Our ref: Accident Cmpensatin / Trt Law Cmmittee 22 March 2013 The Research Directr Finance and Administratin Cmmittee Parliament Huse Gerge Street BRISBANE QLD 4000 Dear Research Directr By email: fac@parliament.qld.gv.au OPERATION OF QUEENSLAND S WORKERS COMPENSATION SCHEME Additinal Submissin Thank yu fr prviding the Queensland Law Sciety (the Sciety) an pprtunity t ldge an additinal submissin t the Finance and Administratin Cmmittee (the Cmmittee) fr its Inquiry int the Operatin f the Queensland Wrkers Cmpensatin scheme (the Scheme). The Accident Cmpensatin / Trt Law Cmmittee f the Sciety clsely mnitrs the Scheme and has cntributed t this submissin. General bservatins The Sciety bserves that there is n impact n the cnslidated revenue f the State f Queensland frm a psitive r negative financial result f WrkCver Queensland in any particular year. The Sciety is encuraged that results fr the 2012 / 2013 financial year are tracking psitively fr the future financial viability f the scheme. It is understd that t the present: cmmn law claims rates remain cnsistently lw cmmn law average payments cntinue t reduce. Results presented at the Nvember 2012 stakehlder actuarial presentatin were very encuraging, evidencing the fllwing: cmmn law claims frequency decreasing bth by wages and numbers f emplyees cmmn law claims nil finalisatins remaining high cmmn law claims payments cntinuing t reduce actuarial prvisins fr utstanding claims were reduced by $114 millin.
OPERATION OF QUEENSLAND S WORKERS COMPENSATION SCHEME ADDITIONAL SUBMISSION 2 The Sciety ntes that at the Nvember 2012 stakehlder presentatin, the actuaries fr bth Q- Cmp and WrkCver Queensland advised that sufficient time had elapsed since the passing f the 2010 amendments, t cnfirm with certainty that: the refrms in 2010 were effective in reducing expsure f the Scheme t adverse claims trends there was a 5% reductin in cmmn law frequency fr 2011 and later injury years there was a 5% reductin in cmmn law settlement sizes fr 2011 and later injury years. The Sciety has cnsistently cautined and the actuaries fr WrkCver Queensland and Q-Cmp have cnfirmed - that any further significant structural change t the Scheme will intrduce actuarial uncertainty and that it may take sme cnsiderable time fr the impact f such changes t crystallise. In the case f the 2010 amendments, cautius actuarial cnfirmatin indicates that that initiative has been successful ntwithstanding actuarial pinin recently expressed that even withut the 2010 amendments, the psitive trends nw cnfirmed may have eventuated. Cmparing the Victrian experience Currently Victria claims t have the lwest wrkers cmpensatin premium in the natin, but as the Sciety nted in its supplementary submissin t the Inquiry, there is a significant difference in the nature f the excess payable by emplyers in the tw States. This will inevitably have an impact n premium levels. Queensland has the secnd lwest average wrkers cmpensatin premium in the cuntry at 1.45% f wages. The published average premium in Victria is lwer at 1.29% but emplyers in Victria must pay the first tw weeks f wages and the first $629 in medical expenses f a claim directly. Emplyers can buy ut this excess by paying a 10% premium increase, being a ttal premium (presently) f 1.4278%. Anther aspect f the Victrian mdel is a threshld t access cmmn law claim entitlements. The threshld cntributes t the high rate f disputatin in the Victrian scheme as a result f arguments ver entitlements t pursue cmmn law claims. Additinal administrative burdens are placed n emplyers wh are ften required t participate in the cmplex multi-stage cmmn law prcess in Victria. Results In the 2011 12 year: Wrksafe Victria made a $675.6M lss after tax WrkCver Queensland made a $199M prfit after tax WrkCver Queensland imprved its equity psitin by 58% Wrksafe Victria s equity psitin wrsened by 54%. There have been n cncerns expressed in respect f the financial psitin f WrkCver Queensland in the 2012 13 year. Recent reprting 1 has indicated that there are significant issues facing the Victrian scheme in the 2012 13 year: there is a sustained surge in cmmn law claims which has dented perfrmance f the Victrian scheme 1 Australian Financial Review, 20 March 2013, Rising Claims hit Vic WrkCver
OPERATION OF QUEENSLAND S WORKERS COMPENSATION SCHEME ADDITIONAL SUBMISSION 3 half-year results fr the 2012 13 year shwed a significant reductin in prfit frm insurance peratins dwn frm $118 millin t $13 millin rising levels f cmmn law claims fr the half year added abut $150 millin t liabilities the Victrian scheme actuary has taken the view that the trend in the increased number f cmmn law claims was nt likely t abate. It is an interesting utcme that despite having a threshld fr access t cmmn law claims in Victria there nw appears t be a sustained increase in the claims rate. In Queensland we have pen access t cmmn law claims and a clearly identified decreasing cmmn law claims rate tgether with decreasing average claims payments as a result f the intrductin f the ISV scale in relatin t awards f general damages. The recent Victrian scheme claims experience reinfrces the Sciety s lng-held psitin that the impsitin f threshlds in rder t access cmmn law claims entitlements: des nt neccesarily impact upn cmmn law claims rates will nt, ging frward, result in the remval frm the scheme f that chrt f claims which presently meet the claims prfile which wuld be excluded by the impsitin f a threshld. In ther wrds, if fr example the impsitin f a threshld wuld n current figures remve 20% f claims, the impsitin f a threshld will never in reality achieve such an ptimistic utcme and the actual reductin in