WorkCover Queensland Amendment Regulation (No. 1) 1999 (Qld)

Queensland Subordinate Legislation 1999 No. 153 WorkCover Queensland Act 1996 WORKCOVER QUEENSLAND AMENDMENT REGULATION (No. 1) 1999 TABLE OF PROVISIONS Section Page 1 Short title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2 Commencement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 3 Regulation amended . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 4 Amendment of s 3 (Definitions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 5 Amendment of s 4 (Scheme solvency—Act, s 5) . . . . . . . . . . . . . . . . . . . . . 5 6 Amendment of s 13 (Surcharge) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 7 Amendment of s 31 (Annual levy and surcharge—Act, s 111) . . . . . . . . . . 5 8 Amendment of s 32 (Conditions of licence—Act, s 112) . . . . . . . . . . . . . . 5 9 Amendment of s 33 (Premium payable after cancellation of self–insurer’s licence—Act, s 125) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 10 Amendment of s 38 (Documents to be kept by eligible person) . . . . . . . . . 6 11 Insertion of new pts 8 and 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 PART 8—REASONS FOR DECISIONS 81 Reasons for decisions must address certain matters—Act, s 489(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 PART 9—AMOUNT OF CALCULATION OF LIABILITY FOR SELF-INSURERS Division 1—Outstanding liability Subdivision 1—Purpose and application of div 1 82 Purpose of div 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 83 Application of div 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

2 WorkCover Queensland Amendment (No. 1) No. 153, 1999 Subdivision 2—Calculation 84 Appointment of actuary for calculation . . . . . . . . . . . . . . . . . . . . . . . 8 85 Calculation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 86 WorkCover to give actuaries information . . . . . . . . . . . . . . . . . . . . . 8 87 Actuarial report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 88 Summary report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 89 Agreement on calculation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 90 Reference to actuarial arbiter if no agreement . . . . . . . . . . . . . . . . . 11 91 Arbiter’s costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 92 Payment of amount for outstanding liability—new applicant . . . . . 11 93 Election by current self-insurer or current applicant about payment for outstanding liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 94 Payment of amount for, or on account of, outstanding liability—current self-insurer and current applicant . . . . . . . . . . . . . 12 95 Transfer of claims information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Subdivision 3—Recalculation 96 Purpose of sdiv 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 97 Application of sdiv 3 for group employers . . . . . . . . . . . . . . . . . . . . . 14 98 Appointment of actuary for recalculation . . . . . . . . . . . . . . . . . . . . . 14 99 Recalculation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 100 WorkCover to give actuaries information . . . . . . . . . . . . . . . . . . . . . 15 101 Actuarial report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 102 Summary report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 103 Agreement on recalculation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 104 Reference to actuarial arbiter if no agreement . . . . . . . . . . . . . . . . . 17 105 Arbiter’s costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 106 Payment of amount for recalculation . . . . . . . . . . . . . . . . . . . . . . . . . 17 Division 2—Total liability and residual liability 107 Purpose of div 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 108 Appointment of actuary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 109 Calculation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 110 Parties to give actuaries information . . . . . . . . . . . . . . . . . . . . . . . . . 19 111 Actuarial report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

3 WorkCover Queensland Amendment (No. 1) No. 153, 1999 112 Summary report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 113 Agreement on calculation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 114 Reference to actuarial arbiter if no agreement . . . . . . . . . . . . . . . . . 21 115 Arbiter’s costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 116 Payment of amount for total or residual liability . . . . . . . . . . . . . . . 21 117 Transfer of claims information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Division 3—Liability after cancellation of self-insurer’s licence 118 Purpose of div 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 119 Appointment of actuary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 120 Calculation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 121 Former self-insurer to give actuaries information . . . . . . . . . . . . . . . 23 122 Actuarial report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 123 Summary report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 124 Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 125 Reference to actuarial arbiter if no agreement . . . . . . . . . . . . . . . . . 24 126 Arbiter’s costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 127 Payment of amount for liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Division 4—Actuarial arbiter 128 Function of actuarial arbiter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 129 Appointment of actuarial arbiter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 130 Decision of arbiter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 131 Arbiter’s decision is final . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 SCHEDULE . . . . . . . . . . . . . . . . . . . . . . . . . 27 CONSEQUENTIAL AMENDMENTS

