

2005 0 0 0 N/A N/A N/A

Total 11 228 353 2% 39% 60%

Notes : (a) number of applications with election status = "N" ie election not registered due to timeframes, not lodged,

disability not recorded

(b) number of applications with election status = "Y" ie election registered for 15% or more

(c) number of applications with election status = "O" ie ongoing cases election not yet registered

(d) = (a) / (a) from table above (the total number of applications lodged)

(e) = (b) / (a) from table above (the total number of applications lodged)

(f) = (c) / (a) from table above (the total number of applications lodged)

% of all applications

This table shows 39% of all applications have been registered.

Split of Election Options by Level of Disability (as at 31/01/2009)

Accident

Year

ended 25% or more >=15% but <25% under 15% not recorded30-Jun (a) (b) (c) (d)

2009 0 0 0 2

2008 17 14 0 209

2007 50 71 0 130

2006 34 60 0 5

2005 0 0 0 0

Total 101 145 0 346

Notes : (a) number of applications with disability level recorded as not less than 25%

(b) number of applications with disability level recorded as not less than 15% but less than 25%

(c) number of applications with disability level of less than 15%

(d) number of applications with disability level not recorded

Level of disability



1/05/2009 5:54 PM


option experience

122

Number of election options at 31/01/2009

0

10

20

30

40

50

60

70

80

2009 2008 2007 2006 2005

Accident year

nu

mb

er

of

ap

plicati

on

s

>= 15% but less than 25% 25% or more

This table and chart reflect the analysis by level of disability, where the level ofimpairment is measured by the PWPI index. The number of claims reported to datefor 2006 accident year with PWPI not less than 15% and less than 25% is higher thanthe number of claims with more than 25% PWPI .

It has only been 38 months since the Stage 2 of the 2004 Reform Act has commencedand there has been a low level of election option activity. This may be driven by thechange that the election option period has extended from 6 to 12 months. Due to thelack of claims experience to date post 2004 Reform Act, we have predominatelyrelied on the claims incurred prior to the Act claim to project common law frequency.


1/05/2009 5:54 PM


option experience

123

H3 Election applications by accident year and lodgement month

We have examined the lodgements for pre and post November 2005 together toobserve trends on the impact of the Stage 2 of the 2004 Reform Act.

The peak of net applications lodged to date (925, excluding self-insurers) were lodgedin December 1999, the last month of the three month transitional period following theintroduction of the Act changes. There was an increase in May to November 2005 toover 50 lodgements per month. Due to retracted lodgements these results have nowreduced to 35 lodgements per month. The charts below show more detail:

Election applications by accident year and lodgement month from 1 October 1999 to 31 December 2000

0

100

200

300

400

500

600

700

800

900

1,000

1999 2000

10 11 12 1 2 3 4 5 6 7 8 9 10 11 12

Year / month

nu

mb

er

lod

ged

2002 2001 2000 1999 1998 1997 & earlier Total

Election applications by accident year and lodgement month from 1 January 2001 to 31 January 2009

0

5

10

15

20

25

30

35

40

45

50

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

1 2 3 4 56 7 8 91011121 23 4 5 67 8 91011121 2 3 45 6 7 8910111212 3 4 5 67 8 91011121 2 34 5 6 78 91011121 2 3 4 56 7 8 91011121 23 4 5 6 78 91011121 2 3 45 6 7 891011121

Year / month

nu

mb

er

lod

ged

2009 2008 2007 2006 2005 2004 20032002 2001 2000 1999 1998 1997 & earlier Total


1/05/2009 5:54 PM


option experience

124

The increased lodgement activity in the charts shows in the total line.

There was a notably high level of lodgement activity in the 12 months toNovember 2005, prior to the commencement of Stage 2 of the 2004 Reform Act. Thenumber of lodgements then wound down to around 20 a month until October 2006,when lodgement activity started rising again, reaching a high of 51 lodgements inOctober 2008.

In the six months ended 31 January 2009 there have been on average 44 (41) netapplications per month of which all (all) are for new lodgements ie claims incurredfrom 1 July 1999 onwards. The figures in the brackets are last years.

We note however that due to retracted claims (duplicates, rejections and withdrawals)the six month average to 31 January 2008 has reduced by 45% from 41 to 23 sincelast year. Our analysis shows estimated net retraction rates to January of 38% afterone year, 3% after two years and 2% after three years for claims incurred from 1 July1999 onwards. On a June financial year basis the retraction rates are 15%, 3% and1% respectively.


1/05/2009 5:54 PM


option experience

125

H4 Analysis of new election applications

The tables below concentrate on the new application lodgements (claims incurredfrom 1 July 1999 onwards and from 15 November 2005 onwards), to get an indicationof potential common law frequency emerging under the new access rules.

Applications for 2000 accident year on, by month incurred and month lodged at 31/01/2009Number lodged

Month Incurred Number lodged Month lodged per month 6 mth avg

7 1999 40 7 1999 08 27 8 09 31 9 0

10 20 10 111 46 11 412 27 12 24 51 2000 38 1 2000 9 62 34 2 12 83 34 3 12 104 27 4 13 125 24 5 15 146 36 6 15 137 32 7 13 138 32 8 25 169 34 9 20 17

10 29 10 12 1711 33 11 26 1912 14 12 26 201 2001 21 1 2001 11 202 31 2 24 203 31 3 13 194 28 4 15 195 22 5 25 196 24 6 19 187 29 7 16 198 27 8 16 179 33 9 17 18

10 32 10 24 2011 23 11 23 1912 27 12 17 191 2002 29 1 2002 25 202 22 2 14 203 24 3 24 214 28 4 24 215 23 5 19 216 26 6 12 207 23 7 27 208 31 8 34 239 18 9 24 23

10 25 10 15 22

11 28 11 18 2212 14 12 21 231 2003 30 1 2003 16 212 29 2 22 193 30 3 24 194 32 4 21 205 31 5 27 226 24 6 20 227 33 7 16 228 26 8 28 239 27 9 22 22

10 29 10 22 2311 35 11 28 2312 27 12 33 251 2004 22 1 2004 28 272 24 2 21 263 29 3 29 274 28 4 26 285 27 5 27 276 29 6 20 257 37 7 22 248 19 8 12 239 25 9 23 22

10 29 10 31 2311 20 11 44 2512 28 12 35 281 2005 25 1 2005 27 292 28 2 34 323 28 3 23 324 35 4 35 335 28 5 30 316 25 6 23 297 23 7 29 298 21 8 29 289 20 9 40 31

10 25 10 31 3011 21 11 38 3212 0 12 28 331 2006 0 1 2006 20 312 0 2 26 313 0 3 40 314 0 4 18 285 0 5 21 266 0 6 13 237 0 7 15 228 0 8 14 209 0 9 17 16

10 0 10 17 1611 0 11 13 1512 0 12 10 141 2007 0 1 2007 16 152 0 2 14 153 0 3 10 134 0 4 18 145 0 5 12 136 0 6 12 147 0 7 10 138 0 8 11 129 0 9 6 12

10 0 10 9 1011 0 11 10 1012 0 12 10 91 2008 0 1 2008 8 92 0 2 9 93 0 3 7 94 0 4 5 85 0 5 9 86 0 6 9 87 0 7 11 88 0 8 13 99 0 9 4 9

10 0 10 8 911 0 11 6 912 0 12 3 81 2009 0 1 2009 4 6

2126 2126


1/05/2009 5:54 PM


option experience

126

Applications for 2005 accident year on, by month incurred and month lodged at 31/01/2009

Number lodgedMonth Incurred Number lodged Month lodged per month 6 mth avg

11 2005 11 11 2005 012 14 12 0

1 2006 17 1 2006 02 16 2 03 12 3 04 8 4 0 05 13 5 0 06 8 6 0 07 12 7 0 08 13 8 4 19 20 9 2 1

10 13 10 2 111 17 11 11 312 8 12 17 6

1 2007 15 1 2007 12 82 21 2 11 93 32 3 12 114 31 4 9 125 41 5 7 116 28 6 13 117 26 7 11 118 43 8 12 119 30 9 15 11

10 32 10 13 1211 37 11 10 1212 24 12 16 13

1 2008 25 1 2008 17 142 15 2 28 173 3 3 22 184 3 4 31 215 1 5 35 256 1 6 29 277 1 7 28 298 0 8 35 309 0 9 36 32

10 0 10 42 3411 0 11 36 3412 0 12 42 37

1 2009 1 1 2009 34 38592 592

The tables show that:

over the six months to 31 January 2009, an average 44 net new applicationswere lodged per month compared with 38 over the six months to31 January 2007

November 2004 has a high of 44 new lodgements. The lodgement numberswere on a downward trend to October 2006 before steadily increasing again,with a new peak reached in October 2008 of 50. The total lodgements forJanuary 2009 was 4 + 34 = 38. (for pre and postNovember 2005 claims respectively)

for claims incurred over the six months to 30 June 2008, an average of 35 newapplications per month have already been lodged, compared to 21 in the sixmonths to 31 December 2007 last year ie 67% higher.


1/05/2009 5:54 PM

Attachment H Analysis of election option

experience

127

This analysis was further subdivided by development month of lodgement and an attempt was made to derive lodgement reportingrates from which the ultimate number of lodgements was projected.

Pre November 2005Applications for the 2000 & later accident years by development month incurred as at 31 January 2009

Development month of lodgementCalendar month 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37

1 2003 0 0 0 0 0 3 4 2 1 0 0 0 1 0 0 0 0 0 0 0 0 0 0 1 0 0 1 1 0 0 0 0 1 0 1 0 0 02 0 0 0 0 1 4 7 2 0 1 1 0 1 0 0 0 0 0 0 0 1 0 0 0 0 0 1 1 0 0 0 0 1 0 0 0 0 03 0 0 0 0 1 6 3 2 1 0 1 1 0 0 1 1 1 1 0 0 2 0 0 0 0 0 1 0 0 1 0 0 0 0 0 1 0 04 0 0 0 0 0 6 3 0 1 1 1 0 0 0 0 1 0 0 0 0 0 0 0 0 0 2 0 0 0 0 0 1 1 1 0 0 0 05 0 0 0 1 1 2 5 3 0 0 0 0 0 1 2 0 0 0 1 0 0 1 0 0 1 0 0 1 0 1 0 0 0 2 1 1 0 16 0 0 0 1 0 7 2 4 1 0 0 1 0 0 1 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 1 0 07 0 0 0 0 1 2 6 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 1 0 0 0 0 0 0 0 0 0 0 1 0 0 0 18 0 0 0 0 5 5 8 1 0 1 1 0 0 1 0 0 1 0 2 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 1 0 09 0 0 0 0 2 5 4 1 0 0 0 0 1 0 0 0 1 0 0 0 0 0 1 0 0 1 0 0 0 0 0 0 0 0 0 0 0 1

