Territory Stories

Annual report 2008/2009, TIO



Annual report 2008/2009, TIO

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Territory Insurance Office annual report 2008/2009


E-Publications; PublicationNT; E-Book; Territory Insurance Office annual report; Annual report




Made available via the Publications (Legal Deposit) Act 2004 (NT).




Territory Insurance Office (N.T.); Periodicals; Insurance, Accident; Northern Territory; Insurance, Automobile; Insurance, No-fault Automobile; Northern Territory; Annual report

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Territory Insurance Office

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Territory Insurance Office annual report; Annual report



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Territory Insurance Office



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Territory Insurance Office Notes to the Financial Statements 30 June 2009 TIO Annual Report 2008/2009 47 2008 2008 Insurance MAC Fund Average weighted term to settlement 4.43 8.35 Average claim frequency (latest accident year) 9.67% 0.30% Average claim size 5,342 75,402 Expense rate 6.73% 7.00% Discount rate 6.3%-7.1% 6.3%-7.1% Inflation 4.40% 4.40% Process used to determine assumptions A description of the processes used to determine these assumptions is provided below: Average weighted term to settlement The average weighted term to settlement is calculated separately by class of business based on historic payment patterns. Average claim frequency Claim frequency is estimated by projecting the number of claims incurred based on past patterns and dividing this by the number of policies in force. Expense rate Claims handling expenses were calculated by reference to past experience, allocated to class of business and compared to past payments. Discount rate Discount rates derived from market yields on Commonwealth Government securities as at the balance date have been adopted. Inflation Economic inflation assumptions are set by reference to current economic indicators. TIOs actuaries use Access Economics forecasts of Average Weekly Earnings (AWE) as the inflation factor to calculate gross outstanding claims liabilities. The inflation factor of 4.2% disclosed in note 3 is a long term projection likely to be experienced after 2012/2013. TIOs actuary noted a reduction from 5.5% to 3.5% for 2009/2010, from 4.2% to 2.8% for 2010/2011 and from 4.2% to 3.4% for 2011/2012, which resulted in a decrease of outstanding claims liabilities of $10.8m (MAC: $7.8m and Insurance: $3m). While Access Economics believe the AWE will fall over the next three years, they also note the inherent volatility of AWE in the Northern Territory. Should AWE revert to the long term projection prior to 2012/2013, the decrease in outstanding claims liabilities may be reversed, decreasing projected after tax profit in Insurance and surplus in MAC.