SEAFARERS, REHABILITATION AND COMPENSATION ACT REVIEW
ISSUES PAPER RESPONSE FORM Please complete in WORD DOCUMENT (.docx) or PDF Format Individual or Organisational Name: Allianz Australia Insurance Limited (ACN 000 122 850)
TOR 1(a) – OHS(MI) Act interaction with the OPGGS Act and State and Territory OHS schemes Questions Comments 1. What practical issues arise in relation to: No comment a) disapplying the Navigation Act and OHS(MI) Acts under the OPGGS Act? b) the interaction between the OHS(MI) Act and State or Territory OHS laws? 2. What changes are considered necessary? No comment TOR 1(b) ‐ Coverage of the Seacare scheme – jurisdictional Issues Key areas where the Navigation Act is currently linked to the Seacare scheme are: a) the Navigation Act provides the definition of a prescribed ship. 3. Should the Seacare scheme be legislatively independent of the Navigation Act? Seafarers, Rehabilitation and Compensation Act Review
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b) the Navigation Act provides a definition of a Seafarer. This is a consequential amendment flowing through from the Navigation Act 2012. Prior to this the definition was under the Seafarers Act. We would support the Seafarers Act being legislatively independent of the Navigation Act, as this provides an opportunity to provide clarity and certainty when defining coverage of the Seafarers Act. Incorporating these definitions under the Seafarers Act, amendments can be made where appropriate to reflect the particulars of the Seacare scheme and provide clear definitions independent of changes being required to the Navigation Act. As noted in the discussion paper, we agree that if the Seacare scheme was made independent, the Navigation Act would need to be monitored so the implications of any changes can be addressed. 4. Does the legislation include anyone who should not be covered or exclude anyone who should be covered? Temporary Employment on a Ship: The current definition of a ‘Seafarer’ clarifies that a person temporarily employed on the ship in port, does not fall under the definition of a Seafarer. There are circumstances whereby a person is temporarily on a ship whilst at sea, and their purpose for being on the ship is not related to the day to day business of the ship. An example of this may be an engineering firm that undertakes some repair and maintenance work on a ship whilst it is in port and when the ship next goes to sea an employee(s) of the engineering firm may be on the ship for a day or two to undertake some testing of the work undertaken. We do not believe a person on the ship in these circumstances should fall under the definition of a Seafarer. It is also unlikely that the employer of these employees would even consider that they may require a policy in accordance with the Seafarers Act, on the basis that they are already covered for Workers Compensation under an applicable state/territory based policy. 5. What other issues are there with the scheme’s current coverage provisions? We note this review will consider the submissions previously made in respect to the Seacare Authority’s 2012 discussion paper on jurisdictional coverage. Allianz provided a submission in response to the discussion paper. Seafarers, Rehabilitation and Compensation Act Review
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In our submission we made comment on coverage in respect to Offshore Industry Vessels and Trainees. The key points we consider need review are: 1) Offshore Industry Vessels The Seacare discussion paper made reference to coverage provisions for offshore industry vessels and noted an intention that these vessels would be covered under the Seafarers Act when operated by an Australian domiciled operator. In principal we would support this provision, however we believe there are a number of key items that need to be addressed ƒ A clear and precise definition is required as to what will constitute an offshore industry vessel, for example, what is the position with supply vessels and rigs engaged in the offshore industry? The definition of an offshore industry vessel provided in the discussion paper was: vessels wholly or primarily engaged in exploiting or exploring the non‐living natural resources of the seabed and subsoil of the seabed. This differs from the definition provided in the Coastal Trading Bill which is broader in that it includes vessels ‘associated with or incidental to’. Under the definition in the Coastal Trading Bill, we would interpret this to include supply vessels. We note that at present a large number of the seafarers (depending on which Union they are represented by) that are working on supply vessels supporting the offshore industry, are currently working under industrial agreements that require them to be covered for benefits consistent with the Seafarers Act, regardless of whether the Seafarers Act actually applies. Our view is that the broader definition noted in the draft Coastal Trading Bill should be adopted. ƒ The draft coverage provisions do not make any mention of crewing requirements. We recommend crewing arrangements be clarified. Our view is crewing arrangements should be comparable to those vessels operating under a General Trading Licence or a Transitional General Trading Licence, or as a minimum, have a requirement that a ‘majority’ of the crew are either Australian citizens, hold a permanent visa or hold a temporary visa. Seafarers, Rehabilitation and Compensation Act Review
