ACT INSURANCE AUTHORITY
Objectives
The objectives of the ACT Insurance Authority (the Authority) are to:  carry out the business of insurer of Territory risks; take out insurance of Territory risks with other entities; satisfy or settle claims in relation to Territory risks; take action for  realising, enforcing, assigning or extinguishing rights against third parties arising out of or in relation to its business; develop and promote good practices for the management of Territory risks; give advice to the Treasurer about insurance and the management of Territory risks; and administer, under agreement with the Chief Minister’s Department, the Default Insurance Fund.
2008–09 Priorities
Strategic and operational issues to be pursued in 2008-09 include:
•	working with selected agencies to reduce the total cost of risk to Government;
•	assisting agencies in the analysis of their operations and assets to improve risk assessment and management;
•	facilitating agency access to the claims reporting and data analysis system to provide an  integrated claims management process;
•	ensuring that accurate information is available for the Authority’s management, its clients and its insurers;
•	conducting regular reviews of existing claims to ensure that appropriate management is being applied, that realistic cost estimates are included in the accounts and that risk management measures are implemented to reduce the chance of similar claims occurring; and
•	conducting progressive reviews of arrangements between agencies and external bodies to ensure that the appropriate level of risk is transferred to contractors, as well as  providing advice on new contracts.
Estimated Employment Level
2007-08
Budget			2007-08
Est. Outcome	2008-09
Budget	
11		  Staffing (FTE)	12	14	

Changes to Appropriation
						
Changes to Appropriation						
 	2007-08	2008-09	2009-10	2010-11	2011-12	
Capital Injection	Est. Out.	Budget	Estimate	Estimate	Estimate	
 	$'000	$'000	$'000	$'000	$'000	
						
2007-08 Budget	 -	-	-	-	- 	
						
2008-09 Budget Technical Adjustments						
Capital Injection – Received from Government	-	10,000	10,000	10,000	-	
						
2008-09 Budget	-	10,000	10,000	10,000 	-	

ACT Insurance Authority	
Operating Statement	
  2007-08			  2007-08	   2008-09		  2009-10	  2010-11	  2011-12		
    Budget			Est.Outcome	   Budget	   Var	  Estimate	   Estimate	  Estimate		
    $'000			   $'000	   $'000	    %	   $'000	    $'000	   $'000		
		Income								
		Revenue								
44,706		User Charges - ACT Government	44,661	49,937	12	52,183	54,532	56,987		
9,471		Interest	10,095	10,961	9	11,690	12,657	13,871		
2,609		Other Revenue	5,706	3,826	-33	4,697	5,016	5,007		
56,786		Total Revenue	60,462	64,724	7	68,570	72,205	75,865		
		Gains								
0		Total Gains	0	0	-	0	0	0		
56,786		Total Income	60,462	64,724	7	68,570	72,205	75,865		
		Expenses								
1,021		Employee Expenses	1,003	1,286	28	1,392	1,430	1,440		
240		Superannuation Expenses	175	220	26	222	228	228		
1,290		Supplies and Services	1,368	1,488	9	1,464	1,494	1,524		
57,857		Other Expenses	61,765	62,447	1	65,582	69,961	74,590		
60,408		Total Ordinary Expenses	64,311	65,441	2	68,660	73,113	77,782		
-3,622		Operating Result	-3,849	-717	81	-90	-908	-1,917		