10 0 0 0 0 0 5 3 1 0 0 1 0 1 1 0 0 1 0 1 1 0 1 1 1 1 0 0 0 0 0 1 1 0 1 0 0 0 011 0 0 0 0 1 5 5 0 0 1 2 0 0 0 0 0 0 0 0 2 1 0 0 0 1 0 0 0 0 0 1 0 1 1 0 0 0 012 0 0 0 1 0 4 3 2 2 1 2 0 1 1 2 0 2 0 2 1 0 0 0 0 0 0 1 1 1 0 0 0 0 0 1 0 0 01 2004 0 0 0 1 2 6 2 0 3 2 1 0 0 1 0 0 0 1 0 0 0 0 0 1 0 0 0 0 0 1 0 1 1 1 0 1 0 02 0 0 0 2 1 2 3 4 0 0 1 0 1 0 0 0 0 0 1 0 0 0 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 03 0 0 0 1 1 7 4 1 1 0 1 0 0 1 0 0 0 1 0 0 1 0 0 1 2 0 1 1 0 0 0 0 0 1 0 1 0 04 0 0 0 0 1 9 3 2 0 3 0 0 0 0 1 0 0 0 0 0 1 0 1 0 0 0 0 1 0 0 0 1 0 0 0 0 1 05 0 0 0 0 1 7 3 2 0 1 1 0 1 1 1 0 0 0 0 0 0 2 0 1 1 0 0 0 0 0 0 0 0 0 0 1 0 06 0 0 0 0 1 2 3 0 0 1 0 1 1 0 0 1 0 0 0 0 0 1 1 0 0 2 1 0 0 1 0 0 0 0 0 0 0 17 0 0 0 0 0 4 3 2 2 0 1 0 1 0 0 0 1 0 0 0 0 0 0 0 0 1 0 0 0 0 1 0 0 0 1 0 1 08 0 0 0 1 0 2 0 1 0 0 1 0 0 1 0 0 0 1 0 0 0 1 0 0 0 1 0 0 0 0 0 0 0 0 2 0 0 09 0 0 0 0 0 5 2 1 1 1 1 0 0 0 0 0 1 0 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 1 0 1 0 1

10 0 0 1 1 0 5 3 2 3 1 0 2 1 0 0 0 0 0 0 1 0 1 1 0 0 0 0 0 0 0 0 0 1 0 0 2 0 011 0 0 0 1 2 3 7 5 4 0 1 1 1 2 1 1 1 0 1 0 0 0 1 0 0 0 0 0 0 0 0 1 0 0 3 0 0 012 0 0 0 2 3 5 4 0 0 1 2 0 0 1 1 0 1 0 0 0 2 0 2 2 0 0 1 0 0 1 0 0 1 0 0 0 0 01 2005 0 0 0 1 1 0 4 3 0 1 2 0 0 0 0 0 0 0 0 3 0 0 0 0 0 1 2 0 1 0 1 0 0 0 0 0 0 02 0 0 1 0 1 3 3 3 1 2 0 1 1 0 0 1 0 1 1 0 0 0 0 0 0 0 1 0 0 0 2 0 0 0 1 0 0 13 0 0 0 0 1 4 3 4 1 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 1 0 0 0 0 0 1 0 1 0 0 0 04 0 0 0 1 0 6 5 1 0 2 2 0 0 1 1 1 2 0 1 0 1 0 0 0 0 0 1 0 0 0 1 0 0 0 1 2 0 05 0 0 1 0 1 3 1 0 1 2 0 1 0 0 0 0 0 0 1 1 0 0 1 2 0 0 0 0 0 0 0 0 0 0 0 0 0 06 0 0 0 0 1 1 5 1 1 1 1 0 2 0 1 1 0 1 0 0 1 1 0 0 0 0 1 0 0 0 0 1 0 0 0 0 0 07 0 0 0 0 0 7 6 3 0 1 0 0 0 0 0 0 0 1 1 2 1 0 0 0 0 0 0 0 0 1 0 2 0 0 0 0 0 08 0 0 0 1 2 5 8 3 2 0 1 0 1 1 0 0 0 0 0 0 0 1 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 09 0 0 0 1 0 10 7 2 0 0 0 2 1 0 1 0 0 0 0 0 0 1 0 0 1 2 0 3 2 1 1 1 0 0 0 0 0 0

10 0 0 0 2 2 5 3 1 0 0 0 1 1 0 0 2 0 0 1 1 1 0 0 0 0 0 0 1 0 1 1 2 0 0 1 0 0 111 0 0 0 1 0 4 7 3 2 3 0 2 3 0 0 0 1 1 0 0 1 0 1 0 2 1 0 1 1 0 0 2 0 0 0 0 0 012 0 0 0 0 0 6 4 4 1 0 2 0 0 0 1 0 1 0 0 0 0 0 0 1 1 0 1 0 1 1 1 0 0 0 0 0 0 01 2006 0 0 1 0 0 3 2 3 1 0 2 0 0 1 1 0 0 0 0 0 0 0 1 0 0 1 0 0 0 0 0 0 0 0 0 0 1 02 0 0 0 0 1 5 3 1 1 1 1 0 0 1 1 0 0 0 0 0 0 0 0 0 0 2 0 1 0 1 0 1 1 0 0 0 0 13 0 0 0 0 4 9 4 3 1 1 1 0 2 0 1 0 0 1 1 0 1 1 2 3 0 1 0 1 0 0 1 0 0 0 0 0 0 04 0 0 0 0 0 1 1 2 1 0 0 1 0 0 0 0 0 0 1 0 0 1 0 0 1 0 1 0 0 1 0 0 1 0 0 0 0 05 0 0 0 0 0 0 2 4 1 0 0 1 1 1 0 0 0 1 0 1 1 0 0 0 0 0 1 0 0 0 0 0 1 0 0 0 0 06 0 0 0 0 0 0 0 1 0 0 1 0 0 0 0 0 0 0 0 1 1 1 0 1 0 1 0 0 1 0 0 1 0 0 0 1 0 07 0 0 0 0 0 0 0 0 0 1 0 1 0 0 1 0 0 0 2 1 0 0 0 0 1 0 0 1 0 2 0 0 0 0 0 0 1 08 0 0 0 0 0 0 0 0 0 1 1 1 0 0 0 1 1 0 1 0 0 0 1 0 0 0 1 0 1 0 0 0 0 0 1 0 0 19 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 1 0 2 2 0 0 0 2 0 1 1 0 1 0 0 0 0

10 0 0 0 0 0 0 0 0 0 0 0 1 1 0 0 1 1 0 0 0 1 0 0 0 1 2 0 0 1 0 0 0 0 0 0 1 0 011 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 1 1 0 2 0 0 0 012 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 1 1 0 01 2007 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 0 1 0 0 0 1 0 0 0 0 2 0 1 0 0 0 1 02 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 0 1 0 1 0 1 0 0 1 0 0 0 0 0 0 0 0 1 1 0 03 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 2 1 0 0 0 0 0 0 0 1 0 1 1 0 04 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 1 0 1 0 1 1 0 0 0 2 1 0 0 0 1 15 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 1 0 1 0 0 0 0 0 1 1 0 06 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 1 1 1 0 0 0 0 0 0 1 0 07 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 1 0 0 1 0 0 0 0 0 0 0 1 28 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 0 0 1 0 0 0 0 0 0 0 1 1 0 1 0 29 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 1 0 0 0

10 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 0 0 0 0 1 0 0 0 0 0 011 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 3 1 0 012 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 1 1 1 1 0 0 0 0 11 2008 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 1 0 0 12 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 2 0 0 0 0 0 0 0 03 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 1 0 0 04 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 15 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 0 0 06 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 0 1 0 07 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 1 2 0 08 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 0 0 1 19 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 0 0 0

10 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 011 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 012 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 01 2009 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

3 2 10 38 98 415 250 128 70 58 50 33 38 28 23 16 28 21 27 27 29 32 21 25 26 29 25 25 18 20 17 24 20 22 29 28 12 21

3 2 10 38 98 415 250 128 70 58 50 33 38 28 23 16 28 21 27 27 29 32 21 25 26 29 25 25 18 20 17 24 20 22 29 28 12 21Prod of adopted lodgement rates

Projected ultimate lodgements

Including Post Nov 05 Act changes 149 98 92 89 80 75 149 99 62 69 27 45 36 31 46 39 35 50 30 32 46 35 35 23 16 8 18 13 20 13 12 8 13 8 12 16 17


1/05/2009 5:54 PM


option experience

128

Applications for the 2000 & later accident years by development month incurred as at 31 January 2009

Calendar month 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74

1 2003 0 0 0 0 02 1 0 0 0 0 03 0 0 0 0 0 0 04 1 1 0 1 0 0 0 05 0 0 1 0 0 0 0 1 06 0 1 0 0 0 0 0 0 0 07 0 3 0 0 0 0 0 0 0 0 08 1 0 0 0 0 0 0 0 0 0 0 09 1 1 1 0 0 2 0 0 0 0 0 0 0

10 0 0 0 0 0 0 0 0 0 0 0 0 0 011 1 0 0 1 1 0 0 0 1 0 2 0 1 0 012 0 1 0 0 0 2 1 0 1 0 0 0 0 0 0 0

1 2004 0 1 0 0 0 0 0 0 0 0 0 0 0 0 2 0 02 0 0 0 0 0 0 0 0 0 3 0 1 0 0 0 0 0 03 0 0 0 0 0 0 0 0 0 0 0 1 1 1 0 0 0 0 04 0 0 0 0 0 0 1 0 0 0 0 0 1 0 0 0 0 0 0 05 0 0 0 0 0 1 1 0 0 0 0 0 0 0 0 0 1 0 1 0 06 0 1 0 1 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 07 0 0 1 0 1 0 0 0 1 1 0 0 0 0 0 0 0 0 0 0 0 0 08 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 09 0 2 0 0 0 1 0 0 0 0 2 0 0 0 0 0 0 0 0 1 0 0 0 0 0

10 1 0 0 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 1 0 0 011 0 1 2 2 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 1 0 1 0 0 0 012 0 0 0 1 0 0 1 0 1 0 0 1 0 0 0 0 0 0 0 0 0 1 0 0 1 0 0 0

1 2005 0 0 0 2 0 1 0 1 0 0 0 0 0 0 0 2 0 0 0 0 0 0 0 0 1 0 0 0 02 0 0 0 1 0 1 0 0 0 2 0 0 0 0 2 0 0 1 0 0 0 0 0 0 0 2 0 0 1 03 0 1 1 0 0 1 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 14 0 0 0 0 0 0 1 0 0 0 0 0 1 0 0 0 0 0 1 0 0 0 0 2 1 0 0 0 0 0 0 05 0 1 0 1 0 0 0 1 1 0 0 0 1 1 2 0 0 0 0 0 0 1 0 2 0 2 0 1 0 0 1 0 06 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 1 0 0 0 1 07 2 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 08 0 0 0 0 0 0 0 0 0 0 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 09 0 0 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 1 0 0 0 0

10 0 0 0 1 0 0 0 0 1 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 011 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 012 0 0 0 0 0 0 0 0 0 0 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

1 2006 1 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 02 0 1 0 0 1 0 0 0 0 0 0 1 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 03 1 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 04 0 0 0 1 1 0 0 0 0 1 0 0 0 0 1 0 1 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 05 0 0 0 0 0 0 0 1 0 1 0 0 1 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 06 0 1 0 0 0 0 1 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 07 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 18 0 0 0 1 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 09 2 0 0 0 0 0 0 0 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 1 0 0 0 0 0 0 0 0 0

10 1 0 0 0 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 0 0 1 0 0 0 0 0 0 0 0 111 0 1 1 0 0 1 2 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 012 1 0 0 0 0 1 0 0 0 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 1 0 0 0 0 1 0 0

1 2007 0 0 1 0 0 1 0 2 0 0 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 1 0 0 0 0 0 0 0 02 0 1 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 1 0 0 03 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 04 0 0 0 0 0 0 1 0 0 0 0 0 0 1 0 0 0 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 05 0 0 1 0 0 0 1 0 1 0 1 0 0 0 0 0 0 0 0 1 1 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 06 0 1 0 0 1 0 0 0 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 07 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 1 0 0 1 0 0 0 0 0 0 1 0 08 1 0 0 0 0 0 0 0 0 0 0 0 0 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 09 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 1 0 0 0 0 0 1 0 0 0 0 0