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It was suggested that these vessels would be covered regardless of where they operate. Is it intended to provide coverage to offshore vessels if they never operate within Australian waters? We would not support a position where coverage is provided to a vessel that only operates outside Australian waters and has a foreign crew. 2) Trainees We believe the coverage provisions in respect to trainees need to be clearly defined. Whilst the Seafarers Act currently has clear definitions around who is a trainee and when an injury to a trainee is considered to have arisen out of, or in the course of, his or her employment, the current application provisions under section 19 of the Act only make reference to employees ‘on’ a prescribed ship. As a trainee may be undergoing a training course prior to becoming a seafarer or may be a seafarer undergoing a training course but is not currently employed or engaged on a vessel, we would recommend a clause in line with the following be included to the coverage provisions: This Act applies to the employment of industry trainees who: (a) Although ordinarily employed or engaged as a seafarer, is not so employed or engaged but is undergoing an approved industry training course. (b) is undergoing an approved industry training course before becoming a seafarer. This Act applies to the employment of company trainees who: (a) Although ordinarily employed or engaged as a seafarer, is not so employed or engaged but is undergoing a training course as required by his or her employer, (b) is undergoing a training course as required by his or her employer before becoming a seafarer. In addition to these items, there are a number of other coverage provisions that we believe require review: Seafarers, Rehabilitation and Compensation Act Review
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1) Coverage of vessels operating in territory waters only: Our view is that the coverage of these vessels (prescribed ships) should be treated in the same manner as vessels engaged in intrastate voyages only. Accordingly we would propose that these vessels should not be subject to the Seafarers Act. 2) Vessels engaged in intrastate and interstate voyages: There are vessels operating in Australia where they undertake a combination of intrastate and interstate voyages. This can lead to confusion with operators as to when the crew of the vessel would be covered by the Seafarers Act or the applicable state based Workers Compensation Act. It can also potentially result in a position whereby a worker can ‘select’ the scheme they want to lodge a claim under, particularly in respect to injuries/diseases of gradual onset. Whilst operators of vessels predominately involved in intrastate voyages have the facility to seek an exemption for ‘one‐off’ interstate/international voyages, we believe this review provides the opportunity to provide clarity around coverage requirements for vessels that undertake mixed voyages. Coverage in all state/territory Workers Compensation Acts takes into consideration a ‘state of connection test’ and we believe the principles of these tests should be considered here. We would support a position whereby: a) a vessel that is “usually” engaged in interstate/international voyages but also undertakes occasional intrastate voyages, would be subject to the Seafarers Act for all voyages. b) a vessel “usually” engaged in intrastate voyages but undertakes occasional interstate/international voyages, would be subject to the relevant state based Workers Compensation Act for all voyages. Since that submission was made, the position on a number of items has been established through the Governments shipping reform associated legislation. We support the maintenance of the following coverage positions established through this legislation, namely: 1) A vessel that is used to engage in coastal trading under a ‘General Licence’: these vessels are subject to the Seafarers Act. 2) A vessel that is used to engage in coastal trading under a ‘Transitional General Licence’: these vessels are subject to the Seafarers Act. Seafarers, Rehabilitation and Compensation Act Review
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3) A vessel that is used to engage in coastal trading under an ‘Emergency Licence’ and the vessel is registered in the Australian General Shipping Register: these vessels are subject to the Seafarers Act. 4) A vessel granted a ‘Temporary Licence’: these vessels are not subject to the Seafarers Act. 5) Vessel registered in the Australian International Shipping Register: these vessels are not subject to the Seafarers Act. 6. What are the implications for the Seacare scheme in the current and proposed maritime reforms and changes to offshore petroleum and greenhouse gas storage regulatory regime? Please refer above TOR 1(c) ‐ Exemptions from the Seacare scheme and declarations under the Navigation Act