s1 4 s4 WorkCover Queensland Amendment (No. 1) No. 153, 1999 ˙ Short title 1. This regulation may be cited as the WorkCover Queensland Amendment Regulation (No. 1) 1999 . ˙ Commencement 2.(1) Section 11, so far as it inserts new part 8, commences on 1 July 1999. (2) The schedule commences on 1 July 2000. ˙ Regulation amended 3. This regulation amends the WorkCover Queensland Regulation 1997. ˙ Amendment of s 3 (Definitions) 4. Section 3— insert— ‘ “actuarial standard” means ‘Professional Standard 300—Actuarial reports and advice on outstanding claims in general insurance’ issued by the Institute of Actuaries of Australia (ACN 000 423 656). 1 “actuary” means an actuary approved by WorkCover. “arbiter” means the actuarial arbiter appointed under section 129. “central estimate” has the meaning given by the actuarial standard, section 10. “claim” , for part 9, means— (a) an application for compensation; or (b) a claim for damages. “financial quarter” means a period of 3 months beginning on 1 January, 1 April, 1 July or 1 October. 1 A copy of the standard may be inspected at the WorkCover’s head office at 280 Queen Street, Brisbane.

s5 5 s8 WorkCover Queensland Amendment (No. 1) No. 153, 1999 “prudential margin” has the meaning given by the actuarial standard, section 12. “risk free rate of return” has the meaning given by the actuarial standard, section 13.’. ˙ Amendment of s 4 (Scheme solvency—Act, s 5) 5. Section 4(1), ‘15%’— omit, insert— ‘5%’. ˙ Amendment of s 13 (Surcharge) 6. Section 13(1), ‘An’— omit, insert— ‘For a period of insurance before 1 July 1999, an’. ˙ Amendment of s 31 (Annual levy and surcharge—Act, s 111) 7 . Section 31(1)(b), before ‘the amount’— insert— for each year, or part of a year, of a licence before 1 July 1999—’. ˙ Amendment of s 32 (Conditions of licence—Act, s 112) 8.(1) Section 32(a), after ‘surcharge’— insert— ‘payable under section 31’. (2) Section 32(b)(i), after ‘bank’— insert— ‘or Queensland Treasury Corporation’.

s 9 6 s 11 WorkCover Queensland Amendment (No. 1) No. 153, 1999 ˙ Amendment of s 33 (Premium payable after cancellation of self–insurer’s licence—Act, s 125) 9. Section 33(1), ‘but does not become a self-rater’— omit. ˙ Amendment of s 38 (Documents to be kept by eligible person) 10. Section 38(3), ‘3 or division 5 22 ’— omit, insert— ‘3A or division 5, subdivision 2 2 ’. ˙ Insertion of new pts 8 and 9 11. After section 80— insert— ‘ PART 8—REASONS FOR DECISIONS ˙ ‘ Reasons for decisions must address certain matters—Act, s 489(4) ‘ 81.(1) For section 489(4) of the Act, the reasons must— (a) cite the provision of the Act under which the decision is made; and (b) state the evidence considered for the decision; and (c) state the evidence that was accepted or rejected for the decision and why it was accepted or rejected; and (d) state the conclusions drawn from the evidence; and (e) disclose the link between the evidence, the conclusions and the relevant provision of the Act. 2 Chapter 3 (Compensation), part 8 (Weekly payment of compensation), division 4 (Entitlement for total incapacity), subdivision 3A (Eligible persons) or division 5 (Entitlement for partial incapacity), subdivision 2 (Eligible persons)