10 0 1 0 1 0 1 0 0 0 0 0 0 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 011 1 0 0 1 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 1 0 0 0 1 0 0 0 0 0 012 0 0 0 0 0 0 0 2 0 0 1 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

1 2008 0 0 0 0 0 1 0 0 0 0 0 0 0 0 2 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 1 02 0 0 0 1 0 0 0 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 0 0 0 0 0 0 0 0 13 0 0 0 0 0 0 0 0 0 1 0 0 1 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 04 0 0 1 0 0 0 0 0 0 1 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 05 0 1 0 1 0 1 0 0 1 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 06 0 0 0 1 1 0 0 0 0 0 1 0 0 0 0 0 0 0 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 07 0 3 0 0 1 0 0 0 0 0 0 1 0 0 1 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 08 0 1 0 0 0 0 0 1 1 0 0 0 0 0 0 0 0 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 2 0 0 0 19 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0

10 1 1 0 0 0 0 0 0 0 1 0 0 0 0 1 0 0 0 0 0 0 0 0 1 0 0 0 1 0 0 0 0 0 0 0 0 011 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 0 0 0 0 012 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 1 0 0 0 0

1 2009 0 0 0 0 0 0 1 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 0 0 0 0 0

19 26 14 21 11 17 13 10 12 18 13 9 9 4 13 4 8 9 6 5 6 2 2 7 8 8 3 11 4 3 5 3 6 2 4 2 419 26 14 21 11 17 13 10 12 18 13 9 9 4 13 4 8 9 6 5 6 2 2 7 8 8 3 11 4 3 5 3 6 2 4 2 4

Prod of adopted lodgement rates 1.225 1.200 1.196 1.184 1.173 1.169 1.162 1.154 1.147 1.133 1.125 1.118 1.115 1.115 1.108 1.108 1.104 1.098 1.094 1.088 1.081 1.081 1.081 1.078 1.075 1.072 1.072 1.061 1.061 1.058 1.051 1.044 1.034 1.034 1.034 1.034

Projected ultimate lodgements 26 30 24 25 27 29 33 40 32 32 28 31 22 32 28 21 41 32 30 30 31 26 24 29 38 31 29 28 35 25 33 33 31 30 31 14Including Post Nov 05 Act changes14 37 30 24 25 27 29 33 40 32 32 28 31 22 32 28 21 41 32 30 30 31 26 24 29 38 31 29 28 35 25 33 33 31 30 31 14


1/05/2009 5:54 PM


option experience

129


Calendar month 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 Total

1 2003 16

2 223 24

4 215 27

6 20

7 168 28

9 2210 22

11 2812 331 2004 28

2 213 29

4 265 276 20

7 228 12

9 2310 31

11 44

12 351 2005 27

2 343 23

4 355 306 23

7 298 29

9 4010 0 3111 0 0 38

12 1 0 0 281 2006 0 0 1 0 20

2 0 0 0 0 0 263 0 0 0 0 0 0 40

4 0 0 0 0 0 0 0 18

5 0 0 0 0 1 0 0 0 216 0 0 0 0 0 0 0 0 0 13

7 0 0 0 0 0 0 0 0 0 0 158 0 0 0 0 0 0 0 0 0 0 0 14

9 0 0 0 0 0 0 0 0 0 0 0 0 1710 0 0 0 0 0 0 0 0 0 0 0 0 0 1711 0 0 0 0 0 0 0 0 0 0 0 0 0 0 13

12 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 101 2007 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 16

2 0 1 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 143 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 104 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 18

5 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 126 0 0 0 0 1 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 12

7 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 108 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 11

9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 6

10 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 911 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 10

12 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 101 2008 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 8

2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 93 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 1 0 0 0 0 0 0 74 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 5

5 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 96 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 9

7 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 118 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 139 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 4

10 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 811 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 6

12 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 31 2009 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 4

1 1 1 0 3 0 0 0 2 0 1 0 1 1 0 1 0 2 1 1 0 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 21251 1 1 0 3 0 0 0 2 0 1 0 1 1 0 1 0 2 1 1 0 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Prod of adopted lodgement rates1.027 1.027 1.027 1.027 1.027 1.024 1.024 1.024 1.024 1.021 1.021 1.021 1.021 1.017 1.017 1.017 1.014 1.014 1.011 1.008 1.006 1.006 1.003 1.003 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000

Projected ultimate lodgements29 26 18 32 24 27 24 29 25 22 30 28 23 33 34 27 29 24 22 28 31 31 21 14 33 29 34 32 32 36 24 27 34 34 38 27 46 19 31 27 40

Including Post Nov 05 Act changes29 26 18 32 24 27 24 29 25 22 30 28 23 33 34 27 29 24 22 28 31 31 21 14 33 29 34 32 32 36 24 27 34 34 38 27 46 19 31 27 40


1/05/2009 5:54 PM


option experience

130

Number of new lodgements by month, accident month & est incurred

0

10

20

30

40

50

60

7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9101112 1 2 3 4 5 6 7 8 9101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9101112 1 2 3 4 5 6 7 8 9101112 1

Year/month

Nu

mb

er

of

ele

cti

on

s

lodged by acc month lodged by calendar month est ultimate incurred 6 mth ave


1/05/2009 5:54 PM


option experience

131

Post November 2005


Development month of lodgementCalendar month 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 Total

11 2005 0 012 0 0 0

1 2006 0 0 0 02 0 0 0 0 03 0 0 0 0 0 04 0 0 0 0 0 0 05 0 0 0 0 0 0 0 06 0 0 0 0 0 0 0 0 07 0 0 0 0 0 0 0 0 0 08 0 0 0 0 0 0 0 0 2 2 49 0 0 0 0 0 0 0 0 1 1 0 2

10 0 0 0 0 0 0 0 0 0 0 1 1 211 1 0 0 0 0 0 0 0 0 0 1 3 6 1112 0 0 0 0 0 0 0 0 0 2 3 6 6 0 17

1 2007 0 0 0 0 0 0 0 0 0 0 2 5 4 0 1 122 0 0 0 0 0 0 0 0 0 1 1 3 3 2 1 0 113 0 0 1 0 0 0 0 0 1 1 1 2 4 2 0 0 0 124 0 0 0 0 0 0 0 0 0 0 0 4 3 1 0 1 0 0 95 0 0 0 0 0 0 0 0 0 0 0 1 5 0 0 1 0 0 0 76 0 0 0 0 0 0 0 0 0 0 2 7 4 0 0 0 0 0 0 0 137 0 0 0 0 0 0 0 0 0 0 0 6 3 0 0 0 0 1 0 0 1 118 1 0 0 0 0 0 0 0 0 0 3 5 3 0 0 0 0 0 0 0 0 0 129 0 0 0 0 0 0 0 0 0 0 1 1 11 0 0 0 0 0 0 1 1 0 0 15

10 0 0 0 0 0 0 0 0 0 2 2 5 4 0 0 0 0 0 0 0 0 0 0 0 1311 0 0 0 0 0 0 0 0 1 0 1 0 8 0 0 0 0 0 0 0 0 0 0 0 0 1012 0 0 0 0 0 0 0 0 1 1 3 6 4 1 0 0 0 0 0 0 0 0 0 0 0 0 16

1 2008 0 0 0 0 0 0 0 0 0 1 6 4 3 1 1 0 1 0 0 0 0 0 0 0 0 0 0 172 0 0 0 0 1 1 0 0 0 1 5 10 9 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 283 0 0 0 0 0 0 0 1 0 0 2 10 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 224 0 0 0 0 0 0 0 0 0 1 1 12 10 1 2 0 0 0 1 1 0 0 1 0 0 0 0 1 0 0 315 0 0 0 0 0 0 0 0 1 3 0 6 18 3 0 1 1 0 0 1 0 0 0 0 0 1 0 0 0 0 0 356 1 0 0 0 0 0 0 0 1 0 1 6 13 5 0 0 1 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 297 1 0 0 0 0 0 0 0 0 1 3 7 10 3 1 0 1 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 288 0 0 0 0 0 0 0 0 0 0 2 5 21 4 0 0 0 0 1 0 0 0 1 0 0 0 0 1 0 0 0 0 0 0 359 0 0 0 0 0 0 0 0 1 0 6 6 12 4 1 1 1 1 1 0 0 0 0 0 0 0 0 1 1 0 0 0 0 0 0 36

10 0 0 0 0 0 0 0 0 0 0 0 11 17 4 2 3 2 1 0 0 0 0 0 0 1 1 0 0 0 0 0 0 0 0 0 0 4211 0 0 0 0 0 0 0 0 0 2 3 6 16 3 1 1 0 1 0 0 1 0 0 0 0 0 0 1 0 0 0 1 0 0 0 0 0 3612 0 0 0 0 0 0 0 1 0 1 3 12 14 4 1 2 1 1 0 0 0 0 0 1 0 0 0 0 1 0 0 0 0 0 0 0 0 0 42

1 2009 1 0 0 0 0 0 0 0 0 3 2 10 9 4 0 0 1 1 0 1 0 0 1 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 34

5 0 1 0 1 1 0 2 9 23 55 160 229 42 12 10 9 6 3 4 3 1 3 1 2 2 0 5 2 0 0 1 0 0 0 0 0 0 0 5925 0 1 0 1 1 0 2 9 23 55 160 229 42 12 10 9 6 3 4 3 1 3 1 2 2 0 5 2 0 0 1 0 0 0 0 0 0 0

Prod of adopted lodgement rates 149.008 149.008 149.008 149.008 149.008 149.008 149.008 99.339 62.087 22.874 8.951 3.003 1.432 1.278 1.241 1.209 1.175 1.155 1.141 1.127 1.121 1.116 1.096 1.088 1.073 1.059 1.059 1.025 1.010 1.010 1.010 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000

Projected ultimate lodgements 149 98 92 89 80 75 149 99 62 69 27 45 36 31 46 39 35 50 30 32 46 35 35 23 16 8 18 13 20 13 12 8 13 8 12 16 17 14 11


1/05/2009 5:54 PM


option experience

132

Number of new lodgements by month, accident month & est incurred

0

50

100

150

11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1

Year/month

Nu

mb

er

of

ele

cti

on

s

lodged by acc month lodged by calendar month est ultimate incurred 6 mth ave

The projection in the previous table produced an overall projected ultimate lodged figure of 34 applications per month over July 1999to January 2009. Average number of lodged applications per month was 32 in 1999/2000, 28 in 2000/2001, 27 in 2001/02, 27 in2002/03, 30 in 2003/04, 31 in 2004/05, 19 in 2005/06, 23 in 2006/07, 47 in 2007/08 and 105 over the seven months to January 2009.This suggests that the number of applications lodged may be increasing by around 1% per year on a month of claim incurred basis, upto 2004/05 before experiencing a dip in 2005/06 following the introduction of the new Act. In 2006/07 there was a small increasefollowed by a significant increase in 2007/08.

The increasing incurred number trend shows clearly in the chart above. The six month moving average lodgement trend also shows anupward trend. However the trend will ultimately flatten as retractions are removed.


1/05/2009 5:54 PM

Attachment H Analysis of election option

experience

133

The results of the above analysis are consolidated in Attachment L: Analysis of theNumber and Average Size of Common Law Claims.