Depending on what amendments are made to the Seafarers Act in respect to the coverage provisions emanating from this review, we believe it would be appropriate to maintain the opportunity for operators to seek exemptions for: 1) ‘One’ off interstate/international voyages for prescribed ships where the crew would normally be subject to a state/territory based workers compensation scheme. 2) Prescribed ships that operate in territory waters only. 3) Prescribed ships that are expected to voyage between two places outside Australia over a period of 12 months or more, and the majority of crew on the prescribed ship are not residents of Australia. 4) The voyages undertaken by a prescribed ship that make the prescribed ship subject to the operation of the Seafarers Act are incidental to the primary operations of the prescribed ship. 5) The size of a prescribed ship is under 500 gross tonnes. 7. Should the Seafarers Act continue to provide for exemptions? If so: • what should they be? • should limitations apply to such exemptions and directions? • should the exemption categories and powers be spelled out in the legislation? 8. Are there satisfactory arrangements for the review of decisions on exemptions? No comment Seafarers, Rehabilitation and Compensation Act Review
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TOR 2(a) ‐ provisions in the legislation which need to be updated
9. Do any provisions in the Seacare scheme’s legislation require updating? Please refer above 10. If so, why and what change should be made? ‐ TOR 2(b) ‐ legislative changes required to the OHS(MI) Act to ensure consistency with the model work health and safety laws. 12. What changes are necessary to align the OHS(MI) Act with the Commonwealth’s Work Health and Safety Act? No comment 13. Are there any considerations that would require a different approach in any area? No comment TOR 2(c) ‐ Consistency with the Safety, Rehabilitation and Compensation Act
Increase the availability of cash redemptions and negotiated settlements. Currently under section 44, redemptions by lump‐sum are only available if the worker’s payments per week are $105.42 or less (as at 01/07/2012). This value is out of proportion with the high level of wages earned and maximum weekly compensation under the Act. It is recommended that the availability of redemptions be improved to the benefit of the worker and the scheme, whereby with the consent of the worker and the employer, a claim can be redeemed by payment of a lump‐sum amount. Similar to the provisions that prevail in section 67 of WA Workers’ Compensation and Injury Management Act. 15. What contemporary workers’ compensation considerations should be considered in the review of the Seafarers Act? Seafarers, Rehabilitation and Compensation Act Review
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It is recommended that reference to the amount of payments under section 44(1)(b) be removed and the requirements be for the redemption of a claim such that the worker’s incapacity is unlikely to change (already section 44(1)(c)) and that all vocational rehabilitation options must have been exhausted and based on an assessment of the worker’s most suitable and profitable employment having regard for the nature of the worker’s injury, the worker’s skills, qualifications and experience. Maintaining an injured worker on workers’ compensation presents a significant challenge to long term claimants especially where maximum medical improvement has been achieved and all rehabilitation options have been exhausted. This allows the injured worker the opportunity to exit the compensation process, while allowing them sufficient financial support to maintain a healthy lifestyle. In addition it will serve to avoid lengthy and costly litigation. Managing claims for seafarers residing outside Australia. The Seacare scheme has mechanisms in place that enable an injured worker to be supported by the employer whilst incapacitated by the provision of medical and rehabilitation services to facilitate as far a possible a return to pre‐accident capacity. At the same time employers operating under the Seacare scheme have obligations to rehabilitate an injured employee to their pre‐accident employment, or where this is not possible undertake retraining. The ability for an employer to effectively meet their rehabilitation obligations for an injured worker is materially diminished when the worker resides outside Australia and more particularly when residing in less developed countries. Additionally there are significant difficulties in the effective management of such claims. There is little to no oversight over the nature and scope of medical treatment nor return to work initiatives including retraining when a return to pre‐accident employment is not possible. The consequences are that such claims cost substantially more with entitlements potentially being paid until retirement age. This applies to both overseas workers returning to their country of residence and other workers who elect to reside outside Australia (including Australian nationals). Seafarers, Rehabilitation and Compensation Act Review
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This creates an inequitable position whereby injured workers residing in Australia are required to undertake appropriate rehabilitation in order continue to receive weekly benefits, whilst injured workers residing outside Australia may have no access to appropriate rehabilitation or no oversight is available around the rehabilitation being provided yet they continue to receive weekly benefits. An increase in the number of seafarers in these categories will result in a substantial increase in the cost of claims under the Seacare scheme which in turn could threaten the financial viability of the scheme. Recovery from third parties The current construction of section 59 (Proceedings against third parties) needs to be contemporarily updated in the Seafarers Act as it is vastly different to the legislative direction contained in