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 42 Motor Accidents (Compensation) Commission Notes to the Financial Statements 30 June 2015 Motor Accidents (Compensation) Commission Annual Report 2014/2015 29 3. Actuarial assumptions and methods continued ii) Impact of changes in key variables Effect on Profit/(loss) before tax Gross of reinsurance $000 Net of reinsurance $000 Equity $000 MAC Fund Weighted term to settlement +10% 9,024 7,072 7,072 -10% (9,222) (7,206) (7,206) Average claim frequency latest accident year +10% (5,256) (5,256) (5,256) -10% 5,256 5,256 5,256 Average claim size +10% (42,069) (37,989) (37,989) -10% 42,069 37,989 37,989 Expense rate +1% (3,913) (3,913) (3,913) -1% 3,913 3,913 3,913 Discount rate +1% 46,713 41,014 41,104 -1% (59,398) (52,062) (52,062) Inflation +1% (58,368) (51,105) (51,105) -1% 46,783 41,039 41,039 Motor Accidents (Compensation) Commission Notes to the Financial Statements 30 June 2015 Motor Accidents (Compensation) Commission Annual Report 2014/2015 28 3. Actuarial assumptions and methods continued Average weighted term to settlement The average weighted term to settlement is calculated separately by class of business based on historical 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 budgeted future expenditure, 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 reporting date have been adopted. Inflation Economic inflation assumptions are set by reference to current economic indicators. Sensitivity analysis - insurance contracts i) Summary MACC conducts sensitivity analyses to quantify the exposure to risk of changes in the key underlying variables. The valuations included in the reported results are calculated using certain assumptions about these variables as disclosed above. The movement in any key variable will impact the performance and equity of MACC. The tables below describe how a change in each assumption will affect the insurance liabilities and show an analysis of the sensitivity of the profit/(loss) and equity to changes in these assumptions both gross and net of reinsurance. Variable Impact of movement in variable Average weighted term to settlement A decrease in the average term to settlement in the long tail classes of business class would lead to more claims being paid sooner than anticipated. Expected payment patterns are used in determining the outstanding claims liability. An increase or decrease in the average weighted term would have a corresponding increase or decrease on claims expense respectively. Average claim frequency Claims frequencies are used in determining the level of claims incurred but not reported (IBNR). An increase or decrease in the assumed average frequency levels would have a corresponding impact on claims expense. Expense rate An estimate for the internal costs of handling claims is included in the outstanding claims liability. An increase or decrease in the expense rate assumption would have a corresponding impact on claims expense. Discount rate The outstanding claims liability is calculated by reference to expected future payments. These payments are discounted to adjust for the time value of money. An increase or decrease in the assumed discount rate will have an opposing impact on total claims expense. Inflation Average claim size Expected future payments are inflated to take account of inflationary increases. In addition to the general economic inflation rate an amount is superimposed to take account of non- economic inflationary factors, such as increases in court awards. Such rates of inflation are specific to the model adopted. An increase or decrease in the assumed levels of inflation would have a corresponding impact on claims expense, with particular reference to longer tail business. Average amount paid per claim. An increase or decrease in the average claim size would have a corresponding impact on claims expense.


Aboriginal and Torres Strait Islander people are advised that this website may contain the names, voices and images of people who have died, as well as other culturally sensitive content. Please be aware that some collection items may use outdated phrases or words which reflect the attitude of the creator at the time, and are now considered offensive.

We use temporary cookies on this site to provide functionality.
By continuing to use this site without changing your settings, you consent to our use of cookies.