Page 4575 - Week 14 - Thursday, 24 November 2005
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fund was restructured following the report. These changes will be supported by the arrangements proposed in this bill.
The bill proposed combining the arrangements for both safety net schemes in the Workers Compensation Act 1951 to allow injury management requirements for all workers compensation claims, to improve accountability and transparency for the safety net arrangements and to clarify the roles and responsibilities of the government, insurers, employers and injured workers.
The new safety net arrangement would be called the default insurance fund. The proposed fund would contain separate accounts for claims made against employers without compulsory insurance policies and for claims made against a compulsory insurance policy issued by an approved insurer that cannot provide the indemnity required under that policy. The proposed fund would provide similar injury management requirements to be applied to default insurance fund claims as apply to other injured territory workers.
The bill will support improved governance, reporting and accountability for the default insurance fund through the appointment of a tripartite advisory committee. The default insurance fund advisory committee will monitor the operations of the default insurance fund and will provide advice for the fund manager or the minister on its administration.
Following the collapse of the HIA Insurance Group in early 2001, the ACT government provided a $30 million loan to the supplementation fund. While the legislation allows for a levy to be charged to recover all or part of this loan, the ACT government does not intend to impose such a levy to recover the loan amount. The territory may seek repayment of the $30 million loan if a surplus remains in the account.
The bill proposes that future costs associated with the collapse of an insurer will be funded using a post-funding model. This means employers will only be required to contribute in the event of another insurer collapse. After the HIA Insurance Group collapse, the commonwealth government introduced changes to the national and regulatory regimes for insurers, including new requirements for increased prudential reserves. While another insurer collapse can never be ruled out, the new requirements for insurers should reduce the likelihood of such an occurrence.
The fund for employers without compulsory insurance will also be funded using a post-funding model to meet the liabilities of the fund each quarter. This would continue the funding arrangement that exists for the Nominal Insurer. The safety net will continue to be privately underwritten. This will ensure that liability for the safety net remains with the employer and is not transferred to the ACT taxpayer.
There is currently no requirement for insurers to disclose to their clients the amount of premium that is attributable to government levies unless required by statute, as is the case with the supplementation fund levy. The bill proposes that all costs should be clearly identifiable to employers. This should appear as an amount on the employer’s insurance policy so that employers can readily identify costs to their business when other employers fail to take out insurance policies. The intention of this approach is to have a self and peer regulating effect.
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