other Acts such s151Z of the Workers Compensation Act 1987(NSW). It is contended that other workers’ compensation legislation provides the employer with the opportunity to take action for indemnity of their costs in circumstances where it is found that a third party is partially or wholly liable for the injury. Under current Seafarers legislation, a recovery action is an action on behalf of the seafarer for damages for the injury, rather than an action for indemnity. The only workers compensation provision that is similar to the provisions contained within s59 is s50 of the Safety, Rehabilitation and Safety Act (Cth) (SRC Act). The provisions are similar in that they both contend that an employer may institute proceedings for damages in the name of the injured worker. However the distinguishing factor is that under the SRC Act, an employer can oblige the injured worker to sign documents to enable them to issue proceedings in the name of the injured worker where they have chosen not to institute proceedings themselves. It is contended that the Seafarers legislation should be updated with respect to recoveries and the right of an employer to indemnity where they are not the “at fault” party. Whilst it may not be directly in the interests of the injured seafarer, this would not be detrimental to them as it is an indemnity to the employer for the costs already paid to the injured worker. Seafarers, Rehabilitation and Compensation Act Review
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Greater ability to undertake determinations of suitable employment and assessment of earning capacity: The current provisions within section 32 (Determination of Suitable Employment) are specific and overly prescriptive, when compared to similar provisions within other State based compensation shemes. As it stands, the ability to determine a workers earning capacity in suitable employment can only be based on the worker being in paid employment or receiving an offer of suitable paid employment. The ability to make a determination of this nature based on an evidence‐based assessment of their most suitable and profitable employment can only be utilised if the worker has not sought suitable employment (section 32(e)). It is considered a contemporary amendment that the Seafarers Act be altered to permit the use of an evidence‐based assessment of a worker’s most suitable and profitable employment, that the worker could be reasonable be expected to perform, whether or not the worker has sought, been offered or has gained that employment. This would be similar to the work capacity assessment guidelines under the NSW Workers Compensation and Rehabilitation Act (sections 43 and 44A) and Northern Territory Workers Rehabilitation and Compensation Act (sections 65(2) and 68). The current provisions of the Act, combined with the generous weekly compensation entitlement, do not motivate or encourage the worker to strive to achieve their most suitable and profitable employment as part of the vocational rehabilitation process. Updating the deeming provisions would provide the precursor to enable this, while improving return to work outcomes in the scheme and reducing costs to employers. Statutory Compensation for Non‐Economic Loss It is recommended the entitlement to Non‐Economic Loss (section 41) be removed from the Seafarers Act, as it and the SRC Act are not in line with most other State based compensation shemes. This entitlement does not exist under other state or territory compensation Acts, including Tasmania, ACT, NT and WA, and with NSW recently repealing this entitlement (section 67) of their Act. It is our view that the statutory lump sum entitlement for permanent impairment adequately compensates injured workers for permanent injuries, and should they wish to pursue an entitlement to non‐economic loss then this falls within the ambits of damages under Common Law and should not be a statutory entitlement. Seafarers, Rehabilitation and Compensation Act Review
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Definition of injury and reasonable disciplinary action. It is considered necessary to amend definition of an “injury” under section 3 of the Seafarers Act to make it contemporary with SRC Act and other state‐based legislations, and require an injury to be caused in a significant or substantial degree by the workers employement, not merely coincidental to them being on board a prescribed ship or authorised recess at the time the injury occurred as outlined in section 9(2)(b) of the Act. The current provisions allow for injuries such as stroke and heart attack to be covered under the definition of an injury, which in our view is not the intention of the legislation, unless the seafarer’s work has contirubted in a significant degree to such injuries. The definition of “injury” under section 3 of the Seafarers Act includes that an injury “does not include anything suffered by an employee as a result of reasonable disciplinary action…or failure by the employee to obtain a promotion, transfer or benefit in connection with his or her employment.” It is recommended and supported that the definition of “reasonable disciplinary action” in the Seafarers Act be replaced with the definition of “reasonable administrative action” as per section 5A(2) of the SRC Act. The definition of “reasonable administrative action” provides a broader test covering a broader range of management decisions and processes enabling more clarity and