Annual Report 2012-13

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© Motor Accident Insurance Commission 2013

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Attribution: Content from this annual report should be attributed as:
The Motor Accident Insurance Commission Annual Report 2012-13

The Honourable Tim Nicholls MP
Treasurer of Queensland and Minister for Trade
GPO Box 611
Brisbane Qld 4001

Dear Treasurer

I am pleased to present the 2012-13 annual report and financial statements for the Motor Accident Insurance Commission and the Nominal Defendant.

I certify that this Annual Report complies with:

• the prescribed requirements of the Financial Accountability Act 2009, Financial and Performance Management Standard 2009 and the Motor Accident Insurance Act 1994, and
• the detailed requirements set out in the Annual Report requirements for Queensland Government agencies.

A checklist outlining the annual reporting requirements can be accessed at https://maic.qld.gov.au/

Yours sincerely

Neil Singleton
Insurance Commissioner

MAIC is responsible for regulating Queensland’s CTP insurance scheme and managing the Nominal Defendant.

Established under the MAI Act, MAIC has been located in Brisbane since it commenced operations on 1 September 1994.

Organisationally, MAIC and the Nominal Defendant are positioned within the Economic and Structural Policy division of Queensland Treasury and Trade.

Vision

Ensuring financial protection that makes Queensland stronger, fairer and safer, through:

• overseeing an affordable and efficient CTP scheme, and
• sound research funding, service delivery, policy development and strategic advice.

Purpose

MAIC is responsible for ensuring a fair, efficient, affordable and effective motor accident insurance scheme.

Responsibilities

MAIC is responsible for:

• ensuring people injured in road accidents can access fair compensation;
• compensating people who are injured as a result of the negligent driving of unidentified and/or uninsured motor vehicles through the Nominal Defendant;
• ensuring Queensland motorists receive affordable premiums;
• the regulation of insurers’ activity and compliance; and
• meeting any claim costs of insolvent insurers.

Functions

MAIC’s key functions involve:

• licensing and supervising CTP insurers;
• monitoring the operation of the scheme;
• fixing the range within which each insurer’s premium must fall and recommending to Government the levies payable;
• promoting research, education and the infrastructure to facilitate the rehabilitation of the injured person;
• developing and maintaining a claims register and statistical database for the purpose of providing management information; and
• administering the Nominal Defendant Fund.

How we contribute to the Queensland Government objectives for the community

MAIC contributes to lowering the cost of living for families by monitoring CTP scheme affordability and advising the Queensland Government on appropriate action.

MAIC contributes to revitalising front line services by investing in targeted research and service delivery initiatives which benefit motorists and improve health outcomes for people injured in motor vehicle crashes.

Queensland’s Compulsory Third Party (CTP) scheme is a common law fault based scheme and is currently underwritten by five licensed private insurers who accept applications for insurance and manage claims on behalf of their policyholders. The scheme has operated since 1936, overseeing the provision of insurance policies covering unlimited liability for personal injuries to motor vehicle owners, drivers, passengers and other persons injured in motor vehicle accidents to which the Motor Accident Insurance Act 1994 (the MAI Act) applies.

The Motor Accident Insurance Commission (MAIC) regulates insurance premium costs by setting floor and ceiling premium bands for each vehicle class within which CTP insurers must set premiums. An efficient system of premium collection, through the motor vehicle registry of the Department of Transport and Main Roads (DTMR), minimises administration costs within the scheme.

The Nominal Defendant is a statutory body established under the MAI Act for the purpose of compensating people who are injured as a result of the negligent driving of unidentified and/or uninsured (no CTP insurance) motor vehicles. The Nominal Defendant has the extended role of meeting the claims costs of any licensed insurer which may become insolvent.

The Queensland CTP scheme remains stable and affordable.

During the course of the year, premiums for Class 1 vehicles rose by 2.8 per cent and many motorists received additional savings or benefits offered by licensed insurers.

The number of new claims continued to reduce while the cost of claims settled remained stable. While this is a good outcome for the scheme, MAIC continues to provide support for initiatives aimed at further reducing the incidence and effects of road trauma.

The Nominal Defendant performed strongly in protecting people injured by an unregistered or unidentified motor vehicle enabling a reduction in the Nominal Defendant levy for 2013–14.