Note that claims with 30% or more disability (or 25% or more PWPI for claimsincurred post November 2005) have no time limit to access common law and hencemore of these claims can develop in the future. The scenarios make some allowancefor this.

H5 Average common law claim size

The problem of negative case estimates in earlier year’s data has been largelyresolved, but there are still some instances where paid to date and case estimates arenot entirely reliable.

A combined analysis of pre and post November 2005 Act changes of severalcategories of claim is shown below:

Summary of claim sizes 2000 and later Claims with

Both Acts Claims with accident paid or case

case est = 0 year claimsestimates > $0

Number of claims with paid >0 (a) 4,643 2,704 6,164

Number of claims with ests >0 (b) 0 850 1,530

Cumulative paid (b) 876,942,169 627,782,548 1,089,002,816

Case estimates outstanding (c) 0 127,943,761 155,021,797

Estimated total cost (d) = (b) + (c) 876,942,169 755,726,309 1,244,024,613

Average paid = (b) / (a) $188,874 $232,168 $176,671

Average case estimate = (c) / (a) $0 $150,522 $101,321

Average total estimate = (d) / (a) $188,874 $382,690 $277,993

For claims with either payments or case estimates greater than zero, this leads to anaverage reported claim size of a common law claim of $277,993 or $382,690 forcommon law claims from accident years 2000 and later. These have increased by 3%and 4% respectively since last year following on from respective increases of 4% and6% the previous year and by 5% and 10% the year before that.

See Attachment L.2 for details for the average total claim size of a common law claimadopted for the actuarial projections in this report.

This adopted average implies an average development factor of 1.06 (1.06 last year),compared with current paid and outstanding. This does not appear unreasonable.


1/05/2009 5:54 PM


option experience

134

H6 Redemption experience

The reduction in estimated common law claim numbers has to be viewed togetherwith the increase in the number of Schedule 1 redemptions. To a large extent theseredemptions represent the replacement cost in the statutory system of the common lawclaims saved.

The chart below shows the recorded number of Schedule 1 redemptions and Schedule2 settlements to 31 January 2009:

Number of Schedule 1 redemptions and Schedule 2 settlements

0

25

50

75

100

125

150

175

200

225

250

275

7 8 9 101112 1 2 3 4 5 6 7 8 9101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9101112 1 2 3 4 5 6 7 8 9101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9101112 1

Year/month

Nu

mb

er

of

red

em

pti

on

s/s

ett

lem

en

ts

Schedule 2 Schedule 1

Schedule 2 settlements grew from an average of 147 per month in 1999/2000 to 214in 2002/03, with a high of 251 in July 2003. There has been a decreasing trend sincefalling to 76 per month in 2007/08 which has continued to date with an average of 48settlements per month in the 12 months to January 2009.

Schedule 1 redemptions were liberalised with the October 1999 amendments andgrew rapidly to 136 in June 2000. Redemptions averaged 109 per month in 2000/01increasing to 140 in 2001/02. The average then dropped to around 130 a month overyears 2002/03 to 2004/05. In 2005/06, the beginning of an increasing trend isobserved, with 157 redemptions a month in the 7 months to January 2009.

A breakdown of these numbers by accident year was not available, but from aseparation of payments for the half year to 31 December 2008 we find that:

94% of Schedule 1 redemption payments and

91% of Schedule 2 settlement payments

relate to the 2003 to 2008 accident years.


1/05/2009 5:54 PM


option experience

135

The number of Schedule 1 redemptions and Schedule 2 settlements appearsreasonable compared to the expected substitution levels, if one allows for the fact thatsome of these claims, previously not allowed under the old Act, are genuine, ie notsubstitution for restricted common law access claims.

H7 Summary

Based on the above analysis of the election option experience up to31 January 2009 (99 months after the October 1999 amendments) we see that :

at this stage the number of election applications slightly reduced with the2007/08 premium rating assumptions

the average common law claim size has slightly increased

the overall of impact of common law was close to being neutral

However, there are several uncertainties underlying the analysis and the number ofelection applications in future :

only 64% to 70% of new applications have been determined (for the 2002 to2006 accident years)

the lag on lodging election applications continues to extend

the number of lodgements shows an increasing trend which is flatter afterremoving retracted lodgements

there is no specified time limit on access to common law for disability levels of30% or more under the October 1999 amendments and the current reportingpattern indicates development is still strong for the 2002 to 2004 accidentyears. Claimants with impairment levels of at least 25% under the 2004 ReformAct need to elect within 12 months unless an extension is granted.

average claim size is somewhat uncertain due to lack of development

the impact of stage 2 of the 2004 Reform Act. While lodgement activityappears to have an increasing trend, there is a uncertainty around futureretraction rates. There is also uncertainty on the future average claim size asthere are currently limited agreements recorded for claims incurred postNovember 2005.

there is a significant increase in common law large claims over $1M (23% bynumber and 23% by estimated cost ie 18 more claims and $29.3M more cost)

behavioural change by system participants does not appear to be a significantfactor


1/05/2009 5:54 PM


option experience

136

psychological overlay is still present and developing as an element whendetermining disability level (pre-2004 Reform Act only).

See Attachment L for the detailed analysis of common law frequency and averageclaim size. These analyses support the adopted common law parameters.


1/05/2009 5:54 PM

Attachment I Analysis of large claim

data

137

I Analysis of large claim data

The following distribution tables were compiled from the data supplied as at31 January 2009. These table are only for RPR returning entities, with self insurers(except ICWA – RiskCover) excluded:

I1 Claims over $500,000

WA workers' compensation claims over $500,000 as at 31/01/2009

Accident Number Number Cumulative Estimated Total Averageyear reported active paid outstanding cost cost

earlier 173 8 118,666,723 3,439,762 122,106,485 705,8181998 49 4 33,386,052 2,082,382 35,468,434 723,8461999 36 5 27,575,064 1,966,477 29,541,541 820,5982000 46 4 36,077,851 1,356,554 37,434,404 813,7912001 52 6 45,822,549 2,122,449 47,944,998 922,0192002 37 10 21,543,347 2,824,869 24,368,216 658,6002003 46 10 29,422,218 3,708,780 33,130,998 720,2392004 61 23 35,072,039 13,943,210 49,015,249 803,5292005 49 18 37,526,519 5,884,440 43,410,958 885,9382006 36 20 17,621,499 10,133,458 27,754,956 770,9712007 29 28 6,866,248 18,884,779 25,751,027 887,9662008 30 30 3,514,450 27,525,470 31,039,920 1,034,6642009 7 7 509,727 4,608,090 5,117,817 731,117

Total 651 173 413,604,285 98,480,719 512,085,004 786,613

I2 Claims over $0.5M but not over $1.0M

WA workers' compensation claims over $0.5M but not over $1.0M as at 31/01/2009


earlier 154 6 93,384,413 2,269,978 95,654,390 621,1321998 41 3 24,647,821 1,056,445 25,704,266 626,9331999 29 4 18,546,573 903,607 19,450,179 670,6962000 43 4 26,981,647 1,356,554 28,338,201 659,0282001 40 4 23,591,089 910,168 24,501,257 612,5312002 36 10 19,842,551 2,824,869 22,667,421 629,6512003 41 10 23,004,677 3,708,780 26,713,457 651,5482004 50 17 25,531,275 7,737,631 33,268,906 665,3782005 41 16 20,038,900 5,728,283 25,767,183 628,4682006 31 16 15,462,942 5,612,774 21,075,716 679,8622007 24 23 5,472,194 10,446,127 15,918,321 663,2632008 19 19 1,799,337 11,039,098 12,838,435 675,7072009 6 6 391,646 3,438,455 3,830,102 638,350

Total 555 138 298,695,067 57,032,768 355,727,835 640,951


1/05/2009 5:54 PM

Attachment I Analysis of large claim

data

138

I3 Claims over $1.0M but not over $2.0M

WA workers' compensation claims over $1.0M but not over $2.0M as at 31/01/2009


earlier 16 2 17,841,993 1,169,784 19,011,778 1,188,2361998 8 1 8,738,231 1,025,938 9,764,168 1,220,5211999 5 1 4,644,324 1,062,870 5,707,194 1,141,4392000 2 0 2,292,631 - 2,292,631 1,146,3152001 9 2 10,576,351 1,212,281 11,788,632 1,309,8482002 1 0 1,700,796 - 1,700,796 1,700,7962003 5 0 6,417,541 - 6,417,541 1,283,5082004 9 5 7,014,674 4,245,229 11,259,902 1,251,1002005 6 1 8,861,216 50,648 8,911,864 1,485,3112006 5 4 2,158,557 4,520,683 6,679,240 1,335,8482007 4 4 943,824 3,892,951 4,836,775 1,209,1942008 9 9 1,429,419 9,347,573 10,776,992 1,197,4442009 1 1 118,080 1,169,635 1,287,715 1,287,715

Total 80 30 72,737,635 27,697,593 100,435,227 1,255,440

I4 Claims over $2.0M

WA workers' compensation claims over $2.0M as at 31/01/2009


earlier 3 0 7,440,317 - 7,440,317 2,480,1061998 0 0 - - - -1999 2 0 4,384,167 - 4,384,167 2,192,0832000 1 0 6,803,573 - 6,803,573 6,803,5732001 3 0 11,655,110 - 11,655,110 3,885,0372002 0 0 - - - -2003 0 0 - - - -2004 2 1 2,526,090 1,960,350 4,486,440 2,243,2202005 2 1 8,626,403 105,509 8,731,912 4,365,9562006 0 0 - - - -2007 1 1 450,230 4,545,701 4,995,931 4,995,9312008 2 2 285,695 7,138,798 7,424,493 3,712,2472009 0 0 - - - -

Total 16 5 42,171,584 13,750,359 55,921,942 3,495,121


1/05/2009 5:54 PM

Attachment J Claims experience

139

J Claims experience

J1 Claims experience during 2007/08

J1.1 Aggregate trends

Total actual claim payments increased by 9.1% over 2007/08 from $442.3M to$482.5M for premium rates returning entities. Common law claim paymentsincreased by 11.8% from $63.8M to $71.3M.

Last year total claim payments increased by 7.3% and common law increased by14.9%.

Returning insurers case estimates outstanding increased by $7.3M (1.2%) from$615M to $622M over the year, following from a 4.2% increase in the previous year.

New claims reported increased by 520 (1.4%) from 37,594 to 38,114 at 30 June 2008compared to a 0.4% decrease last year.

The number of new claims reported followed a decreasing trend from 1993 to 2003,before it stabilised with small increases of 1.3% and 1.8% in 2004 and 2005 reportingyears respectively. There was a 4% reduction in 2006 followed by a marginaldecrease in 2007 and also in 2008.

Active claim numbers increased by 4.4% from 20,528 to 21,428 at 30 June 2008.Active claims increased by 0.1% last year.

The claim statistics indicate a deterioration in claims experience in 2007/08 comparedto last year with:

increases in claim payments including an increase in common law payments

small increase in insurers’ case estimates though to a lesser extent than theincrease in active claims

small increase in the number of claims reported and

increase in the number of active claims.


1/05/2009 5:54 PM


140

J1.2 Claims incurred in 2007/08

Based on the 34,370 claims reported to 30 June 2008 for the 2007/08 accident year,the projected number of incurred claims is 38,014 which is 1% higher than the 37,664projected incurred in 2006/07.