certainty in the assessment of mental injury claims of this kind. Where injuries, such as “injury diseases” are concerned, provision needs to be made in the Seafarers Act for these and other events such as degenerative conditions, heart attacks, strokes to be assessed as being “significantly” or “substantially” contributed to by the nature of the worker’s employment. “Injury diseases” are often a consequence of lifestyle, genetic or congenital factors, and just as likely to occur at home, as they do in the workplace. The on‐going inclusion of these “injury diseases’” in the Seafarers scheme is placing an unnecessary burden on the scheme and will increase employer premiums as the prevalence and impact of these chronic diseases affect the Australian (and Seafarer) population. With Australian worker’s now remaining at work until age 67 (eligible pension age) consideration must be given to eliminating the potential for “injury disease” to further increase the cost the Seafarers scheme. 16. Aside from coverage, are there any aspects of the Seafarers Act’s rehabilitation and compensation scheme that should different from what is provided under the Safety Rehabilitation and Compensation Act? Seafarers, Rehabilitation and Compensation Act Review
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The definition of “disease” (section 3) currently refers to an ailment or an aggravation that was contributed to by a material degree. It is our contention that this definition should be amended and aligned with section 5B of the SRC Act where the disease must be “…contributed to, to a significant degree, by the employee’s employment” where significant degree “means a degree that is substantially more than material”. Journey claims to/from work. Under the Seafarers Act, injuries arising whilst an employee is travelling between his or her place of residence and place of work are considered to have arisen out of or in the course of employment. It is proposed that this provision be amended, to purposely exclude journeys to/from home as the employer has little to no control over managing this risk. This would bring the Seafarers legislation contemporarily up to date with the national trend for state‐based legislations to move away from to/from work journey claims as evidenced with the recent amendments to the NSW scheme. Section 6(1C) of the SRC Act specifically states that travel between the “employee’s residence and the employee’s usual place of work” is not to be considered as traveling for the purpose of employment, and it is this provision that should be adopted by the Seafarers Act. Permanent Impairment. Under section 39(7) (Compensation for injuries resulting in permanent impairment), compensation is not payable if the assessment of permanent impairment is less than 10% (except for injuries relating to the finger, toe, taste or smell). This is slightly modified from section 24 of the SRC Act, where there is an additional exception for hearing impairment claims only need to meet a 5% threshold. The Review of Safety, Rehabilitation and Compensation Act 1998 Issues Paper dated September 2012 discusses that the threshold for permanent impairment claims may be reduced based on improved assessment tools. It is our opinion that regardless of the advances in medical science, considerable discrepancy between assessors still remains, especially at the lower percentages, due to the application and interpretation of the Guides. Accordingly, it is our opinion that the provisions for permanent impairment under the Seafarers Act, as they Seafarers, Rehabilitation and Compensation Act Review
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stand, are contemporary, functional and applicable. We would not support a lowering of the permanent impairment threshold on claim or to incorporate a lower threshold for hearing loss claims, as his would have a cost implication for the scheme and contribute to the raising costs of managing a Seafarers claim. Enable the AAT to order costs against an unsuccessful Applicant. Sections 91 and 92 (Costs of proceedings before AAT) are similar to those detailed section 67 of the SRC Act, in that the AAT can order costs against the employer for proceedings in the AAT whether or not the Applicant is successful. This is an additional layer of claim expenses that an employer must bear, regardless of the outcome. The application of these sections in the Seafarers legislation is contradictory to the state‐based legislations. The Seafarers scheme is privately underwritten and should not be aligned with the government aided / self‐
funded Comcare scheme in this regard. It is proposed that under Seafarers the AAT be granted with the ability to order costs against an unsuccessful applicant, especially if the matter is considered to be frivolous or vexatious by the Tribunal. Adjustment Mechanism for Former Employees: It is our understanding that the indexation provisions within the SRC Act were established due to difficulties in assessing the appropriate classification of former employees and therefore the applicable normal weekly earnings (NWE) entitlement. This difficulty does not apply to Seafarers, as most are employed under a clearly defined classification system under the Enterprise Bargaining Agreements (EBA’s). The challenge faced, however, is that former employees continue to benefit from increases in wages negotiated under these EBA’s, as their NWE is adjusted to reflect the increased wage rates. This subsequently results in increased claim costs as the weekly benefit entitlement increases. Whilst it would be unrealistic to apply the SRC Act Wage Price Index (WPI) methodology to Seafarers as the wage inflation is generally greater than the WPI and reflective of the smaller labour pool, consideration should be given to excluding casual and temporary workers from having their NWE entitlement adjusted as there was no expectation that employment would be ongoing if not for the injury. Seafarers, Rehabilitation and Compensation Act Review