claims will always be less than prjected. The prblems and limitatins previusly identified by the Sciety with the peratin f access threshlds will always frustrate the ultimate utcme sught when impsing such threshlds. Changes t the Scheme The wrkers cmpensatin scheme in Queensland is the best in the natin. It delivers: fair benefits t injured wrkers lw premiums t emplyers the right balance between the delivery f statutry benefits and access t cmmn law the pprtunity fr emplyers t enjy the benefits flwing frm a psitive invlvement in the wrkplace health and safety f wrkers. The Sciety has asserted fr sme time that significant structural changes t the Scheme were nt needed, and that with current claims trends premium levels will decrease. Premiums may als be decreased by increasing emplyer excesses as referred t abve and we address belw in the cntext f QCOMP s prpsal. The Sciety urges the exercise f cautin in undertaking significant changes t the Scheme. If changes are cnsidered necessary, it is t be excepted that the actuaries fr bth WrkCver Queensland and QCOMP will be given the pprtunity t mdel the impact any such refrms and, if necessary, further cnsultatin with stakehlders will be undertaken. The QCOMP prpsal The Sciety supprts in general terms the suggestin f QCOMP regarding adjusting the excess payable by emplyers. The Sciety ntes that there are a number f practical issues which will need t be reslved t ensure that there is apprpriate cllectin and retentin f evidence as t: the ccurrence f an event giving rise t an injury and the sustaining f an injury by a wrker
OPERATION OF QUEENSLAND S WORKERS COMPENSATION SCHEME ADDITIONAL SUBMISSION 4 ntificatin having been given t the emplyer as abve. Hwever, there are risks with the type f arrangement prpsed by QCOMP: emplyers with pr recrd keeping prcesses may assert that a genuine injury had nt been reprted and therefre, did nt ccur. In such cases any ensuing dispute will have the ptential t be cstly and administratively burdensme fr bth emplyers and WrkCver Queensland injuries which at the time might be cnsidered minr may, in the fullness f time, be mre significant latent nset cnditins may be sustained and may remain asymptmatic fr many years and ultimately be fatal, eg, mesthelima (a fatal asbests related cnditin). It is imperative that safeguards are implemented t ensure that injured wrkers managed slely at the emplyer level (as suggested by QCOMP) are nt disadvantaged cmpared t arrangements currently in place. One pssible way f addressing the issues identified abve which is bth practical, cst effective and reduces the administrative burden n emplyers - is fr WrkCver Queensland t establish an nline prtal fr wrkers, r their representatives, t reprt claims. This prtal culd be designed in such a way t present brief details f the basis f the claim and be immediately transmitted t the emplyer fr actin. Relevant infrmatin culd be retained by WrkCver Queensland fr future use. Ntificatins thrugh the prtal wuld als need t be specifically excluded when calculating ladings r claims experience metrics fr an emplyer s premium. In the event f a dispute in relatin t the claim, WrkCver Queensland culd immediately intervene. Alternative apprach An alternate apprach, which may be f greater efficacy t emplyers and may serve t reduce average premiums, wuld be intrductin f a system which draws heavily n the Victrian excess and claim reprting system. This may include prviding emplyers with a chice f premiums: the standard premium payable, which wuld: permit an emplyer t refer all wrkers cmpensatin claims t WrkCver Queensland fr management; and retain the current ne week f QOTE excess; r a discunted premium payable (arund 10% less than the standard premium payable), which wuld: permit an emplyer t self-manage wrkers cmpensatin claims up t an amunt f tw weeks f QOTE (r alternatively up t 10 days lst time) and / r $650 in medical expenses; and empwer either the emplyer r emplyee t ldge a claim directly with WrkCver Queensland if a dispute has arisen cncerning a claim that cannt be reslved between the parties within tw wrking days; and have WrkCver Queensland implement either an emplyee claims ntificatin prtal as discussed abve r an nline claims management tl fr emplyers t recrd details f the claim and the actin that they had taken. Ladings r claims experience metrics fr an emplyer s premium is t nt t be assessed n the basis f infrmatin entered int the nline facility. Sme f the benefits f this apprach are:
OPERATION OF QUEENSLAND S WORKERS COMPENSATION SCHEME ADDITIONAL SUBMISSION 5 the ptential t significantly reduce the statutry claims administrative burden n WrkCver Queensland discunt premium rates are ffered t emplyers wh are willing t take a greater rle in managing their wrkers cmpensatin respnsibilities injured wrkers are nt denied any assistance r supprt emplyers are incentivised t imprve their injury rates and btain direct benefits fr reducing the number f minr injuries in their wrkplaces emplyers need nt take a greater rle in managing their wrkers cmpensatin respnsibilities and can still access a full service mdel frm WrkCver Queensland, but cntribute t the increased administrative csts withut penalising mre practive emplyers reduced administrative burdens fr emplyers as a result f reductins in red tape. Thank yu again fr the pprtunity t prvide these supplementary cmments and bservatins. The Sciety wuld be pleased t respnd t any questins frm the Cmmittee relating t legal practitiners, r t assist the Cmmittee in any way it can. Please cntact ur Principal Plicy Slicitr, Mr Matt Dunn, n 3842 5889 r via email n m.dunn@qls.cm.au. Yurs faithfully Annette Bradfield President