s 11 7 s 11 WorkCover Queensland Amendment (No. 1) No. 153, 1999 ‘ (2) The reasons must also clearly state the decision made and be written in plain English. ‘ PART 9—AMOUNT OF CALCULATION OF LIABILITY FOR SELF-INSURERS ‘ Division 1—Outstanding liability ‘ Subdivision 1—Purpose and application of div 1 ˙ ‘ Purpose of div 1 ‘ 82. This division sets out the process for the calculation of an amount for a self-insurer’s outstanding liability for the Act, section 116. 3 ˙ ‘ Application of div 1 ‘ 83. This division applies to the following employers— (a) an employer who was licensed as a self-insurer immediately before 3 March 1999 (a “current self-insurer” ); (b) an employer who lodged an application to be licensed as a self- insurer on or before 3 March 1999 (a “current applicant” ); (c) an employer who applies to be licensed as a self-insurer after 3 March 1999 (a “new applicant” ). 3 Section 116 (Self-insurer replaces WorkCover in liability for injury) of the Act

s 11 8 s 11 WorkCover Queensland Amendment (No. 1) No. 153, 1999 ‘ Subdivision 2—Calculation ˙ ‘ Appointment of actuary for calculation ‘ 84. WorkCover and the employer must each appoint an actuary to calculate an amount for the outstanding liability. ˙ ‘ Calculation ‘ 85.(1) The calculation must— (a) be prepared under the actuarial standard; and (b) apply a central estimate of the outstanding liability; and (c) as far as practicable, be based on the employer’s claims experience from claims incurred before the employer becomes or became a self-insurer; and (d) apply the risk free rate of return; and (e) include claims administration expenses of 7% of the outstanding liability; and (f) not include a prudential margin. ‘ (2) For a new applicant, the calculation must be based on data as at the last day (the “assessment day” ) of the financial quarter immediately before the day the application for self-insurance is lodged. ‘ (3) For a current self-insurer or a current applicant, the calculation must be based on data as at the last day (also the “assessment day” ) of the last financial quarter for which data is available— (a) 3 months before the day the application for renewal of self- insurance is lodged; or (b) if the self-insurer or applicant decides to assume the outstanding liability before lodging the application for renewal, on the day WorkCover receives written notice of the decision. ˙ ‘ WorkCover to give actuaries information ‘ 86. WorkCover must give the actuaries the information necessary to

s 11 9 s 11 WorkCover Queensland Amendment (No. 1) No. 153, 1999 enable the actuaries to complete the calculation within the time mentioned in section 87(3). ˙ ‘ Actuarial report ‘ 87.(1) After completing the calculation, each actuary must prepare an actuarial report on the calculation the actuary made. ‘ (2) The report must— (a) be prepared under the actuarial standard; and (b) clearly state the key assumptions made for the calculation and how the assumptions have been derived, including— (i) the average amount of claims for compensation against the employer; and (ii) the average amount of claims for damages against the employer; and (iii) claims anticipated to have been incurred by the employer for which no formal claim has been lodged; and (iv) the frequency of claims for compensation against the employer; and (v) the frequency of claims for damages against the employer; and (vi) the net amount of the claims after allowing for future inflation ( “inflated value” ); and (vii) the net present value of the inflated value after allowing for income from assets set aside by the employer to pay the outstanding liability; and (viii)the rate of inflation used; and (c) state the following about the data used in the calculation— (i) the nature of the data; (ii) the actuary’s assessment of its accuracy; (iii) how the actuary interpreted the data; and (d) state the actuarial model used in the calculation; and

