Territory Stories

Annual Report 2015 Motor Accidents (Compensation) Commission (MACC)

Details:

Title

Annual Report 2015 Motor Accidents (Compensation) Commission (MACC)

Other title

Tabled paper 1556

Collection

Tabled Papers for 12th Assembly 2012 - 2016; Tabled Papers; ParliamentNT

Date

2015-11-19

Description

Deemed

Notes

Made available by the Legislative Assembly of the Northern Territory under Standing Order 240. Where copyright subsists with a third party it remains with the original owner and permission may be required to reuse the material.

Language

English

Subject

Tabled papers

File type

application/pdf

Use

Copyright

Copyright owner

See publication

License

https://www.legislation.gov.au/Details/C2019C01622

Parent handle

https://hdl.handle.net/10070/273151

Citation address

https://hdl.handle.net/10070/799706

Page content

Northern Territory Motor Accidents (Compensation) Commission Annual Report 2015 Notes to the Financial Statements - 30 June 2015 Page 38 Motor Accidents (Compensation) Commission Notes to the Financial Statements 30 June 2015 Motor Accidents (Compensation) Commission Annual Report 2014/2015 25 Provisions are calculated gross of any reinsurance recoveries. A separate estimate is made of the amounts that will be recoverable from reinsurers based upon the gross provisions. Details of specific assumptions used in deriving the outstanding claims liability at year end are detailed in note 3. b) Assets arising from reinsurance contracts Assets arising from reinsurance contracts are also computed using the above methods. The recoverability of these assets is assessed on a periodic basis to ensure that the balance is reflective of the amounts that will ultimately be received, taking into consideration factors such as counterparty and credit risk. Impairment is recognised where there is objective evidence that MACC may not receive amounts due to it and these amounts can be reliably measured. Motor Accidents (Compensation) Commission Notes to the Financial Statements 30 June 2015 Motor Accidents (Compensation) Commission Annual Report 2014/2015 24 claims provisions, it is likely that the final outcome will prove to be different from the original liability established. The estimation of claims incurred but not reported ('IBNR') is generally subject to a greater degree of uncertainty than the estimation of the cost of settling claims already notified to MACC, where more information about the claim event is generally available. IBNR claims may often not be apparent to the insured until many years after the events giving rise to the claims have happened. In relation to the workers compensation, liability and MAC Fund classes of businesses, there is typically a greater variation between initial estimates and final outcomes due to the uncertainty in estimating the ultimate cost of claims reported. For the short-tail personal and domestic classes, claims are typically reported soon after the claim event, are settled within a reasonably short period, and hence tend to display lower levels of volatility. In calculating the estimated cost of unpaid claims MACC uses a variety of estimation techniques, generally based upon statistical analyses of historical experience, which assumes that the development pattern of the current claims will be consistent with past experience. Allowance is made, however, for changes or uncertainties which may create distortions in the underlying statistics or which might cause the cost of unsettled claims to increase or reduce when compared with the cost of previously settled claims including: ! changes in MACC processes which might accelerate or slow down the development and/or recording of paid or incurred claims, compared with the statistics from previous periods ! changes in the legal environment ! the effects of inflation ! changes in the mix of business ! the impact of large losses ! movements in industry benchmarks ! medical and technological developments. A component of these estimation techniques is usually the estimation of the cost of notified but not paid claims. In estimating the cost of these claims MACC has regard to the claim circumstance as reported, any information available from loss adjusters and information on the cost of settling claims with similar characteristics in previous periods. Large claims impacting each relevant business class are generally assessed separately, being measured on a case by case basis or projected separately in order to allow for the possible distortive effect of the development and incidence of these large claims. Where possible, MACC adopts multiple techniques to estimate the required level of provisions. This assists in giving greater understanding of the trends inherent in the data being projected. The projections given by the various methodologies also assist in setting the range of possible outcomes. The most appropriate estimation technique is selected taking into account the characteristics of the business class and the extent of the development of each accident year.


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