The vanishing – where did the NSW CTP claims go?

Estelle Pearson, Tony Mobbs, John Jeaitani, and Francis Beens

The  Motor Accident Injuries Act 2017 changed how the NSW CTP scheme operates for accidents post 1 December 2017.  The changes followed some years of escalating claim frequency in the NSW CTP scheme, which had led to increasing CTP prices. 

The establishment of Taskforce Ravens –a NSW police initiative targeting fraud in the scheme–was an additional measure that targeted blatant fraud within the scheme.

The new Act extended benefits to at fault drivers, aimed to get benefits to injured people more quickly by introducing statutory benefits for medicals and income loss, aimed to reduce the incentive for exaggeration and fraud by removing lump sum common law entitlements for those with minor injuries, and aimed to reduce frictional costs by placing limits on legal costs and insurer profits.

Over a year and a half into the new scheme we have seen a significant reduction in claim frequency for statutory benefits.  For minor injury claims this reduction is not surprising and arguably consistent with the scheme objectives.  We estimate that it has led to a reduction in legal costs of around $200 million a year. A bigger surpriseis the reduction in the number of non-minor injury claims for statutory benefits and a focus of this paper has been on understanding why these claims have gone.  In looking at this we have been mindful that so far there has been little common law claiming activity for non-minor injury claims and we may expect to see increased frequency in the next couple of years through this activity.

Our conclusions are that there are four key reasons for lower statutory benefit frequency – incentives, value, complexity and awareness.  The first two relate to the way that the form of benefits and associated legal costs impact the propensity to make a CTP claim.  Reductions in claim frequency due to these factors may be thought of as being roughly consistent with the objectives of the scheme, although it may be preferable if any treatment or loss of income expenses were funded through the CTP system rather than other systems, such as public hospitals and Medicare.  The second two relate to lower awareness of scheme entitlements and difficulty in navigating a compensation system where there is limited legal involvement and limited financial incentives for lawyers to be involved. Lower frequency due to lack of awareness is often a feature in the early years of reformed schemes (called the ‘honeymoon effect’) and may be reversed as people become used to the new scheme. Our analysis does suggest however that some groups of claimants are impacted more by these factors than others. While there are initiatives by the scheme regulator to improve awareness and assist with navigation, our analysis suggests that more could be done and provides an indication of which areas may need a greater focus.

Future Relevance of Workers Compensation
Rosi Winn and Michael Playford

This paper aims to start a conversation about the future direction of the workers compensation system. Australian workers compensation schemes were developed decades ago when the concept of work and how it was performed was very different to today. So called mega-trends including digitisation, globalisation and demographic changes have, and will continue, to transform our society.

These trends add to the complexity of the workers compensation system and dilute the role that such schemes can and do play in today’s society in providing the protection that workers need.

This has led us to challenge whether such schemes remain fit for purpose.

  • Are there other better ways of providing for our needs?
  • What could such a new system look like?
  • It is possible to manageably transition to such a system from where we are now?

Communities/countries worldwide have developed a range of social support systems to meet the needs of their citizens. In effect these systems help people save whilst they are working for later life needs, provide health treatment, and protect them by mitigating the life and financial impact of adverse life events. These social support systems can generally be classified into the health, savings and protection domains. In Australia we have evolved a system which brings together a number of Commonwealth

and State government and private mechanisms to deliver these services and supports. The details vary by domain – but often include a safety net or base level of provision provided by government to all and private mechanisms to deliver higher levels of services or benefits. Of relevance is the fact that the government safety net for the “health” and “savings” parts of the system are significantly stronger than that for the “protection” part.

Implementation Evaluation of Comcare’s New Access Trial – August 2019
PricewaterhouseCoopers Consulting (Australia) (PwC)

Mental health is a growing concern in Australia with considerable repercussions on individuals, organisations and the broader economy. Untreated mental illness is estimated to cost workplaces $10.9 billion each year in lost productivity and compensation claims. The most common type of disorder experienced by Australians is anxiety disorders (14.4 per cent), followed by affective disorders such as depression (6.2 per cent), and substance use disorders such as alcohol abuse (5.1 per cent).