s 11 10 s 11 WorkCover Queensland Amendment (No. 1) No. 153, 1999 (e) state the results of the calculation; and (f) state the actuary’s confidence in the results of the calculation. ‘ (3) The actuaries must complete the calculations and the reports— (a) for a new applicant—within 35 days after the day the application for self-insurance is lodged; or (b) for a current self-insurer or a current applicant— (i) no later than 2 months before the day the application for renewal of self-insurance is lodged; or (ii) if the self-insurer or applicant decided to assume the outstanding liability before lodging the application for renewal, no later than 35 days after the day WorkCover received written notice of the decision. ˙ ‘ Summary report ‘ 88.(1) The actuaries must jointly prepare a summary report that— (a) includes the individual actuarial reports; and (b) states how the individual reports agree or differ. ‘ (2) The actuaries must give the completed summary report to WorkCover and the employer— (a) for a new applicant—within 2 months after the day the application for self-insurance is lodged; or (b) for a current self-insurer or a current applicant— (i) no later than 35 days before the day the application for renewal of self-insurance is lodged; or (ii) if the self-insurer or applicant decided to assume the outstanding liability before lodging the application for renewal, no later than 2 months after the day WorkCover received written notice of the decision.

s 11 11 s 11 WorkCover Queensland Amendment (No. 1) No. 153, 1999 ˙ ‘ Agreement on calculation ‘ 89. WorkCover and the employer may agree on the calculation having regard to the summary report. ˙ ‘ Reference to actuarial arbiter if no agreement ‘ 90. If WorkCover and the employer can not agree on the calculation, WorkCover must refer the summary report to the arbiter for decision within 14 days after WorkCover is given the summary report. ˙ ‘ Arbiter’s costs ‘ 91. The arbiter’s costs in deciding on the calculation are to be paid by WorkCover and the employer in equal amounts. ˙ ‘ Payment of amount for outstanding liability—new applicant ‘ 92.(1) For a new applicant, the amount WorkCover must pay for the employer’s outstanding liability is the amount agreed to by WorkCover and the employer (the “agreed amount” ) or, if there is no agreement, the amount decided by the arbiter (the “decided amount”) . ‘ (2) WorkCover must pay the employer— (a) 75% of the agreed or decided amount on the day the licence commences; and (b) the balance within 1 month after the day the licence commences. ‘ (3) The agreed or decided amount paid to the employer must be adjusted by WorkCover’s actuary to take into account— (a) compensation and damages payments made between the assessment day and the day the employer becomes liable for the employer’s outstanding liability; and (b) claims lodged against the employer between the assessment day and the day the employer becomes liable for the employer’s outstanding liability.

s 11 12 s 11 WorkCover Queensland Amendment (No. 1) No. 153, 1999 ˙ ‘ Election by current self-insurer or current applicant about payment for outstanding liability ‘ 93.(1) This section applies if the employer is a current self-insurer or a current applicant. ‘ (2) The employer may, by written notice given to WorkCover, elect to accept— (a) payment of an amount for the outstanding liability unconditionally; or (b) an interim payment of an amount on account of the outstanding liability. ‘ (3) The employer must make the election within 7 days after— (a) WorkCover and the employer agree on the calculation; or (b) if there is no agreement, the employer receives the statement of the arbiter’s decision about the calculation. ‘ (4) If the employer elects to accept payment of an amount under subsection (2)(a), the amount WorkCover must pay for the employer’s outstanding liability is the total of— (a) the agreed or decided calculation; and (b) an amount equal to 5% of the agreed or decided central estimate. ‘ (5) If the employer accepts payment of an amount under subsection (2)(a), no further amount is payable for the outstanding liability. ‘ (6) If the employer elects to accept an interim payment under subsection (2)(b), an amount for the outstanding liability is recalculated under subdivision 3. ‘ (7) In this section— “agreed” means agreed to by WorkCover and the employer. “decided” means decided by the arbiter. ˙ ‘ Payment of amount for, or on account of, outstanding liability—current self-insurer and current applicant ‘ 94.(1) For a current self-insurer or a current applicant, WorkCover must