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It is considered reasonable to raise the Seafarers pension age to be in line with the eligible pension age. It is noted that most other state‐based legislations have already made this amendment, however it is our strong position that any increase in entitlements only applies to claims which occur after any legislative amendment, and that entitlements are not extended restrospectively for existing claims. Premiums have been set in the context of the present legislative regime and with regard to the level and extent of coverage currently provided. Retrospective application will have the effect of imposing liability for which appropriate premium has not been collected, potentially resulting in unfunded liabilities. Based on the current wording, the proposed amendment of the pension age in the Seafarers Act will automatically and retrospectively impact the cost to the scheme. Based on a recent assessment, following this amendment to the NT Workers’ Rehabilitation and Compensation Act, we determined there would be a 5% increase in costs to the NT scheme. This assessment was based on Northern Territory claims, a mix of low hazard and high hazard claims. It is considered that the impact to the Seafarers scheme will be substantially more than the 5% assessed in the NT, due to the nature of Seafarers claims being particularly high hazard / high cost. The proposal to expand the entitlement of a Seafarer, under section 38(2) to receive incapacity payments for up to 104 weeks is not supported. The incapacity benefits under the Seafarers Act are already exceedingly generous, compared to the other state‐based schemes e.g. 75% reduction at 45 weeks incapacity versus 26 weeks in other state‐based legislations, and the expansion from 52 to 104 weeks will add further to the increasing costs of the scheme and employer premiums due to the long‐tail nature of the portfolio. In addition, Seafarers also have access to generous superannuation benefits, and would be able to access this scheme at the cessation of compensation entitlements after 52 weeks. It is considered that the current provision of a Seafarer being entitled to 12 months of compensation, if injured at age 64 or older (age 66 or older if the eligible pension age is adopted) remains entirely adequate. Are there issues of age discrimination that should be addressed and, if so, are the proposals of the ALRC (see above) for the consistent amendment of Seafarers Act and the Safety Rehabilitation and Compensation Act appropriate? Seafarers, Rehabilitation and Compensation Act Review
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TOR 3 ‐ Workers’ Compensation Premium Issues
18. What is the appropriate funding model for the Seacare scheme? A privately underwritten model has been proven to be the most effective one. All privately underwritten schemes in Australia (ACT, NT, Tasmania, WA and Seafarers) do not have any unfunded liabilities. In contrast, the centrally underwritten schemes have incurred susbstantial deficits over the past decade and many are still in deficit with unfuned liabilities. Insurers operating in the privately underwritten jurisdictions are regulated by APRA and are required to maintain a prescribed amount of capital to support the underwriting of insurance products. Insurers also arrange reinsurance to provide protection against catastrophic losses. Insurers price their products on the basis of achieving a market return on the capital employed. Insurers providing cover under Seacare are generally operating in all other privately underwritten workers compensation schemes. The total premium pool for the privately underwritten schemes exceeds $1.2 billion. The top 4 national workers compensation insurers account for over 85% of the total market. Workers Compensation insurers in Australia employ specialist staff in the management of their national businesses; these include health professionals, safety experts, lawyers and actuaries. Generally these insurers have purpose built workers compensation systems to manage all aspects of policy and claims management. Reinsurance is attained for the total portfolio of workers compensation risks and the cost of reinsurance is cost effective in view of the spread of risk. Additionally, insurers with the benefit of scale, make investment in innovation across all aspects of workers compensation management. While the Seacare scheme is relatively small in terms of policyholders and premium pool when compared to all other State and Territory schemes , insurers offer policyholders under Seacare efficient and effective insurance coverages afforded because of their national capabilities. In addition to providing insurance for Seacare, insurers also provide coverage under the same policy, for certain liabilities under the Navigation Act in relation to medical and other expenses. Seafarers, Rehabilitation and Compensation Act Review