The expected number of open claims for the 2007/08 accident year at 30 June 2008 is34,370 x (1-0.63955) = 12,389 compared to actual of 13,054 ie actual is 5% higher.

The 30/06/2007 projection basis expected 3,001 x (1.0475 ^0.5 x 1.029) = $3,161 tobe paid on each of the 2007/08 accident year claims in the year of claim. The actualamount paid per claim was $3,470 ie 9.8% more, in real values.

The average case estimate per active claim in real values at the end of developmentyear 0 decreased by 7% from $19,703 at 30 June 2007 to $18,306 at 30 June 2008.

The 2007/08 accident year shows adverse claims experience relative to 2006/07 withabove expected claim reports, active claims and claim payments partially offset bylower average case estimates.

J1.3 Claims incurred in prior years (up to 30/06/2007)

The main aspects of claim experience compare to the 30 June 2008 projections in our30/04/2008 report to the WorkCover WA Board as follows:

(a) more (3%) late-reported claims than projected (see Attachment G2.1)

(b) slower (3%) claims finalisation than expected (see Attachment G2.2)

(c) lower (9%) than projected claim payments (see Attachment G2.3)

(d) lower than expected increases in case estimate (see Attachment G2.4).

On balance, the above indicators are favourable compared to expected, with claimpayments and case estimate development better than expected while claim numbersand claim finalisation worse than expected.

Claim payments are close to or better than expected for all accident years except 2001and earlier where actual was 9% to 10% higher than expected. The claim numbersreported are above expected for all accident years except 2004 and 2005. Claimclosure experience is faster than expected for all accident years except 2006 and 2007.Case estimate development is higher than expected for all accident years, except2003, 2004 and 2000 and earlier.


1/05/2009 5:54 PM


141

J1.4 The 2007/08 experience

The 2007/08 experience on balance indicates that :

claim reports are higher than expected

claim payments were low compared to expected in real terms

claim closure was slightly slower than expected

lower case estimates development than expected

for the 2007/08 accident year claim reports, active claims and claim paymentsare higher than expected, with case estimate development being lower thanexpected.

This experience implies a potential stabilisation of the declining cost trends of recentyears.

Payment patterns

The sum of the all payment types per claim incurred (PPCI) has varied as follows incurrent values

Year ended Sum of PPCI % Change30 June Real Values $

2000 13,1372001 11,277 -14.2%2002 11,583 2.7%

2003 12,014 3.7%2004 11,741 -2.3%2005 12,431 5.9%2006 12,712 2.3%2007 12,901 1.5%2008 13,106 1.6%

In aggregate the amount paid for claims incurred increased from 1999 to 2000 in realterms and decreased significantly in 2001. There were steady increases in 2002 &2003 followed by a 2.3% decrease in 2004. 2005 had a significant increase of 5.9%followed by steady though declining percentage increases in 2006 to 2008.

The proportions paid by development year remained stable over the two years to2000, with a noticeable decrease in development year 0. However in 2001 there wasan increase in development years 0 and 1 which probably represents an increase instatutory payments while common law decelerated as a result of the October 1999amendments. This trend increased further in 2002 up from 54% to 57% of allpayments being due to development year 0 and 1 and 2003 stable at 57%, 2004slightly higher at 60%, where it has generally been since. This is consistent with theearly impact of the 2004 Reform Act.


1/05/2009 5:54 PM


142

The sum of common law payments per claim incurred (PPCI) has varied as follows incurrent values:

Sum of CommonYear ended Law PPCI % Common Law30 June Real Values $ % Change of All Payments

2003 1,535 12.8%2004 1,119 -27.1% 9.5%2005 1,520 35.9% 12.2%2006 1,555 2.2% 12.2%2007 1,738 11.8% 13.5%2008 1,828 5.2% 14.0%

Common law payments by accident year have been collected for the past nine years.The average has been volatile for the past 7 years. A significant increase in 2005 hasbeen followed by a small increase in 2006, another significant increase (12%) in 2007and a moderate increase in 2008 (5%).

Common law as a proportion of total payments reduced from 12.8% in 2003 toaround 9.5% in 2004. It remained stable at around 12% in 2005 and 2006 beforeincreasing over 2007 and 2008.

It is noted that the post – October 1999 amendments common law paymentexperience is maturing and has increased in the half-year to 31 December 2008 (seenext section for more detail).

The proportions paid over development year 0 to 3 on post 30 June 1993 common lawclaims are as follows:

Proportion paid per claim incurred in development yearYear ended30 June 0 1 2 3 Total

2003 1% 18% 31% 51% 100.0%2004 1% 22% 28% 49% 100.0%2005 0% 21% 46% 33% 100.0%2006 0% 24% 43% 33% 100.0%2007 0% 18% 39% 43% 100.0%2008 2% 12% 33% 53% 100.0%

Development year 1 has a gradual increase from 18% in 2003 to 24% in 2006 beforereturning to 2003 levels in 2007 and falling further to 12% in 2008. In 2005 and2006, the proportion paid in development year 2 increased significantly to 46% and43% respectively before reducing to 33% in 2008. For development year 3, theproportions paid dropped from around 50% to 33% in 2005 and 2006 offset by a risein 2007 and 2008. This suggests a slowing down of payments.

The payment pattern trends since the October 1999 amendments are consistent with adecreasing level of superimposed inflation, largely due to stabilising of common lawexperience. There is some evidence that reducing payment trends are stabilising andhence the observed improvement trends may not be ultimately realised. Lack ofmature common law payment experience post-Act change and processing lagstogether with the increase in the number and size of large claims over $1M hasresulted in significant common law payments in the last three years and there ispotential for higher ultimate costs on large/ common law claims to persist for sometime.


1/05/2009 5:54 PM


143

The PPCI common law and legal chart from section 4.2 provides this perspective:

Common law and legals PPCIs

-

200

400

600

800

1,000

1,200

1,400

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

$


J2 Claims experience in the six months to 31/12/2008

J2.1 Claim reports

Claim reports for the six months are 1% above expected from models derived onexperience to 30 June 2008. 2008 and 2009 are 1% above expected, while all otheryears are significantly above expected, except for 2004.

Accident Expected Proportionyear for to Actual/

2008/09 31/12/2008 Expected Actual Expected %(a) (b) (c) (d) (e)

2009 34,370 45.8% 15,740 15,883 101%2008 3,323 93.8% 3,116 3,138 101%2007 93 65.6% 61 73 119%2006 36 57.1% 21 25 121%2005 28 42.5% 12 14 119%

2004 21 39.5% 8 7 83%2003 & earlier 189 48.8% 92 134 146%

Total 38,060 19,050 19,274 101%

Notes : (a) = from the adopted 30/06/2008 actuarial projection patterns, assuming 2009 equals 2008

(b) = from examination of the 2007/08 and 2006/07 quarterly Form WC20

(c) = (a) x (b)

(d) = from Form WC20 to 31/12/2008

(e) = (d) / (c) %

Six months to 31/12/2008


1/05/2009 5:54 PM


144

J2.2 Claims finalised

Claims finalised are 5% below expected in aggregate, with all years below expectedexcept 2009 and 2003 and earlier.


2008/09 31/12/2008 Expected Actual Expected %(a) (b) (c) (d) (e)

2009 21,766 31.1% 6,774 6,830 101%2008 12,047 77.5% 9,339 8,845 95%2007 1,976 67.0% 1,324 983 74%2006 787 74.0% 583 477 82%2005 387 79.8% 308 266 86%2004 207 79.8% 165 138 83%2003 & earlier 674 75.3% 508 535 105%

Total 37,845 19,001 18,074 95%

Notes : (a) = from the adopted 30/06/2008 actuarial projection patterns


(c) = (a) x (b)

(d) = from Form WC20 to 31/12/2008

(e) = (d) / (c) %


J2.3 Claim payments

Accident Expected Proportion

year for to Actual/

2008/09 31/12/2008 Expected Actual Expected %

$M (a) (b) $M (c) $M (d) (e)

2009 132.040 25.5% 33.672 40.253 120%2008 187.075 58.2% 108.918 107.128 98%2007 96.773 56.3% 54.444 54.941 101%2006 49.263 57.6% 28.378 28.813 102%2005 28.901 59.8% 17.277 20.917 121%2004 20.684 65.4% 13.530 7.170 53%2003 & earlier 31.147 59.6% 18.568 16.609 89%

Total 545.883 274.786 275.831 100%

Notes : (a) = from the adopted 30/06/2008 actuarial projection including Act change allowance

and using PPCI for 2007 AYR


(c) = (a) x (b)

(d) = from Form WC20 to 31/12/2008

(e) = (d) / (c) %


Overall actual claim payments are on par with expected for the December 2008 halfyear being $276M compared to $275M expected. The 2008 accident year has actualpayments 20% above expected. The other years are generally close to expected at thisstage except 2004 and 2003 and earlier which are significantly below expected.


1/05/2009 5:54 PM


145

The table below compares claim payments by type of payment in real terms:

Payment 31/12/2008 31/12/2007 % Real

type $M (a) $M (b) change (c)

Weekly benefits 97.347 79.863 17.2%Redemptions 31.899 29.881 2.6%Schedule 2 9.291 8.339 7.1%Fatal 1.764 1.329 27.7%Medical Pracs/Specialists 28.664 25.108 9.8%Hospital Expenses 14.979 12.716 13.3%All Other Treatment 14.944 11.957 20.2%Vocational Rehab 8.987 7.241 19.3%Miscellaneous 13.175 10.351 22.4%

Legal Expenses 13.306 10.088 26.8%

Common Law 41.714 39.508 1.5%

TOTAL 276.070 236.380 12.3%

Notes : (a) = from 2008/09 Form WC101 for returning entities

(b) = from 2007/08 Form WC101 for returning entities including

any late revisions submitted

(c) = [(a) / {(b) x 1.04} -1] % in current values

Six months ended

This shows that, after adjusting for 4.5% wage inflation, claim payments for the sixmonths are above last year. The key drivers are:

weekly benefits are up 17%,

hospital expenses up by 13%,

miscellaneous up by 22% and

legal expenses up by 27%

The above increases show continued cost pressure from weekly benefits. There hasbeen an easing of cost from redemptions payments since previous years.

It is interesting that the rise in legal expenses is not matched by an increase incommon law.


1/05/2009 5:54 PM


146

J2.4 Case estimate development

Case estimates development in the six months to 31 December 2008 is 85% aboveexpected compared to 10% below expected in the half year to 31 December 2007.


2008/09 31/12/2008 Expected Actual Expected %

$M (a) (b) $M (c) $M (d) (e)

2009 44.2%2008 71.482 76.1% 54.413 88.963 163%2007 13.735 71.3% 9.797 28.160 287%2006 4.769 98.5% 4.698 6.556 140%2005 0.170 98.8% 0.168 4.803 2857%2004 (0.372) 98.8% (0.367) 2.346 -639%2003 & earlier 4.494 98.8% 4.439 4.545 102%

Total 94.278 73.148 135.374 185%

Notes : (a) = (PCE projected case estimates o/s at end + payments) - case est at start

indexed as appropriate

(b) from examination of the 2007/08 quarterly Form WC20, adopted for 1999 and

1998 & earlier


(c) = (a) x (b)

(d) = from Form WC20 to 31/12/2008


The significant increase is due to strong positive case estimate development across allaccident years.

J2.5 Summary of experience for the six months to 31 December 2008

In summary the six months to 31 December 2008 has seen:

claim reports above expected (1%)

claim closure below expected in aggregate (5%)

claim payments on par with expected but 20% higher for the current accidentyear

case estimate development is significantly above expectations for most accidentyears.