s 11 13 s 11 WorkCover Queensland Amendment (No. 1) No. 153, 1999 pay the employer, for or on account of the outstanding liability— (a) 75% of the amount mentioned in section 93(2)(a) or (b) on the day the licence is renewed; and (b) the balance within 1 month after the day the licence is renewed. ‘ (2) However, if the employer decided to assume the outstanding liability before lodging the application for renewal, WorkCover must pay the whole of the amount— (a) within 3 months after the day WorkCover received written notice of the decision; or (b) on a later day agreed to by WorkCover and the employer. ‘ (3) The amount paid to the employer must be adjusted by WorkCover’s actuary to take into account— (a) compensation and damages payments made between the assessment day and the day the employer becomes liable for the employer’s outstanding liability; and (b) claims lodged against the employer between the assessment day and the day the employer becomes liable for the employer’s outstanding liability. ˙ ‘ Transfer of claims information ‘ 95. WorkCover must give the employer claims information in relation to the employer’s outstanding liability— (a) for a new applicant—before the day the licence commences; or (b) for a current self-insurer or a current applicant— (i) before the day the licence is renewed; or (ii) if the self-insurer or applicant decided to assume the outstanding liability before lodging the application for renewal, no later than the day the whole of the amount mentioned in section 93(2)(a) or (b) is paid.

s 11 14 s 11 WorkCover Queensland Amendment (No. 1) No. 153, 1999 ‘ Subdivision 3—Recalculation ˙ ‘ Purpose of sdiv 3 ‘ 96. This subdivision sets out the process for the recalculation of an amount for a self-insurer’s outstanding liability if the self-insurer has made an election under subdivision 2 to accept an interim payment on account of the outstanding liability. ˙ ‘ Application of sdiv 3 for group employers ‘ 97. If the self-insurer is a group employer, this subdivision applies only in relation to— (a) the members of the group as at the day the self-insurer became liable for compensation and damages for the self-insurer’s outstanding liability; or (b) if the self-insurer applied, on or before the day the self-insurer became liable for compensation and damages for the self- insurer’s outstanding liability, for WorkCover’s consent to change the group membership on the licence—the proposed members of the group as at that day. ˙ ‘ Appointment of actuary for recalculation ‘ 98. At the end of 5 years after the self-insurer became liable for compensation and damages for the self-insurer’s outstanding liability, WorkCover and the self-insurer must each appoint an actuary to recalculate an amount for the outstanding liability. ˙ ‘ Recalculation ‘ 99.(1) The recalculation must— (a) be prepared under the actuarial standard; and (b) apply a central estimate of the outstanding liability; and (c) as far as practicable, be based on the self-insurer’s claims experience from claims incurred before the self-insurer became a

s 11 15 s 11 WorkCover Queensland Amendment (No. 1) No. 153, 1999 self-insurer; and (d) apply the same risk free rate of return that was used in the calculation of an amount for the liability under subdivision 2; and (e) include claims administration expenses of 7% of the outstanding liability; and (f) not include a prudential margin; and (g) have regard to compensation and damages payments made in relation to the liability between the day the self-insurer became liable for compensation and damages for the self-insurer’s outstanding liability and the end of 5 years after that day; and (h) exclude an amount for liability in relation to a change in the self- insurer’s membership after the day the self-insurer became liable for compensation and damages for the self-insurer’s outstanding liability. ‘ (2) The recalculation must be based on data as at the last day (the “assessment day” ) of the last financial quarter for which data is available at the end of 5 years after the self-insurer became liable for compensation and damages for the self-insurer’s outstanding liability. ˙ ‘ WorkCover to give actuaries information ‘ 100. WorkCover must give the actuaries the information necessary to enable the actuaries to complete the recalculation within the time mentioned in section 101(3). ˙ ‘ Actuarial report ‘ 101.(1) After completing the recalculation, each actuary must prepare an actuarial report on the calculation the actuary made. ‘ (2) The report must— (a) be prepared under the actuarial standard; and (b) clearly state the key assumptions made for the recalculation and how the assumptions have been derived, including— (i) the average amount of claims for compensation against the

