The New South Wales (Australia) Workers Compensation Scheme’s long-term investments place it in a strong financial position with premiums continuing to decrease despite the Global Financial Crisis.
WorkCover NSW CEO Lisa Hunt reported that while external factors such as the Global Financial Crisis had lowered the level of long term interest rates; the Scheme’s Workers Compensation Insurance Fund was still out-performing similar funds.(WCxKit)
“Ongoing strong financial management is a high priority for the organization to enable the long-term sustainability of the NSW Workers Compensation Scheme,” she said.
“WorkCover NSW, under the policy direction of the Workers Compensation Insurance Fund Investment Board, manages the Fund’s assets of around $11 billion, making it one of the largest institutional investors in Australia.”
The Workers Compensation Insurance Fund outperformed similar funds both during the Global Financial Crisis and more recently during the global economic recovery.
In the 2009/2010 financial year, Workers Compensation Insurance Fund posted a return of 11 per cent despite holding a conservative portfolio.
In the past five years the Workers Compensation Insurance Fund has produced an average investment return of around 5 per cent, which was higher than the average return for superannuation funds of 4 percent.
Valuation results show that the NSW Workers Compensation Scheme deficit increased by $367 million to $1,583 million over the six month period to 30 June 2010.
The increase was due principally to a fall in long term bond yields which increases the value of claim liabilities.
Hunt said that excluding the impact of falling long term interest rates on the value of future claims, the NSW Workers Compensation Scheme achieved a surplus of $28 million from underwriting operations in the six months to June 30, 2010.
“The Scheme provides long-term support for injured workers with premiums collected in any one year needing to cover ongoing costs and payments for claims based on that year, possibly over decades,” she said.
“The Board’s investment policy is designed to reduce the variation in returns from differing market conditions.
“As a long-term investor we are well positioned when investment markets inevitably turn around.
ldquo;On the basis of the Workers Compensation Insurance Fund’s overall financial performance and strong underlying position, it has been possible to reduce premium rates while still collecting sufficient funds to meet future NSW Workers Compensation Scheme costs.”
According to Hunt, workers compensation premium rates were reduced by up to 2.5 percent from June 30, 2010, the sixth premium rate cut since November 2005.
“The latest rate cut targeted those industries that showed a sustained improvement in work health and safety, injury prevention and management,” Hunt said. ““Businesses operating in more than 240 industry classes had their premium rates reduced as a result.
“The reduction benefits more than 161,000 employers – or 55 percent of employers covered by the NSW Workers Compensation Scheme – across the state.
Premium rates for all other industries were maintained at the same level as in the previous year.
Hunt added that work-related injuries are at their lowest levels in NSW since the Scheme was introduced in 1987. (WCxKit)
“There are more around 265,000 employers in New South Wales and WorkCover NSW collects more than $2.6 billion in premiums annually,” Hunt noted. “WorkCover NSW is delivering on its goal of providing safer workplaces and greater support for New South Wales workers now and into the future.”
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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
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