The combined impact of this on claim costs is unfavourable compared to our expectedresults.


1/05/2009 5:54 PM


147

J3 Analysis of large claim data

The large claim data file supplied from WorkCover WA’s database is used to monitoremerging trends in large claims. Any claim with total estimated cost over $0.5M wasincluded in the data file.

Please note the values quoted in this section only include data from RPR returningentities.

The detailed distribution tables in Attachment I show:

the total number of large claims increased from 577 last year to 651 this year,total cost estimates increased from $445.6M to $512.1M i.e 15%

average costs per claim increase from 1999 to 2001. There is a sharp decreasein 2002, increasing to be over $1.0M by 2008, excluding a decrease in 2006.There has been a significant decrease to $0.7M in 2009

the distribution of claims between $0.5M to $1.0M has increased significantlysince last year with claims numbers in the $1.0M to $2.0M increasing to asmaller extent.

the distribution of claims over $2.0M is sparse but increased from 14 to 16 withtotal cost significantly increasing (21%) from $46.1M last year to $55.9M andthe average cost increasing to $3.5M (6%) from $3.3M previously.

the eight largest claims are over $3M, with two being less then $4M and oneestimated at over $6.5M.

The distributions analysed suggest some adverse trends emerging in:

the number of large claims increased by 13%, which is similar to the increasesover the past two years

the total cost estimate of these claims is up by 15% having increased 12% lastyear

the growth in the number of claims over $2.0M was small but with significantincreases in total cost and moderate increases in average cost per claim forthese claims

Subsequent analyses will monitor these trends.


1/05/2009 5:54 PM


148

J4 Noise – induced hearing loss claims

J4.1 First election claims

The noise-induced hearing loss claim (NIHL) data supplied by WorkCover WAshows increasing trends in the confirmed assessment of first election claims over the11 years to 2007, however it has reduced significantly in 2008. The number and costof claims with a formalised Memorandum of Agreement (MOA) have followed asimilar trend.

Due to the amount of effort required to remove self-insurer claims from the NIHLdata, the below summarises the NIHL claims experience for both RPR returningentities and self-insurers. We have estimated the impact of self-insurers assumingthat the same proportions apply for NIHL claims as for the entire WA workerscompensation scheme. Self-insurers account for approximately 10% of all claimsreported and 8% of total costs within the whole scheme. This also applies to sectionJ4.2.

The three year average of confirmed assessments increased from:

27 claims with $0.342M at 30 June 1998, $12,844 average claim size, to

72 claims worth $1.306M at 30 June 2006, a $18,222 average claim size, to

75 claims worth $1.390M at 30 June 2007, a $18,449 average claim size and

71 claims worth $1.360M at 30 June 2008, a $19,150 average claim size.

The three year average of formal MOAs increased from:

6 claims worth $0.063M at 30 June 1998, a $11,077 average claim size to

67 claims worth $1.152M at 30 June 2006 a $17,287 average claim size, to

73 claims worth $1.351M at 30 June 2007 a $18,596 average claim size and

70 claims worth $1.304M at 30 June 2008 a $18,723 average claim size.

Excluding self-insurance claims, we estimate that the three year confirmedassessments would be 64 claims worth $1.250M to 30 June 2008 while the three yearaverage of the form MOAs would be 63 claims worth $1.200M.

The increasing trend to 2007 and decrease in 2008 of these claims is shown below:


1/05/2009 5:54 PM


149

NIHL 1st election claims : cost of claims

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

$

confirmed assessment MOA

NIHL 1st election claims : number of claims

-

10

20

30

40

50

60

70

80

90

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009


On the data supplied, the current levels of first election NIHL claims appear to becosting the system around $1.3M per year based on confirmed assessments, which isaround 0.22% of the $580M projected incurred cost of claims for 2007/08 accidentyear in section 3.1.1.

J4.2 Subsequent election claims

The noise-induced hearing loss claim (NIHL) data supplied by WorkCover WAshows increasing trends in the confirmed assessment of subsequent election claimsover the past 7 years to 2007, however it has reduced significantly in 2008. Thenumber and cost of claims with a formalised Memorandum of Agreement (MOA)have followed a similar trend.

Note that as all elections after the first election are subject to the same requirementswe have included both second and third election claims in this analysis. At present,there is only one third election claim.

The three year average of confirmed assessments increased from:

5 claims worth $71k at 30 June 2006, a $13,224 average claim size to

7 claims worth $86k at 30 June 2007, a $12,262 average claim size and

6 claims worth $77k at 30 June 2008, a $12,904 average claim size.

The three year average of formal MOAs increased from:

4 claims worth $51k at 30 June 2006 a $12,774 average claim size to

5 claims worth $78k at 30 June 2007 a $14,546 average claim size and

4 claims worth $60k at 30 June 2008 a $13,933 average claim size.

Excluding self-insurance claims, we approximate that the three year confirmedassessments would be 5 claims worth $71k to 30 June 2008 while the three yearaverage of the form MOAs would be 4 claims worth $55k.

The increasing trend of these claims is shown below:


1/05/2009 5:54 PM


150

NIHL 2nd election claims : cost of claims

-

20,000

40,000

60,000

80,000

100,000

120,000

2001 2002 2003 2004 2005 2006 2007

$


NIHL 2nd election claims : number of claims

-

1

2

3

4

5

6

7

8

9

2001 2002 2003 2004 2005 2006 2007


On the data supplied, the current levels of subsequent election NIHL claims appear tobe costing the system around $80k per year based on confirmed assessments, which isaround 0.01% of the $580M projected incurred cost of claims for 2007/08 in section3.1.1.


1/05/2009 5:54 PM

Attachment K Claim statistics

151

K Claim statistics

K1 Numbers of claims incurred

The number of claims incurred are illustrated below.

Number of claims incurred

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

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

Accident Year

In 1997 the number of claims incurred began at around 60,000.

There was a declining trend from 1998 to 2002 when estimated claims incurredreduced first to around 58,800 in 1998 and then significantly over the next severalyears to just under 38,000 in 2003. Claim numbers incurred reduced by 37% over thesix year period to 2003.

In 2004, incurred claim numbers increased slightly by 1% to 38,418 and 2% in 2005to 39,272. These two years are the first time since 1988/89 that incurred claims haveincreased. In 2006, the claims incurred reduced by 5% to 37,463, then increased by1% in 2007 to 37,664.

Claims incurred for 2008 are expected to be 38,014, 1% above 2007.

In the six months to 31 December 2008 the number of claims reported for claimsincurred during 2008/09 is 2% higher than the comparable 2007/08 accident yearclaim reports last year and is also higher than expected. This indicates that thenumber of claims incurred seems more than likely to remain at a similar level if notincrease again in 2008/09.


1/05/2009 5:54 PM


152

K2 Finalisation of claims

Probabilities of claim finalisation, defined as:

Number of claims finalised in year(Number of outstanding at beginning of the year plus

number reported during the year)

have been as follows during the last twelve years:

Proportion of claims finalised in year

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

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

Payment Year

It can be seen that the proportion of claims finalised has been relatively stable overthe past 12 years, remaining between 62% and 68%. After the high of 68% in 2002,there was a reduction in the proportion of claims finalised to 65% and 63% in 2003and 2004 respectively. It has remained around this level since.


1/05/2009 5:54 PM


153

K3 Payment per claim incurred (PPCI)

By payment year

Real payments per claim incurred : development years 1 - 6

-

1.000

2.000

3.000

4.000

5.000

6.000

7.000

8.000

9.000

10.000

11.000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Payment Year

PP

CI

($000's

)

After a period of adverse common law claims experience, the tightening of access tocommon law initially reduced claims costs as indicated by the low PPCI in 1995/96(see previous reports). However, the effect of the changes then eroded as illustratedby the strong upward trend from 1998 to 2000.

The aggregate increase over the four year period between 1995/96 and 1999/2000,was 57%.

The one year delayed effect of the October 1999 amendments on payments is clearlyseen in the 19% fall in 2000/01. There has been a generally increasing trend sincethen with 2008 on par with 2007.


1/05/2009 5:54 PM


154

By accident year

The chart below shows cumulative PPCI by accident year. This is calculated as:

claim payments made to date (in 30/06/2008 values)number of claims incurred to date

As the values in the chart are all in current values, any differences are the result of achange in the real cost of each claim. This is also referred to as superimposedinflation. The chart is based entirely on actual experience. There are no futureprojections included in this graph.

PPCI Average Claim Size by Accident year

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

1 2 3 4 5 6 7 8 9 10 11

$

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

For the 1996 accident year and onwards, the recent payment experience shows acontinued upward trend in the chart, but at a slightly slower rate. While the paymentsin 1999 and 2000 showed reductions, the upward trend returned in 2001. A realincrease in PPCI is clear for accident years 2001 to 2004 for PPCI’s up todevelopment year 5, and suggests the presence of superimposed inflation.

Since 2004, more recent accident years have followed at a similar if slightly higherlevel.


1/05/2009 5:54 PM


155

K4 Average claim sizes – including allowance for the 2004 Reform Act

On the basis of the actuarial estimates adopted in the report, estimated average claimsizes including 2004 Reform Act allowance are as follows:

Average claim size in 30/06/2008 values

0.000

2.000

4.000

6.000

8.000

10.000

12.000

14.000

16.000

2001 2002 2003 2004 2005 2006 2007 2008

Accident Year

Avera

ge

cla

imsiz

e($

'000)

Cum payts o/s ests

The higher average claim sizes in recent years is a reflection of the trends shown insection K3. Average claim sizes have grown steadily since 2001 from around$11,700 to $15,300 by 2008. This is an overall increase of 31% or 3.9% pa over theseven year period.

The uncertainty of the actuarial estimates, and any future development which occurs,means that the ultimate level may be higher than predicted at this early stage in therecent accident years' development. This is especially true for the 2007/08 accidentyear where a high proportion (77%) of the average claim size consists of the uncertainfuture estimate.

The real average claim size trends show the combined impact of:

the October 1999 amendments

the 2004 Reform Act changes and

the reduction in the number of claims incurred up to 2003 and in 2006.


1/05/2009 5:54 PM


156

K5 Loss ratios including allowance for 2004 Reform Act

"Loss ratios" may be calculated for each accident year using the following formula:

(Past claim payments to 30/06/2008 + estimated outstanding liability at 30/06/2008)earned premium

Note that LGIS - WorkCare has been excluded from the data as per the formerPremium Rates Committee instruction from the 2002/03 year.

The past claim payments, estimated outstanding liability and earned premium are allin 30/06/2008 values ie current values. Also the estimated outstanding liabilityincludes allowance for future superimposed inflation.

These ratios are not a proper measure of profitability as they do not allow forinvestment returns or expenses. Nevertheless, as a crude measure, they do provide anindication of trends in the experience.