Individuals are exposed to various risk factors at work that can adversely impact their mental health and wellbeing. Job demands and pressures, lack of clarity on roles and support, poor workplace relationships, poor organisational change management and justice, poor environmental conditions, remote or isolated work and violent or traumatic events are some of the commonly reported risk factors.

Workplaces present an opportune setting to prevent mental illness and support recovery and return to work. Therefore, employers have a key role to play in providing mentally healthy workplaces for all employees.

Innovative models of care that focus on prevention and early identification of mental illness have been designed and implemented nationally and internationally, with proven recovery and return to work outcomes. In this context, Comcare contracted Beyond Blue to trial a low intensity cognitive behaviour therapy program (LiCBT), NewAccess, in two Australian Public Service (APS) workforce settings for a cohort of 50 people in Agency A and Agency B. NewAccess is an adaptation of the UK’s Improving Access to Psychological Therapy (IAPT) program and was previously trialled in the community where it achieved a strong recovery rate of 67.5 per cent.

During the evaluation, it was identified that Agency C was also implementing NewAccess, beginning in June 2018. Though the roll-out of NewAccess in Agency C was outside this trial, we were able to collect and include comparable data into the current evaluation for comparison against another agency.

Comcare engaged PricewaterhouseCoopers Consulting (Australia) (PwC) to conduct an independent implementation evaluation of Comcare’s NewAccess trial (Comcare trial). The objectives of the evaluation were to assess the appropriateness of the program, ease of implementation, uptake and return on investment. This report outlines the evaluation approach, findings and recommendations for future roll-out of the program.

Waging war: A new wage inflation forecast model
Hugh Miller and Glenn Cardinio

We have proposed an inflation forecasting model for Australian Weekly Earnings, composed of:

  • A Consumer price index (CPI) inflation estimate, which depends on a long-run assumption, the shape of the current nominal bond yield curve and the gap between nominal and inflation-linked bond (ILB) yield curves.
  • An AWE gap (AWE minus CPI) estimate, which depends on a long-run assumption, the shape of the current nominal bond yield curve and the unemployment rate (either national or state).

The model moves seamlessly from estimation formulae appropriate in the short term (higher weight on ILB and unemployment rates) and those for long-run assumptions. The inclusion of bond yields helps reduce (but not eliminate) the impact of bond rate changes on liabilities.

The model appears to perform well at both short- and medium-term durations. When comparing to Access Economics forecasts for future nominal inflation our model has 5-20% lower error and in some cases less than half the variability from quarter to quarter for inflation. The model performs well at a state level, whereas Access forecasts are typically weaker.

Performance enhancing: A look at modern operational performance rating models
Hugh Miller

Performance models are a feature of many programs, including injury and disability schemes. They are particularly relevant when a program function is outsourced, and the performance of different providers needs to be compared. Unless caseloads are completely randomised, there are many design questions that have statistical implications and can generate poor provider rankings. Key findings include the difference between ‘residual’ approaches to performance estimation versus estimating parameters within the model, the impact of correlation between predictors and providers, and additional diagnostics that should be considered when undertaking a provider comparison exercise.

"You'll be fine – you've only sprained your brain": Practical Steps Toward Normalization of Expectations and Improvement of Treatment for Emotional Harm
Robert Aurbach and Les Kertay

We think and talk about mental health conditions differently than we do about physical conditions, with negative consequences for workers and the system. Because of those differences, both treaters and workers have developed expectations and practices concerning mental health conditions which contribute to poor outcomes. We can do better by changing language, insisting on diagnostic rigor, insisting on appropriate care and patient education, and regular monitoring of the care given. The role of the General Practitioner in the diagnosis of mental health concerns is discussed.

The changes to implement this approach are relatively simple, and can be accomplished either directly, through legislation and regulation, or indirectly, through the payer’s power to withhold payment until satisfied that the claimant is getting appropriate and effective services.