ACT Insurance Authority	
Balance Sheet	
    Budget			Est.Outcome	   Planned		   Planned	   Planned	   Planned		
as at 30/6/08			as at 30/6/08	as at 30/6/09	   Var	as at 30/6/10	as at 30/6/11	as at 30/6/12		
   $'000			   $'000	    $'000	    %	    $'000	    $'000	    $'000		
		Current Assets								
111,421		Cash and Cash Equivalents	137,730	145,388	6	159,708	177,828	189,424		
5,955		Receivables	9,514	11,163	17	12,001	12,032	12,032		
117,376		Total Current Assets	147,244	156,551	6	171,709	189,860	201,456		
		Non Current Assets								
13,839		Receivables	12,788	11,050	-14	11,575	12,724	12,500		
36,632		Investments	31,144	28,437	-9	25,813	23,306	20,799		
50,471		Total Non Current Assets	43,932	39,487	-10	37,388	36,030	33,299		
167,847		TOTAL ASSETS	191,176	196,038	3	209,097	225,890	234,755		
		Current Liabilities								
60,111		Payables	56,524	56,770	..	57,590	59,592	62,396		
336		Employee Benefits	311	319	3	319	319	319		
60,447		Total Current Liabilities	56,835	57,089	..	57,909	59,911	62,715		
		Non Current Liabilities								
132,597		Payables	160,690	156,015	-3	158,344	164,043	172,021		
132,597		Total Non Current Liabilities	160,690	156,015	-3	158,344	164,043	172,021		
193,044		TOTAL LIABILITIES	217,525	213,104	-2	216,253	223,954	234,736		
-25,197		NET ASSETS	-26,349	-17,066	35	-7,156	1,936	19		
		REPRESENTED BY FUNDS EMPLOYED								
-25,197		Accumulated Funds	-26,349	-17,066	35	-7,156	1,936	19		
-25,197		TOTAL FUNDS EMPLOYED	-26,349	-17,066	35	-7,156	1,936	19		

ACT Insurance Authority	
Cash Flow Statement	
  2007-08			  2007-08	   2008-09		  2009-10	  2010-11	  2011-12		
    Budget			Est.Outcome	   Budget	   Var	  Estimate	   Estimate	  Estimate		
    $'000			   $'000	   $'000	    %	   $'000	    $'000	   $'000		
		CASH FLOWS FROM OPERATING ACTIVITIES								
		Receipts								
44,706		User Charges	44,600	49,998	12	52,183	54,532	56,987		
9,471		Interest Received	10,095	10,961	9	11,690	12,657	13,871		
45,372		Other Revenue	50,280	47,053	-6	46,670	47,149	48,730		
99,549		Operating Receipts	104,975	108,012	3	110,543	114,338	119,588		
		Payments								
1,251		Related to Employees	1,168	1,498	28	1,614	1,658	1,668		
1,177		Related to Supplies and Services	1,255	1,479	18	1,456	1,486	1,517		
81,123		Other	81,749	103,622	27	99,315	99,119	100,852		
83,551		Operating Payments	84,172	106,599	27	102,385	102,263	104,037		
15,998		NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES	20,803	1,413	-93	8,158	12,075	15,551		
		CASH FLOWS FROM INVESTING ACTIVITIES								
		Receipts								
13,934		Proceeds from Sale/Maturities of Investments	13,934	911	-93	911	911	911		
13,934		Investing Receipts	13,934	911	-93	911	911	911		
		Payments								
2,639		Purchase of Investments	2,639	4,666	77	4,749	4,866	4,866		
2,639		Investing Payments	2,639	4,666	77	4,749	4,866	4,866		
11,295		NET CASH INFLOW/(OUTFLOW) FROM INVESTING ACTIVITIES	11,295	-3,755	-133	-3,838	-3,955	-3,955		
		CASH FLOWS FROM FINANCING ACTIVITIES								
		Receipts								
0		Capital Injection from Government	0	10,000	#	10,000	10,000	0		
0		Financing Receipts	0	10,000	#	10,000	10,000	0		
0		NET CASH INFLOW/(OUTFLOW) FROM FINANCING ACTIVITIES	0	10,000	#	10,000	10,000	0		
27,293		NET INCREASE/(DECREASE) IN CASH HELD	32,098	7,658	-76	14,320	18,120	11,596		
84,128		CASH AT BEGINNING OF REPORTING PERIOD	105,632	137,730	30	145,388	159,708	177,828		
111,421		CASH AT THE END OF THE REPORTING PERIOD	137,730	145,388	6	159,708	177,828	189,424		