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19. Are there any changes to the existing arrangements that would be likely to reduce premiums? The cost of premiums is a function of the cost of claims. A sustainable reduction in premiums can only be achieved by a reduction in the number of accidents and the cost of each accident. While the average premium rates for Seacare between 2006‐2007 and 2010‐2011 have reduced from approximately 5.5% to 3.5% (Comparative Performance Monitor 2010‐2011), it is unclear whether the reduction is a real reduction in claims costs or whether it is partly due to policyholders assuming more cost through policy excesses. 20. Should self‐insurance options be available under the Seafarers Act and, if so, what rules should apply to them? 21. Should limitations be placed on employers operating with very high claims excesses on their insurance policies? The option to self‐insure is currently available in each state and territory, plus under Comcare. We would support the option for employers under the Seacare Scheme to have access to a self‐insurance option on the basis that they meet similar criteria to that existing under the regulatory regimes in each of the states and territories. This criteria would need to address and consider items such as: • An employer’s financial strength and viability • The size of workforce; self insurance is not feasible for small employers. • Demonstrating satisfactory occupational and health safety performance • Demonstrating adequate resources to manage claims • Appropriate workplace rehabilitation policy and procedures • Acceptable reinsurance cover to provide protection for large losses over a certain limit As noted in the discussion paper, there is currently a form of de facto self‐insurance in place for some employers who have a high claims excess in place. The use of high claims excesses has been a method adopted by a number of employers for many years to amongst other things reduce premium costs, although the cost of the workplace accident is still bourne by the employer. One potential issue with carrying high excesses, where claims matters are managed internally by an employer, is the availability of suitably qualified staff to effectively manage all elements of a workers claim in accordance with legislation and regulations. If an employer wishes to carry a high level of self insurance then it should be permissible but within the framework of a regulated self insurance structure. Seafarers, Rehabilitation and Compensation Act Review
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If an employer wishes to carry a small amount of self insurance then it should be permitted within certain parameters. Tasmania for example allows for Excesses for weekly compensation up to 28 days incapacity and medical costs of $200. Our experience is that excesses of this magnitude do not impede the effective management of a claim. 22. How could rehabilitation and return to work be improved in ways that would be fair to all parties and have a meaningful effect on reducing premium costs? We believe the suggested changes outlined above to the benefit structure , particularly around the definition of injury and disease, as well as assessments of earning capacity, would assist in achieving the balance between reduction in premium costs, as well as encourage and facilitate improved return to work outcomes for workers who have suffered an injury that is substantially caused by their work. 23. Should P&I Clubs be encouraged to operate in the scheme? If so, how? Our understanding is that P&I Clubs do not wish to be involved in long tail schemes such as Seacare. TOR 4 ‐ Governance Issues
24. Do the current governance arrangements of the Seacare Authority allow it to fulfil its functions efficiently and effectively? No observations to suggest this is not the case; the key consideration is the existence of an authority to monitor the operation of both SRC Act and OHS(MI) Act. 25. What changes, if any, should be made? No comment 26. Are there any changes that would improve accountability under the Seacare scheme and the transparency and review of decision making within the scheme? No comment 27. Should there be any change to how the cost of regulation is met? No comment 28. Should any changes be made in relation to the Safety Net Fund? This would be dependent on what controls operate for quasi self insurance in the form of excesses under policies of insurance, and what controls operate for shipping operators to provide evidence of insurance on an annual basis. In the absence of effective and efficient controls, the Fund is potentially exposed to substantial liabilities. Seafarers, Rehabilitation and Compensation Act Review
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Final Comments? Any other matters you wish to bring to the attention of the Review? It is recommended that any changes to the legislation not be applied retrospectively. Industry pricing has been set in the context of the present legislative regime and with regard to the level and extent of coverage currently provided. Retrospective application will have the effect of imposing liability for which appropriate premium has not been collected, potentially resulting in unfunded liabilities. Additionally, any retrospective application may cause uncertainty in relation to past decisions and settled law . Seafarers, Rehabilitation and Compensation Act Review
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