NSW CTP and Lifetime Care Andrew Nicholls General Manager Motor Accidents Authority of New South Wales Don Ferguson General Manager Lifetime Care and Support Authority of New South Wales This presentation has been prepared for the Actuaries Institute 2013 Injury Schemes Seminar. The Institute Council wishes it to be understood that opinions put forward herein are not necessarily those of the Institute and the Council is not responsible for those opinions.
NSW CTP Update Andrew Nicholls General Manager Motor Accidents Authority of New South Wales This presentation has been prepared for the Actuaries Institute 2013 Injury Schemes Seminar. The Institute Council wishes it to be understood that opinions put forward herein are not necessarily those of the Institute and the Council is not responsible for those opinions.
Outline Proposed reform: Motor Accident Injuries Amendment Bill 2013 CTP Roundtable - Withdrawn from Parliament The show must go on Challenges: Increasing Green Slip prices Scheme efficiency and affordability Claim frequency and propensity are increasing Delayed payment of benefits Realised profit continues to be higher than filed profit 3
Emerging trends Average claims size, claims frequency and propensity continues to rise mainly driven by low severity, legally represented claims More is spent on care now than before, particularly gratuitous care Efficiency over last 10 years is poor: More is spent on lawyers than on medical and related treatment costs Insurer profit continues to be higher than estimated at the time of filing The majority of payments in the scheme are made 3 5 years after the date of accident Low yield rates are biting 4
CTP Insurance Market Market share by insurer group for quarter ending 30 June 2013 (based on premium volume) 6.2% (Zurich) 21.8% (Suncorp Group - AAMI & GIO) 19.9% (QBE) 35.3% (Insurance Australia Group - NRMA) 16.7% (Allianz Group - Allianz & CIC Allianz) 5
Green slip components Three main components: Insurer premium Medical Care and Injury Services (MCIS) Levy GST 6
Medical Care and Injury Services (MCIS) Levy Review Change in mix Over collection being addressed Reduced rates for motor vehicles and a number of other vehicles 7
Premium as a proportion of NSW Average Weekly Earnings Premium Affordability $600 44.0% $550 $500 42.0% 40.0% 38.0% $450 $400 $350 36.0% 34.0% 32.0% 30.0% $300 $250 28.0% 26.0% 24.0% $200 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Measurement at 30 June 22.0% Average premium - all passenger vehicles (LHS) Average premium - all passenger vehicles as % of Average Weekly Earnings (RHS) 8
Number of claims 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Accident year ending 30 June Minor non-rep Minor rep Moderate Serious s151z * ANFs * s151z claims refer to workers compensation recovery 9
Claim frequency Claim frequency per 10,000 vehicles and the propensity to claim since 2000 for full claims only (excluding ANF s). Claim frequency per 10,000 vehicles and propensity to claim since 2000 for ANF s. 70 70 60 60 Claims per 10,000 vehicles 50 40 30 20 50 40 30 20 Propensity to claim 10 10 0 0 Accident Year ending 30 September Claims frequency = Number of full claims / registered vehicles (LHS) Propensity to claim = Number of full claims / Road casualties (RHS) 10
Average claim size (in 30 June 2012 values) for minor severity injuries legally represented $120,000 $110,000 $100,000 $90,000 $80,000 $70,000 $60,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 Accident year ending June 2009 2010 2011 2012 11
Distribution of Scheme funds 2000-2012 19% Direct claimant benefits 3% 16% 50% Legal and investigation expenses Insurers' expenses MAA and RMS expenses Insurers' Profit 12% 12
Heads of damage 18.0% 20.0% Claim payments 6.0% 2.0% 14.0% 40.0% NEL Economic loss Medical Care Bulk billing Other (incl. ANF) - Care has dramatically increased as a benefit - Other payment types have remained relatively stable Notes: 1. Claim payments shown in the chart above are actuarial estimates derived from averages across underwriting years 2000 to 2010. 2. Claim payments include just compensation payments which make up 50% of the premium components. Non compensation payments (Legal and investigation) which make up 12% of premium components, are excluded from the chart. 13
Claims costs paid out by year post injury 25% Percentage of claims costs paid out by year post-injury (excluding LTCS claims) 20% 15% 10% 5% 0% 0 1 2 3 4 5 6 7 8 9 Development Year NSW Vict oria 14
Scheme improvement projects NSW Government committed to designing an efficient and affordable Scheme Enhancing MAA regulatory role Improving the claimant experience Simplifying and improving the purchase of Green Slips Reducing friction and other Scheme costs Improving the dispute resolution processes 15
NSW Lifetime Care Don Ferguson General Manager Lifetime Care and Support Authority of New South Wales This presentation has been prepared for the Actuaries Institute 2013 Injury Schemes Seminar. The Institute Council wishes it to be understood that opinions put forward herein are not necessarily those of the Institute and the Council is not responsible for those opinions.