ACT Insurance Authority	
Statement of Changes in Equity	
    Budget			Est.Outcome	   Planned		   Planned	   Planned	   Planned		
as at 30/6/08			as at 30/6/08	as at 30/6/09	   Var	as at 30/6/10	as at 30/6/11	as at 30/6/12		
   $'000			   $'000	    $'000	    %	    $'000	    $'000	    $'000		
-21,575		Opening Balance	-22,500	-26,349	-17	-17,066	-7,156	1,936		
		Accumulated Funds								
-3,622		Operating Result for the Period	-3,849	-717	81	-90	-908	-1,917		
		Reserves								
-3,622		Total Income And Expense For The Period	-3,849	-717	81	-90	-908	-1,917		
		Transactions Involving Equity Holders Affecting Accumulated Funds								
0		Capital Injections	0	10,000	#	10,000	10,000	0		
-25,197		Closing Balance	-26,349	-17,066	35	-7,156	1,936	19		
Notes to the Budget Statements
Significant variations are as follows:
Operating Statement
•	user charges - ACT Government:  the increase of $5.276 million in the 2008‑09 Budget from the 2007‑08 estimated outcome is due to an increase in the annual insurance premiums charged to agencies.  The increase in premiums recognises the net expected increase in cost of future public liability claims arising due to significant growth in award settlements, claim numbers and growth in the average size of property claims.  
•	interest:
–	the increase of $0.624 million in the 2007‑08 estimated outcome from the original budget reflects a greater level of investment due to the timing of claim payments; and
–	the increase of $0.866 million in the 2008‑09 Budget from the 2007‑08 estimated outcome reflects higher interest rates.
•	other revenue:
–	the increase of $3.097 million in the 2007‑08 estimated outcome from the original budget is due to the recognition of revenue associated with introducing a provision for the risk margin on reinsurance recoveries; and
–	the decrease of $1.880 million in the 2008‑09 Budget from the 2007‑08 estimated outcome reflects expected payments by reinsurers.
•	employee and superannuation expenses:  the increase of $0.328 million in the 2008‑09 Budget from the 2007‑08 estimated outcome reflects the full year impact of the creation of new positions and the filling of others which have remained vacant during the previous year.
•	supplies and services:  the increase of $0.120 million in the 2008‑09 Budget from the 2007‑08 estimated outcome reflects increases in the cost of contractors, insurance brokers and other consultants.
•	other expenses:
–	the increase of $3.908 million in the 2007‑08 estimated outcome from the original budget mainly reflects the claims experience of the increasing cost of awards and the number of settlements being made by the Territory; and
–	the increase of $0.682 million in the 2008‑09 Budget from the 2007‑08 estimated outcome reflects an expectation of the Territory’s claims experience continuing.
Balance Sheet
•	cash and cash equivalents:  the increase of $26.309 million in the 2007‑08 estimated outcome from the original budget and the increase of $7.658 million in the 2008‑09 Budget from the 2007‑08 estimated outcome reflects the building of investments in order to meet future claims and the movement of funds from non-current investments;
•	receivables current:  
–	the increase of $3.559 million in the 2007‑08 estimated outcome from the original budget is mainly due to the recognition of a provision on the risk margin on insurance premiums; and 
–	the increase of $1.649 million in the 2008‑09 Budget from the 2007‑08 estimated outcome is mainly due to increases in reinsurance recoveries and movement of reinsurance recoveries from non-current to current.
•	receivables non-current:  the decrease of $1.051 million in the 2007‑08 estimated outcome from the original budget and the decrease of $1.738 million in the 2008‑09 Budget from the 2007‑08 estimated outcome recognises movement in the provision for reinsurance recoveries from non-current to current.
•	investments non-current:  the decrease of $5.488 million in the 2007‑08 estimated outcome from the original budget and the decrease of $2.707 million in the 2008‑09 Budget from the 2007‑08 estimated outcome reflects the movement of funds to short term investment;
•	payables current:  the decrease of $3.587 million in the 2007‑08 estimated outcome from the original budget reflects higher than anticipated claim payments and movement of claims from current to non-current.
•	payables non-current:
–	the increase of $28.093 million in the 2007‑08 estimated outcome from the original budget reflects the movement of claims from current to non-current and anticipated growth in the cost of future claims; and
–	the decrease of $4.675 million in the 2008‑09 Budget from the 2007‑08 estimated outcome reflects the claims portfolio’s liabilities approaching maturity and the anticipated payment of some large claims.
Statement of Changes in Equity
•	capital injection from Government:  the $10 million capital injection in the 2008‑09 Budget is to improve the capital adequacy of the Authority, in order to provide for outstanding claims.  This is partially a consequence of a revised actuarial assessment of the Territory’s liabilities.  Further capital injections of $10 million are scheduled to be received by ACTIA in 2009‑10 and 2010‑11.