MAIC commissioned market research to understand motorist’s views of the scheme and what is important to them. The overwhelming feedback was the need for CTP premiums to remain affordable. This reinforces the need to continually improve scheme experience whether through direct action by MAIC or through supporting improvement initiatives by other stakeholders.

Premium income for the year totalled $1.3bn. Understanding where these dollars go is important. The Scheme Performance Report (see page 14) indicates that over the past five years, 63.8 per cent of premium dollars were expended on claimant benefits and the remaining 36.2 per cent funded scheme delivery costs.

MAIC wants to better understand the elements comprising the 63.8 per cent – what types of compensation are paid and how those funds are being applied. During the coming year MAIC will commission claimant research and undertake analysis to identify opportunities to further improve scheme performance.

MAIC is proud of the continued association with the research centres CARRS-Q (based at Queensland University of Technology) and CONROD (based at University of Queensland). The high quality research completed by these centres continues to inform policy considerations and supports development of initiatives aimed at reducing the incidence and effect of road trauma.

It is pleasing to see broader research opportunities also being pursued. MAIC recently joined with Professor Perry Bartlett at the Queensland Brain Injury Institute to enter a five year funding agreement to support the establishment of the Professorial Fellowship in Traumatic Brain Injury Research. With road crashes being the single biggest cause of traumatic brain injury, research that helps to mitigate the effect of this catastrophic injury has the potential to improve outcomes for injured people as well as improving outcomes for the CTP scheme.

I express my appreciation to the MAIC and Nominal Defendant teams for their sustained performance during the course of the year. We are proud to be continuing and improving the Queensland CTP scheme now and into the future.

People

MAIC works in partnership with Queensland Treasury and Trade (QTT) to ensure its workforce has the skills and capabilities to progress its strategic objectives. As part of this partnership, MAIC has adopted QTT’s frameworks for workforce planning, employee performance management, leadership development and industrial and employee relations. QTT provides MAIC with strategic advice and support on issues such as recruitment, attraction, retention, induction, performance management, talent management and recognition.

In addition to providing MAIC with human resource support services, QTT’s Human Resources branch also assists MAIC with meeting its obligations under the Public Sector Ethics Act 1994. MAIC staff access QTT’s suite of online training modules specific to public sector ethics and the Queensland Government Code of Conduct. The online training package is rolled out to all new MAIC staff and all staff are required to complete the training annually.

In October 2012, MAIC piloted QTT’s new online Achievement and Development Plan (ADP) performance management system. Since the new system was introduced, staff participation in performance planning has improved and MAIC’s leadership team now have greater visibility of staff performance plans.

During the year, MAIC’s workforce accessed QTT’s flexible work arrangements and policies including part-time work arrangements and telecommuting / working from home. Staff also benefited from QTT’s workplace health and wellbeing policy and services including annual flu vaccinations, the employee assistance program, access to first aid officers, corporate health insurance rates and the opportunity to attend health workshops.

MAIC’s full-time equivalent staff establishment, employee expenses and key executive management personnel and remuneration information can be found in the Financial Information (pages 23-49 for MAIC and pages 51-85 for the Nominal Defendant). Additional information on QTT’s workforce strategies and frameworks, along with workforce statistics that include MAIC, can be located in Treasury and Trade’s annual report.

Managing risks

MAIC is committed to establishing an organisational culture that ensures risk management is an integral part of all activities and a core management capability. MAIC’s risk management philosophy is aided by QTT, who provides us with a framework for regularly reviewing the importance, probability and treatment of risks.

As part of MAIC’s annual planning and reporting processes, the leadership team identifies risks and opportunities which could impact on MAIC achieving its objectives. Risk mitigating strategies are identified and implemented. Risks are recorded in QTT’s risk register and reviewed on a six-monthly basis. The risk register is also reviewed annually by external auditors.

MAIC is committed to business continuity management as an integral component of risk management, to ensure continuity of key business services which are essential for or contribute to achievement of MAIC’s goals.

In addition to managing operational risks, as part of our project management methodology, we identify risks associated with projects and develop solutions to mitigate and manage them. Project reporting includes continual assessment of risks, their impact and the need for intervention.

MAIC participates in QTT wide risk and accountability management through representation on the Audit and Risk Management Committee.

