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Legislative Assembly for the ACT: 2003 Week 3 Hansard (13 March) . . Page.. 1095 ..
Ms Gallagher
: The answer to the member's question is as follows:(1) Supplementation Fund (Annual Report p.101):
A total of $64 million was predicted to be the liability in relation to the 757 claims made against the liquidator at an average of $84,500 per claim.
(a) Given that in the first full financial year, 485 claims have been finalised for a total expenditure of $7.3 million, or $15,000 per claim, leaving a balance of 272 claims with total allocations of $56.7 million or $208,000 per claim, is this figure still accurate or is it likely that performance will be significantly better than originally predicted by both the actuary and ACT WorkCover;
The current estimate of liability associated with the HIH Group collapse is $38.8 million, so it is now considered likely that performance will be significantly better than the original estimates.
The earlier predicted liability of $64 million was an actuarial estimate only. The soundness of actuarial estimates depends on the amount and quality of data available to the actuary at the time of preparing the estimate.
The $64 million estimate of liability was based on data to June 2001, and prepared in August 2001, less than five months after the collapse of the HIH Group.
A further actuarial assessment of liability was prepared in September 2002, based on data with a further 12 months of claims development, meaning that the estimate would be more reliable. The estimate of liability prepared at this time was $55 million.
However, the actuary heavily qualified this estimate, because it was discovered at this time that data on which the estimate was based, provided by the HIH Supervising insurer, did not reconcile with the database maintained by ACT WorkCover.
These data problems have now been rectified and the Fund actuary, Taylor Fry, has prepared a new estimate based on this more reliable data. The new estimate of $38.8 million represents an amount of money that has a 90% probability of covering HIH liabilities.
The Government believes that this estimate is sufficiently robust to make decisions regarding the amount of money that needs to be collected for the Fund, as the data on which it is based is more reliable than earlier estimates for two reasons:
data held by the Supervising Insurer has now been reconciled with the Government's data held by ACT WorkCover. The removal of discrepancies means that the actuary's estimates are more reliable; and
two years has now passed since the HIH Group collapse, allowing additional time for claims development over this period. Therefore, the actuary's estimates are now informed by a reasonable period of claims experience.
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