s 11 16 s 11 WorkCover Queensland Amendment (No. 1) No. 153, 1999 self-insurer; and (ii) the average amount of claims for damages against the self- insurer; and (iii) claims anticipated to have been incurred by the self-insurer for which no formal claim has been lodged; and (iv) the frequency of claims for compensation against the self- insurer; and (v) the frequency of claims for damages against the self-insurer; and (vi) the net amount of the claims after allowing for future inflation ( “inflated value” ); and (vii) the net present value of the inflated value as calculated at the same risk free rate of return that was used in the calculation of an amount for the liability under subdivision 2; and (viii)the rate of inflation used; and (c) state the following about the data used in the recalculation— (i) the nature of the data; (ii) the actuary’s assessment of its accuracy; (iii) how the actuary interpreted the data; and (d) state the actuarial model used in the recalculation; and (e) state the results of the recalculation; and (f) state the actuary’s confidence in the results of the recalculation. ‘ (3) The actuaries must complete the recalculations and the reports within 35 days after the end of 5 years after the self-insurer became liable for compensation and damages for the self-insurer’s outstanding liability. ˙ ‘ Summary report ‘ 102.(1) The actuaries must jointly prepare a summary report that— (a) includes the individual actuarial reports; and (b) states how the individual reports agree or differ.

s 11 17 s 11 WorkCover Queensland Amendment (No. 1) No. 153, 1999 ‘ (2) The actuaries must give the completed summary report to WorkCover and the self-insurer within 2 months after the end of 5 years after the self-insurer became liable for compensation and damages for the self-insurer’s outstanding liability. ˙ ‘ Agreement on recalculation ‘ 103. WorkCover and the self-insurer may agree on the recalculation having regard to the summary report. ˙ ‘ Reference to actuarial arbiter if no agreement ‘ 104. If WorkCover and the self-insurer can not agree on the recalculation, WorkCover must refer the summary report to the actuarial arbiter for decision within 14 days after WorkCover is given the summary report. ˙ ‘ Arbiter’s costs ‘ 105. The arbiter’s costs in deciding on the recalculation are to be paid by WorkCover and the self-insurer in equal amounts. ˙ ‘ Payment of amount for recalculation ‘ 106.(1) If the amount agreed to by WorkCover and the self-insurer (the “agreed amount” ) or, if there is no agreement, the amount decided by the arbiter (the “decided amount” ), for the recalculation is more than the interim payment made under subdivision 2 on account of the outstanding liability— (a) the amount WorkCover must pay for the self-insurer’s outstanding liability is the agreed or decided amount; and (b) WorkCover must pay the self-insurer— (i) the difference between the interim payment and the amount for the outstanding liability; and (ii) interest on the difference, from the day the whole of the interim payment was paid, at the same risk free rate of return that was used in the calculation of an amount for the liability

s 11 18 s 11 WorkCover Queensland Amendment (No. 1) No. 153, 1999 under subdivision 2. ‘ (2) If the agreed or decided amount is less than the interim payment— (a) the amount WorkCover must pay for the self-insurer’s outstanding liability is— (i) the interim payment; less (ii) 30% of the difference between the interim payment and the agreed or decided amount; and (b) the self-insurer must pay WorkCover— (i) the difference between the interim payment and the amount for the outstanding liability; and (ii) interest on the difference, from the day the whole of the interim payment was paid, at the same risk free rate of return that was used in the calculation of an amount for the liability under subdivision 2. ‘ (3) WorkCover or the self-insurer must pay the amount of the difference within 28 days after— (a) WorkCover and the self-insurer agree on the recalculation; or (b) if there is no agreement, WorkCover or the self-insurer receives the statement of the arbiter’s decision about the recalculation. ‘ (4) On payment of the amount, no further amount is payable for the outstanding liability. ‘ Division 2—Total liability and residual liability ˙ ‘ Purpose of div 2 ‘ 107. This division sets out the process for the calculation of an amount for total liability for the Act, section 118(2), (4) or (6) 4 or residual liability for the Act, section 576(2), (4) or (6) 5 because of a change in a self- insurer’s membership. 4 Section 118 (Change in self-insurer’s membership) of the Act 5 Section 576 (Change in self-insurer’s membership) of the Act