Audit and Risk Management Committee

In 2012, QTT combined its risk management and audit functions by merging its risk management and audit committees. MAIC is represented on QTT’s Audit and Risk Management Committee by the Insurance Commissioner Neil Singleton. The committee’s key responsibilities include:

• considering audit and audit-related findings.
• assessing and enhancing corporate governance processes including our systems of internal control and the internal audit function.
• evaluating and facilitating the practical discharge of the internal audit function, particularly in planning, monitoring and reporting.
• overseeing and appraising financial and operational reporting processes through the internal audit function.
• reviewing risk management and mitigation strategies.
• reviewing the effectiveness of risk management framework and process for identifying, monitoring and managing significant business risks, including fraud.

In 2012–13, the committee met four times and considered a range of matters including reviewing the 2011–12 financial statements for MAIC and the Nominal Defendant.

Ensuring accountability

MAIC’s governance framework includes both internal and external accountability measures.

QTT provide internal audit services to MAIC. In 2012–13, QTT appointed PricewaterhouseCoopers (PwC) Australia to deliver internal audit services. Although outsourced to PwC, the new team sits seamlessly within QTT. The Internal Audit function provides an independent and objective assurance service and operates in accordance with the Internal Audit Charter which has incorporated key internal audit and ethical standards. The Internal Audit function is also independent of the Queensland Audit Office (QAO), although it liaises with QAO regularly.

Externally, MAIC and the Nominal Defendant are audited by the Queensland Audit Office in accordance with the Financial Accountability Act 2009. MAIC and the Nominal Defendant have achieved unqualified audits since the Commission commenced operations in 1994.

More information on QTT’s Audit and Risk Management framework including information about the committee, can be located in QTT’s annual report.

Queensland’s CTP insurance premium contains levies and an administration fee to help cover the costs involved in delivering different components of the CTP scheme. These levies and administration fee are calculated annually and include the Statutory Insurance Scheme Levy, the Nominal Defendant Levy, the Hospital and Emergency Services Levy and an Administration Fee (payable to the DTMR).

The Statutory Insurance Scheme Levy

The Statutory Insurance Scheme Levy covers the estimated operating costs of administering the MAI Act and also provides funding for research into accident prevention and injury mitigation. From 1 July 2012, the levy remained unchanged at $1.85 per policy and the levy collected income of $7.1 million in 2012–13.

The Nominal Defendant Levy

The Nominal Defendant Levy, which varies by vehicle class, covers the estimated costs of the Nominal Defendant scheme which provides funds to pay for claims relating to uninsured or unidentified vehicles. The levy is set having regard to an actuarial assessment of claim trends. From 1 July 2012, the levy for Class 1 vehicles was $12.35, remaining unchanged from 2011–12, with $46.4 million collected in 2012–13.

The Hospital and Emergency Services Levy

The Hospital and Emergency Services Levy is designed to cover a reasonable proportion of the estimated cost of providing public hospital and public emergency services to people who are injured in motor vehicle accidents, who use such services and who are claimants or potential claimants under the CTP scheme. The levy amount calculated varies by vehicle class. From 1 July 2012, the Hospital and Emergency Services Levy increased by $0.80 to $16.90 for Class 1 vehicles. Proceeds from this levy are then apportioned to Queensland Health and the Department of Community Safety.

The Administration Fee

The Administration Fee is the fee payable to the DTMR for delivering administrative support for the CTP scheme. From 1 July 2012, the fee remains unchanged at $7.70 per policy. In the year 2012–13, $32 million was collected.

The statistical report (PDF 560 K) covers all aspects of the CTP scheme required by the Motor Accident Insurance Act 1994, including:

Vehicle registrations and CTP premiums collected
Scheme delivery components and affordability
Average Class 1 filed premiums and market share by insurer
Accidents by region
Claims by gender and severity
Rates of legal representation and litigation
Claim duration
Claim payments by heads of damage and injury severity

These financial statements are an electronic presentation of the audited statements for the Motor Accident Insurance Commission and the Nominal Defendant.

Financial information (PDF 935 K)

Consultancies and overseas travel

Motor Accident Insurance Commission Consultancies

Actual expenditure – end of financial yearProfessional and technical $407,760

Nominal Defendant Consultancies

Actual expenditure – end of financial yearProfessional and technical $54,545

Overseas Travel
Nil to report.