Comcare pleased as punch as premiums drop

By Stephen Easton

July 5, 2017

Workplace insurer and federal Work Health and Safety Act regulator Comcare proudly reports a dramatic financial turnaround that demonstrates the strong link between its own performance and the cost of premiums to Commonwealth and ACT public sector bodies.

Costs are down due to a stricter approach to assessing claims and a focus on the importance of actively working with staff to reduce the amount of time spent on compensation through earlier interventions.

Overall, premiums for 2017-18 average out at 1.23% of payroll, which is 28% lower than last year, according a statement. For federal agencies, that means a saving of $87 million this financial year.

As we learned via the ACT budget, the Comcare scheme is now fully funded — its asset to liability ratio reached 107% for 2016-17 — three years ahead of schedule and for the first time since 2010. ACT taxpayers are expected to save about $15 million this year and as a result, their government recently decided not to follow through on its 2015 threat to leave the scheme and establish its own.

“We believe this turnaround in performance is the most significant of any large workers’ compensation scheme in Australia,” CEO Jennifer Taylor said. “Fewer claims and better return to work outcomes have seen claims liability reduce by more than $700 million over the past three years.”

According to the statement, “significant increases in time off work for claimants receiving incapacity payments were the main cause of rising costs up to 2013″ when the ratio dipped to 64%.

“Claim duration after injury has levelled off since then and is showing signs of improvement in the critical first six months after injury,” said Taylor, who said she intends to keep the funding ratio around 105-110% going forward.

The Comcare scheme is expected to run an operating surplus of about $540 million for 2016-17 due to a $450 million reduction in claims liabilities.

The scheme’s improved performance is not only the result of Comcare’s efforts, but also those of the agencies it covers. The federal agency has been encouraging public service bosses to reduce the amount of compensation paid out to their employees through various means including strong financial incentives. As such, the turnaround also means the end of the “additional margin” that was charged to agencies to help the scheme recover over the past four years.

The results of this crackdown are clear: the number of new claims received by Comcare has dropped by about 30% over the past five years. Comcare reports mental health related claims dropped by about 26% over the same period of time.

“Comcare will continue to focus on early intervention efforts to help improve recovery and return to work outcomes in the first six months of a claim,” said Taylor.

“We are also working to reduce the cost of longer-term claims by finding opportunities for rehabilitation and better liability management. This is starting to show results with the number of long-term incapacity claims falling for the first time in many years.”

Correction: the original version of this article quoted a 6% reduction in mental health claims from a Comcare media release, which has since been updated.

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