The loss ratios are calculated in the following table and illustrated in the chart. Thechart shows separately the portion of the loss ratios relating to amount already paidand amount still outstanding:

Accident

year ended

30 June

Estimated

loss ratio

In historic In historic

values values

$M $M $M $M $M

2001 621.6144 974.748 338.487 489.1477 13.632 52%

2002 585.1639 882.648 309.111 429.8101 15.444 50%

2003 587.3281 848.018 322.264 426.6140 35.234 54%

2004 575.8648 787.996 353.606 444.4017 66.350 65%

2005 617.0833 796.882 355.370 424.8864 98.489 66%

2006 701.6193 854.300 316.335 360.2350 132.332 58%

2007 734.8883 830.887 271.238 293.1998 241.051 64%

2008 764.9455 800.561 126.055 131.9238 450.770 73%

In

30/06/2008

values

In

30/06/2008

values

Estimated net

outstanding

claims liability in

30/06/2008

values

Gross earned premiums Cumulative payments


1/05/2009 5:54 PM


157

Loss ratios

0%

20%

40%

60%

80%

100%

120%

2001 2002 2003 2004 2005 2006 2007 2008

Accident yearPayments made Outstanding claims Target

Note: (a) The target loss ratio was developed in Section 3.1.2 and including brokerage it is 72.0% in

inflated and discounted values. This is equivalent to 73.1% in current values or 77.9%

inflated.

The table and chart show:

the loss ratios have generally decreased compared to last year with a significantreduction occurring in the 2006 accident year

the loss ratio is well below the target loss ratio of 73% for 2001 to 2007. 2008is currently just below the target loss ratio

in 2001 to 2004 there were decreases in recommended and actual premiumrates, with loss ratios starting to increase in 2003, with 2004 above 60% for thesecond time since 1999 (see prior reports)

the loss ratio has been increasing to 66% in 2005, falling to 58% in 2006 beforeincreasing over the next two years to 73% in 2008. The low for 2006 may be aresult of the high wage growth in Western Australia over that periodoutstripping the respective benefit growth over that time.


1/05/2009 5:54 PM


158

K6 Analysis of settlement costs

The graphs below investigate the trends of :

real payments per claim handled per development year, and average real case estimates per active claim per development year.

The trends from development year two and onwards can be regarded as a goodmeasure for common law activity since in this range claim costs are dominated bycommon law claims.

Yearly real payments per claim handled by accident year

-

2,500

5,000

7,500

10,000

12,500

15,000

17,500

20,000

22,500

25,000

27,500

30,000

32,500

35,000

37,500

40,000

DY0 DY1 DY2 DY3 DY4 DY5 DY6 DY7 DY8

Development year

$

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

The graph shows that the average payments per claim handled (PPCH) atdevelopment year 8 increases by accident year but is significantly higher for 1998because of large claim payments starting in development year 7. The average PPCHhas risen in 2000 but there is no sign of deterioration in experience with PPCHgenerally remaining at around the $22,000 to $28,000 level up to 2003.

There is an early sign of higher settlement in later development years upon examiningthe higher PPCH for 2001 in development year 6 compared to 2000 and prior years.The common law payment pattern could be extending due to the slower electionoption processing procedures. The above chart and the PPCI common law chart in4.2 of the report, show some signs of an extension. The graph in section 4.2 showsslight increases in the common law PPCIs for the later development years. It is tooearly to observe the impact of the 2004 Reform Act.


1/05/2009 5:54 PM


159

Average real case estimate per active claim

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

55,000

60,000

65,000

70,000

75,000

80,000

85,000

90,000

DY0 DY1 DY2 DY3 DY4 DY5 DY6 DY7 DY8

Development year

$

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

The average case estimates were high for 1998 in development year 6 before fallingback to the same level as other accident years. 2001 was an exception due to the highnumber of large claims reported (52 compared to an average of 40 per year between1998 and 2008). 2002 was distinctively lower than other years. However, thisfavourable experience did not sustain for 2003 and 2004, noting that the average caseestimates were relatively higher in development years 2 and 3.

Consistent with other analyses, the development year 0 average real case estimatesshow an increasing trend over 1999 to 2002 which has stabilised in the more recentyears. Statutory claim costs are increasing, while longer duration common law costsare reducing.

The conclusion to be drawn from these graphs is that the October 1999 amendmentsappear to be resulting in a reduction in case estimates while payments, after slowingdramatically in 2001 appear to be increasing. Although it is too early to observe thefull impact of the 2004 Reform Act, case estimates for 2005 to 2008 appear to be inthe mid to lower range of accident years for development years shown.


1/05/2009 5:54 PM


160

In arriving at this conclusion we have taken into account the claim trends in thissection and in attachment J above, in particular :

stable to slightly increasing incurred claim numbers

stable to faster claim settlement rates up to 2002, with a slow down in 2003 and2004, increasing for 2005 and stabilising for 2006 onwards

increasing real payments per claim incurred over 2001 to 2003, followed by areduction in 2004, then further increases from 2005 to 2007, with 2008 on parwith 2007

increasing real average claim sizes

adverse experience in the six months to 31/12/2008 with higher claims reportedand claim payments, slightly slower settlements and higher than expected caseestimate development

the emerging impact of the 2004 Reform Act changes.


1/05/2009 5:54 PM

Attachment L Analysis of the Number

and Average Size of Common Law

Claims

161

L Analysis of the Number and Average Size of Common

Law Claims

L.1 Analysis of the number of common law claims using data from several sources

Sources of data : (a) the election option data as at 31 January 2009 and earlier years as supplied by WorkCover WA

(b) Form WC20, WC20A and WC20B as supplied quarterly by RPR returning entities

1. Estimated common law frequency from projected gross ultimate election applications net of retractions

Accident year Average elections Retraction Est common Est total % change Common lawended 30 June per month (a) Rate (b) claims pa (c) incurred (d) (e) frequency (f)

2000 31.92 0.0% 383.00 49,437 0.77%2001 27.69 0.0% 332.27 42,870 -13.3% 0.78%2002 27.46 0.0% 329.52 38,055 -11.2% 0.87%2003 27.19 0.0% 326.24 37,949 -0.3% 0.86%2004 30.19 0.0% 362.28 38,418 1.2% 0.94%2005 30.80 0.7% 367.20 39,272 2.2% 0.94%2006 19.21 1.8% 226.28 37,463 -4.6% 0.60%2007 22.61 5.2% 257.16 37,664 0.5% 0.68%2008 47.30 19.4% 457.63 38,014 0.9% 1.20%

Average 29.37 337.95 39,905 -3.1% 0.85%Average excl 2008 27.13 322.99 40,141 -3.6% 0.80%3 year average 29.71 313.69 37,714 -1.0% 0.83%

Projected for 2009/10 (g) 368.83 38,361 0.96%

Notes : (a) = from our projected ultimate number of election applications lodged in H4 gross of retractions

(b) = product of {1 - [1 - (number of election applications to 30 June for each prior accident year in Jan 2009 data / number in June 2008 data)]}

= the historic number of elections applications which are removed due to rejections and withrawals

(c) = (a) x {1 - (b)} x 12

(d) = projected total incurred number as per Attachment G1.15

(e) = {(d) / (d) in previous year - 1} %

(f) = (c) / (d) %

(g) = { 7 year average of (f) excluding 2006 & 2007} x {(d) for 2008 x (1 + % growth in claim numbers in half year to 31 Dec 2008 from Att JB1)}

= the adopted common law claim frequency x the most up to date estimate of the overall number of claims incurred

2. Estimated common law reporting patterns using only actual election options registered

2.1 Claims with disability levels >= 16% but < 30% or post 14 Nov 2005 levels of impairment >= 15% but < 25%

Accident Year Development year for accident year ended 30 June (a)ended 30 June DY0 DY1 DY2 DY3 DY4 DY5 DY6 DY7 DY8 DY9

2001 1 302002 2 39 742003 1 31 76 852004 0 26 60 85 882005 1 38 65 77 85 892006 0 31 72 78 89 88 902007 0 34 106 94 82 91 89 892008 (b) 0 10 84 106 80 68 75 77 782009 (b) 0 14 71 98 108 77 70 75 77 78

Ave reporting rate (c) 42.6000 2.5561 1.1995 1.0487 1.0088 1.0163 0.9939 1.0000 1.0000

Product of reporting rate (d) 139.5879 3.2767 1.2819 1.0687 1.0190 1.0102 0.9939 1.0000 1.0000

Estimated no of common law 77.5 97.9 91.0 104.7 110.1 77.8 69.6 75.0 77.0 78.0claims (e)

Notes : (a) = from second table in H2 of this and our earlier years RPR reports.

(b) = 2008 onwards does not include self-insurance claims whereas prior years are inclusive of self insurers

(c) = (sum of cumulative reports at year end) / (sum of cumulative reports at year start)

= chain ladder factor for claim reports using all accident years excluding change from 2007 to 2008 as these are inconsistent dueto the removal of self-insurance)

(d) = product of (c) starting with DY8 ( = DY8 ^ 2)

(e) = number of claims at 31 January 2009 x (d) for appropriate DY, adjustment to DY1 as a result of change in electionperiod as part of 2004 Reform Act


1/05/2009 5:54 PM



Claims

162

2.2 Claims with disability levels >= 30% or post 14 Nov 2005 level of impairment >= 25%

Accident Year Development year for accident year ended 30 June (a)ended 30 June DY0 DY1 DY2 DY3 DY4 DY5 DY6 DY7 DY8 DY9

2001 3 322002 6 28 802003 1 22 55 1152004 0 16 53 84 1382005 3 17 47 84 118 1692006 3 20 69 91 107 144 1982007 1 15 63 131 131 136 163 2052008 (b) 0 14 46 90 138 126 131 151 1872009 (b) 0 17 50 71 120 159 138 132 154 185

Ave reporting rate (c) 8.7097 2.7987 1.6457 1.3233 1.2136 1.1367 1.0243 1.0199 0.9893

Product of reporting rate (d) 74.8681 8.5960 3.0715 1.8663 1.4104 1.1622 1.0224 0.9982 0.9787

Estimated no of common law 154.4 146.1 153.6 132.5 169.2 184.8 141.1 131.8 150.7 183.0claims (e)

Estimated total of common 232.0 244.0 244.6 237.2 279.3 262.6 210.7 206.8 227.7 261.0law claims (f)

Est total incurred (g) 38,361 38,014 37,664 37,463 39,272 38,418 37,949 38,055 42,870 49,437

Est common law freq % (h) 0.6% 0.6% 0.6% 0.6% 0.7% 0.7% 0.6% 0.5% 0.5% 0.5%

Notes : (a) = from second table in H2 of this and our earlier years RPR reports.