Lifetime Care and Support Scheme NSW No fault scheme for people seriously injured in motor accidents in NSW Provides reasonable and necessary treatment, rehabilitation and care Commenced October 2006 for children and October 2007 for adults Administered by the Lifetime Care and Support Authority (LTCSA) - An Agency of Safety, Return to Work and Support Division (SRWSD) 17
Lifetime Care and Support Scheme NSW 965 participants accepted into Scheme since 1 October 2006 142 interim participants who recovered and not lifetime 27 deceased 796 current participants of which 438 are lifetime participants Now approximately 185 participants a year (originally 160) 71% participants are male 76% participants have a brain injury 11 participants with amputations, 4 burns and 1 vision loss 18
Reported participants 1,200 Reported participants 200 Inactive participants 1,000 150 Deceased 800 600 400 200 100 50 0 Active participants Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Interim Lapsed 0 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Point in time (as at the end of) 19
Mean term of liabilities is 25 years Scheme Liabilities Plateau of cash flow and liability in approx 60 years Outstanding claims liability of $2.07 billion Latest annual incurred cost is $410 million Overall average cost per participant is $2.23 million (range $500,000 to $10,000,000) Funded by a levy on CTP motorists, calculated as a percentage of premium 20
Scheme Risks Still small Long tail (size of liability compared to annual revenue cash flow currently 5:1 but will increase to 25:1 Solvency Movement of eligibility threshold Investment return 21
Scheme Risks Superimposed inflation Escalation of what services are reasonable and necessary Attendant care Gratuitous care legal challenge paying family as carers cost and availability of attendant care workers 22
Scheme Volatility Very high quarter to quarter volatility with average claim cost per quarter varying from $1.5m to $3m or quarterly liability varying from $40m to $140m Participant numbers Volatility quarterly, but reasonable stable on annual basis Severity of injuries Severity distribution of brain injury important as 76% participants have a brain injury. Recovery pattern, service usage over time and impact of aging still uncertain. 23
Severity of brain injury Care and Needs Scale (CANS) Levels 1 to 7 Level 7 most severely injured, 24 hours of care a day Level 6 20 to 23 hours of care a day Level 5 12 to 19 hours of care a day Level 4 up to 11 hours of care a day, can be left alone overnight Level 3 can be left alone a few days a week Changing CANS score as participant improves 24
Development years for CANS Number of CANS 7 - by accident year cohort 60 50 40 30 2012/13 2011/12 2010/11 20 2008/09 10 2008/09 2007/08 (annualised) 0 0 1 2 3 4 5 Development year 25
Payments per motor vehicle brain injury Brain injuries $10 $9 2007/08 (annualised) $8 $7 $6 2010/11 2009/10 2008/09 $5 $4 $3 2011/12 $2 $1 2012/13 $0 0 2 4 6 8 10 12 14 16 18 20 22 Development Quarter 26
Current expenditure Attendant Care 34% 38% Equipment Home modifications Rehabilitation 6% 17% Case management 7% 7% 7% $62.1m paid in the past 12 months 18% 38% Hospital Rehabilitation Attendant care Medical Equipment Case Management 7% 7% 7% 7% 6% 7% 18% 16% 17% 23% 2012 FY $56.8m paid in total 2013 FY $62.1m paid in total Medical Hospital Home Modification 6% 6% 0% 5% 10% 15% 20% 25% 30% 35% 40% 27
Attendant Care Will ultimately make up around 75% of full cost model Approximately 38% of current participants receiving attendant care services Approximately 73% of lifetime participants have receive attendant care services at any one time Participants are requesting approximately 60% of care they are assessed as requiring 28
Trends Spinal cord injury numbers as expected, but number of incomplete injuries increasing compared with complete Slightly older cohort of participants Slight increase in % of participants with a brain injury over 35 Slight increase in % of participants with a spinal cord injury over 55 Increasing complexity of eligibility decisions Causation issues e.g. did stroke cause mva or stroke result from mva Co-morbidities of mental health, drug and alcohol, dementia Complex late applications 29
LTCS Initiatives Person-centred approaches Move to increasing participants choice and control over their life and services Increasing focus on assisting participants to set their own goals Direct funding pilots Improving employment outcomes for participants with brain and spinal cord injury Increasing opportunities for participants to have a say Increasing links with other disability programs 30
LTCS Focus next 3 years Continued focus on scheme solvency Increase alignment of SRWSD schemes National Injury Insurance Scheme (NIIS) Greater focus on health and social outcomes Continued focus on developing a more person centred approach Growing internal and industry capacity to support expected growth 31
Questions? www.maa.nsw.gov.au www.lifetimecare.nsw.gov.au