A centrally managed risk management fund was introduced from 1 July 1998 for the financing of insurable risk for ACT Government agencies from that date, excluding workers’ compensation risks. That fund is now functioning and will continue to operate during 1999-2000, with the objectives of:
- enabling the territory to meet the cost of its insurable claims and losses in an orderly, timely and cost effective manner;
- ensuring the costs are fully reflected in the Territory’s accounts in accord with accrual accounting principles;
- protecting the budget from the risk of very large claims; and
- aiding and improving risk management practices in all agencies.
The fund is financed through risk-determined levies based on information supplied by agencies covering their operations and asset holdings. The levies are set so that the fund will be sufficient to meet all claims incurred during the current year, even if those claims are not paid until a later year. Each agency meets the cost of claims below the level of a deductible or excess, determined in consultation with the Office of Financial Management.
Liabilities in the fund are based on past experience of claims in the Territory, the estimate of the cost of current claims and an estimate of the cost of claims that have been incurred but not yet reported, calculated according to sound insurance practices.
The Government will again purchase catastrophe insurance from 1 July 1999 to protect the fund against large claims or losses, or a series of these events, which would threaten the viability of the fund. Any funds that are surplus to immediate requirements will be invested with the Central Financing Unit.
Accounting procedures are in place to meet claims and losses, and Intranet access to the Insurance Policy Manual and electronic claims reporting is available to all agencies. Training of staff in agencies responsible for risk management has commenced and will continue in the coming year.
The fund will again process the payment of the Government workers’ compensation premium to Comcare, which levies a single premium covering all Government agencies. Each agency will pay its share of the premium into the fund for the purpose of financing the premium payment to Comcare.
Issues that will be pursued in 1999-2000 include:
- further refinement of the electronic claims reporting and data systems to provide an integrated management process and ensure that accurate information is available for the fund and its insurers;
- provision of additional training of agency risk managers and operational managers;
- assistance for agencies in the examination of their operations and assets to improve risk assessments and risk management; and
- progressive reviews of arrangements between agencies and external bodies to ensure the appropriate level of risk is transferred to contractors.