(b) = 2008 onwards does not include self-insurance claims whereas prior years are inclusive of self insurers

(c) = (sum of cumulative reports at year end) / (sum of cumulative reports at year start)= chain ladder factor for claim reports using all accident years excluding change from 2007 to 2008 as these are inconsistent due

to the removal of self-insurance)

(d) = product of (c) starting with DY8 ( = DY8 ^ 2)

(e) = number of disability levels >=30% claims for accidents before 14 Nov 2005 and level of impairment >= 25% after 14 Nov 2005at 31 Jan 2009 x (d) for appropriate DY

(f) = (e) from this table + (e) from table 2.1 above

(g) = (e) from table 1 above. Being claims incurred on a 30 June year, they don't quite match butthis should not materially impact the freq % calculate in (g) below

(h) = (f) / (g)

3. Estimated common law reporting patterns using Form WC20A and Form WC20B for RPR entities

As at date Development year for accident year ended 30 June (a)DY0 DY1 DY2 DY3 DY4 DY5 DY6 DY7 DY8 DY9

Dec-03 32 131 191 183Jun-04 96 151 186 208Dec-04 20 154 187 209 225Jun-05 85 186 207 222 239Dec-05 9 170 238 229 246 251Jun-06 45 211 267 248 246 251Dec-06 15 83 257 299 262 264 267Jun-07 38 145 289 327 277 274 269Dec-07 11 90 187 307 353 286 278 275Jun-08 45 139 233 336 353 286 278 275Dec-08 20 122 200 279 359 381 310 289 280Jun-09 estimated 82 188 249 305 359 381 310 289 280

Ave reporting rate (b) 3.9448 1.6979 1.2286 1.0739 1.0587 1.0500 1.0311 1.0182 1.0091

Product of reporting rate (c) 10.5023 2.6623 1.5680 1.2762 1.1884 1.1224 1.0690 1.0368 1.0183

Estd common law claims (d) 430.0 501.6 390.7 389.7 426.6 427.7 331.4 299.6 285.1

Est common law freq (e) 1.1% 1.3% 1.0% 1.0% 1.1% 1.1% 0.9% 0.8% 0.7%

Raised by insurers : Jun 08 (f) 10 40 55 92 131 91 94 111 111Dec 08 (g) 14 59 59 69 110 133 98 93 110 110

Notes : (a) = from RPR entities consolidated Form WC20A for Dec 03 to Dec 08 and Form WC20B for Jun 06 onwards= Schedule 92 (f) claims included in WC20A and WC20B from December 2007, these can occur earlier than other common law claims= common law claims at (Dec 08) x {Jun 08 / Dec 07}

(b) = (sum of cumulative reports at year end) / (sum of cumulative reports at year start)= chain ladder factor for claim reports using as many years in average as per the claim triangle

(c) = product of (b) from DY8 ( with product DY8 = DY8 ^ 2 as above)

(d) = est number of claims at 30 June 2009 x (c) for appropriate development year= (average common law freq) x (est number incurred from table 2.2 above) for DY0 (2009)

(e) = (d) / (f) from table 2.1 above, except for DY0 (2009) = average (DY1 to DY4)

(f) = (g) = number of common law claims included in (a) which are raised by the insurer as havinga common law potential, as at the dates shown


1/05/2009 5:54 PM



Claims

163

4. Conclusions

4.1 The estimated common law frequency varies by data source and method used

4.2 The results obtained for the 2008/09 year are :

Est common law Est no. offreq % c/law claims

Projected ultimate election applications (table 1 above) 0.96% 368.83

Developed actual elections registered (tables 2 above) 0.60% 231.96

Developed Form WC20A and Form WC20B data (table 3 above) 1.21% 465.33

Adopted last year 0.99% 371.16

Notes : (a) frequencies and estimated number of common law claims taken from tables 1 to 3above except last year's results are from Attachment L4 of our 30 April 2008 RPR report

4.3 While the results on the developed actual elections are very stable over 2001 to 2007, they appear verylow compared to the other two methods and to last years adopted level.

4.4 The results on the projected ultimate elections method have a slight decrease from 2002 to 2003 with increasesin 2004 and 2005. There is a signficant decrease in 2006 and 2007 due to the change in election period from six months totwelve months. 2008 increased to a similar level to 2004 and 2005 though this may reduce if retraction higher than adopted.

4.5 The results on the developed Form WC20A and Form WC20B data do not appear unreasonable but this data is notas reliable as the election option data as it is open to interpretation by insurers, particularly values from the 'raised by insurer'column. The frequency rose dramatically in 2004 and 2005 but reduced slightly in 2006 and 2007 before increasing in 2008.2009 is currently at a similar level to 2006 and 2007.

4.6 A reasonable compromise between the results obtained appears to be the claim frequency from theprojected election option method averaged over 2002 to 2008, excluding 2006 and 2007.

Est common law Est no. offreq % (a) c/law claims (b)

Projected ultimate election applications (table 1 above) : 0.96% 368.83

Notes : (a) = average common law freq for 2002 to 2008 excluding 2006 and 2007 from table 1 above

(b) = (a) x estimated number of Statutory plus common law for 2008/09 claims

where estimated overall claims for 2009/10 are assumed to equal

the estimated overall claims for 2008/09


1/05/2009 5:54 PM



Claims

164

L.2 Analysis of the average claim size of common law claims

Sources of data : (a) a unit claim file of common law claims at 08/08/2002 of pre Oct1999 claims

(b) the election option data file used in Att H

(c) Form WC20A and Form WC20B

1. Estimated average common law claim size

Average common law claim size (a)Data source 16% to <30% 30% or more overall (b)

$ $ $Pre Oct 1999 unit claim file (c) 205,856 422,930 314,393

Election option claim file (d) 294,377

Form WC20A and Form WC20B (e) 171,861

Notes : (a) = average common law claim sizes by disability range where available,otherwise in overall total

(b) = calculated as a weighted average for item (c) and directly from the datasource for (d) and (e). The weights used are equal ie 50:50

(c) = (average claim sizes from the 2002 analysis) x (indexation of 1.035^3)x AWE inflation for 2005/06, 2006/07 and 2007/08

(d) = from Attachment H5 / (1.3 to remove Statutory claim costs)

(e) = ( cum real common law claim pymts + common law case ests)

/ number of common law claims

from the consolidated 30 June 2008 Form WC20A and Form WC20B for RPR entities

= 213,900 for the 2008 accident year158,815 for the 2007 accident year142,869 for the 2006 accident year148,884 for the 2005 accident year171,861 average for 2006 to 2008

The 2006 to 2008 average is used in spite of its undeveloped nature, though result is lowcompared to other sources

2. Adopted average common law claim size

Average common law claim sizeData source 16% to <30% 30% or more overall

$Election option claim file 294,377

The election option data average claim size is very close to the average from pre October 1999data and somewhat higher than Form WC20A. Nonetheless it is adopted.

Where required the pre October 1999 average split by disability range is used to calibratethe adopted average.


1/05/2009 5:54 PM

Attachment M Table of assumptions

165

M Table of assumptions

The table below contains a list of all assumptions used in the report and their source:

No. Page no. Value Description Source

1 3 75.3% Target loss ratio Adopted – inflated and discounted

estimated incurred cost of claims

before expenses, divided by

premium charged.

2 9 $3M Cap on large

claims

Cap was as decided upon in

2002/03 when first introduced

3 12 10% Contingency

margin, i.e. as a

percentage of risk

cost plus loadings

for expenses

See attachment E3 for further

details

4 12 0.67% Percentage of

premium credited

for interest

earnings

Theoretical allowance - Risk free

interest rate for one quarter of the

year based on 28 February 2009

Commonwealth Bond Yields

5 14 10% Discount on

Gazette rates in

2009

Estimated long term discount level

6 20 3.6% Increase in

minimum

premiums

See attachment E1 (page 87),

Perth CPI Index for derivation

7 25 10% Prudential margin

(for whole

system)

Research done by the Institute of

Actuaries on Australian Prudential

Regulatory (APRA’s) current

standards produced a 10.5% risk

margin at 75% level of sufficiency

for a $1.5bn workers’ compensation

outstanding claim provision. (Oct

2005 and Nov 2008)

8 25 75% Level of

sufficiency

See above


1/05/2009 5:54 PM


166

9 41 17% Coefficient of

variation of the

distribution of

results, used to

calculate overall

prudential margin

Benchmarked against reports by

APRA and the Institute of Actuaries

(Oct 2005 and Nov 2008)

10 60 78% Target inflated

loss ratio

Inflated value of assumption 1

above

11 85 4.00% Wage inflation

assumption

See attachment E1 for calculation

12 87 Past wage

inflation

ABS Cat 6302.0 Average Weekly

Earnings for WA as at 30 June

2008

13 90 9% Target overall

level of claims

related expenses

i.e. 9% of claim

payments?

Long term level of market claim

management fees for insurance

portfolios

14 90 5% Claims

management

expense

allowance

Commonly used benchmark for

outstanding claim liabilities.

15 92 25.2% Total

management

expense and

contingency

loadings -

excluding

brokerage.

15.2% total management expenses

+ 10% contingency margin

16 96 983,525 Estimated number

of applicable WA

wage and salary

earners

From second table in B1 - from

ABS Cat. 6248.0.55.002 2007/08,

Table 1 public sector employees

local and state. ABD Cat no. 6202.0

Labour Force Survey Australia

Table 8 (persons) for the private

sector July 2008.

17 99 $0.40 Minimum

premium rate

By investigation of various

minimum rates to achieve a low

level of cross-subsidy across rating

classes


1/05/2009 5:54 PM


167

18 99 $20 Maximum

premium rate

By examination to limit

recommended rates to a maximum

of 20% of wages

The following Board directives have also been issued:

All self insurers, with the exception of the ICWA-RiskCover, are excludedfrom the recommended premium rates (LGIS WorkCare was included in therates until 2004)

Brokerage has been excluded from the total expenses since 2002/03

Premium rates are gross of reinsurance. The contingency margin containsallowance for the insurer to hold the total amount of capital required to supportthe business without the purchase of reinsurance. If the premium rates werenet of reinsurance we would need to include the net cost of reinsurance (ie thereinsurance premium minus any recoveries expected) and reduce thecontingency margin because reinsurance reduces the level of capital requiredby insurers in the event of a catastrophic event.


1/05/2009 5:54 PM

Attachment N Glossary

168

N Glossary

The following terminology is used in this report:

AASB – Australian Accounting Standards Board

ABS - Australian Bureau of Statistics

Accident year

The financial year ending 30 June, in which the accident event leading to aclaim occurs, irrespective of when the claim is reported, paid and finalised.

APRA – Australian Prudential Regulation Authority

Burner policies

Burner policies or adjustable premium policies, are a form of risk ratedinsurance, generally issued to large employers. The effect is ultimately that anemployer pays the claims cost plus a margin for expenses and other loadingssubject to a stated minimum and maximum premium. The initial burnerpremium is known as the deposit premium and the insurer will request a top-up premium once claim costs exceed a stated percentage of the depositpremium. When the burner is finalised or closed (usually after 36 months orlonger) the final balance is either paid to the employer or insurer depending onthe developed cost of claims.

In recent years, with the good economic environment the number of burnerpolicies has increased as a percentage of the total premium pool and thedeposit premium has reduced close to the minimum premium. This affects theinitial level of discounting observed.

Central Estimate

Unbiased actuarial estimate which has 50% probability of being sufficient. It isthe median of the range of possible outcomes

Conventional policies

Conventional policies pay premiums based on declared wages.

Development year

The number of completed years since end of the accident year. Developmentyear zero refers to the financial year ending 30 June in which the accidentevent occurs. Development year is also abbreviated to DY in this report.


1/05/2009 5:54 PM

Attachment N Glossary

169

Gross premium

The gross premium is an estimate of the total cost of a policy, that is the claimscost and allowance for expenses and margins.

Gross Premium = Risk Premium + loadings for expenses, margins etc

= Risk Premium / [( 1 - expense loading % - contingencymargin %) x interest earned factor)

Inflated and discounted values

The estimates in current values are inflated to the dollar values in the estimatedfuture year of payment. These values are discounted to 30 June 2008 values toallow for future investment income that will be earned until the claim is paid.The inflation and discount rates are outlined in Attachment E1.

Risk margin

The margin added to the central estimate to increase its level of adequacy toabove 50%.

Risk premium

The risk premium is an estimate of the pure risk cost of claims and does notinclude allowance for expenses or margins.

Risk Premium = estimated incurred cost of the risk covered ie of the claimswith dates of occurrence in the risk/cover period

= number of claims x average claim size

Date post:	15-Aug-2020
Category:	Documents
Upload:	others
View:	0 times
Download:	0 times

WorkCoverWesternAustralia...4 Analysis by type of payment 29 4.1 By financial year 29 4.2 PPCI by...

Documents