s 11 19 s 11 WorkCover Queensland Amendment (No. 1) No. 153, 1999 ˙ ‘ Appointment of actuary ‘ 108. The party with whom the liability currently resides (the “old insurer” ) and the party assuming liability (the “new insurer” ) must each appoint an actuary to calculate an amount for the total or residual liability. ˙ ‘ Calculation ‘ 109.(1) The calculation must— (a) be prepared under the actuarial standard; and (b) apply a central estimate of the total or residual liability; and (c) as far as practicable, be based on the claims experience of the employer or member of a group employer that is the subject of the transfer of liability; and (d) apply the risk free rate of return; and (e) include claims administration expenses of 7% of the total or residual liability; and (f) not include a prudential margin. ‘ (2) The calculation must be based on data as at the last day (the “assessment day” ) of the financial quarter immediately before the relevant day mentioned in the Act, section 118(3), (5) or (7) or 576(3), (5) or (7). ˙ ‘ Parties to give actuaries information ‘ 110. The parties must give the actuaries, in the form approved by WorkCover, the information necessary to enable the actuaries to complete the calculation within the time mentioned in section 111(3). ˙ ‘ Actuarial report ‘ 111.(1) After completing the calculation, each actuary must prepare an actuarial report on the calculation the actuary made. ‘ (2) The report must— (a) be prepared under the actuarial standard; and (b) clearly state the key assumptions made for the calculation and

s 11 20 s 11 WorkCover Queensland Amendment (No. 1) No. 153, 1999 how the assumptions have been derived, including— (i) the average amount of claims for compensation against the employer or member; and (ii) the average amount of claims for damages against the employer or member; and (iii) claims anticipated to have been incurred by the employer or member for which no formal claim has been lodged; and (iv) the frequency of claims for compensation against the employer or member; and (v) the frequency of claims for damages against the employer or member; and (vi) the net amount of the claims after allowing for future inflation ( “inflated value” ); and (vii) the net present value of the inflated value after allowing for income from assets set aside by the employer or member to pay the total or residual liability; and (viii)the rate of inflation used; and (c) state the following about the data used in the calculation— (i) the nature of the data; (ii) the actuary’s assessment of its accuracy; (iii) how the actuary interpreted the data; and (d) state the actuarial model used in the calculation; and (e) state the results of the calculation; and (f) state the actuary’s confidence in the results of the calculation. ‘ (3) The actuaries must complete the calculations and the reports within 35 days after the day the old insurer receives WorkCover’s written consent to the change in the self-insurer’s membership (the “consent day” ). ˙ ‘ Summary report ‘ 112.(1) The actuaries must jointly prepare a summary report that— (a) includes the individual actuarial reports; and

s 11 21 s 11 WorkCover Queensland Amendment (No. 1) No. 153, 1999 (b) states how the individual reports agree or differ. ‘ (2) The actuaries must give the completed summary report to the parties within 2 months after the consent day. ˙ ‘ Agreement on calculation ‘ 113. The parties may agree on the calculation having regard to the summary report. ˙ ‘ Reference to actuarial arbiter if no agreement ‘ 114. If the parties can not agree on the calculation, the party with whom the liability currently resides must refer the summary report to the actuarial arbiter for decision within 14 days after the party is given the summary report. ˙ ‘ Arbiter’s costs ‘ 115. The arbiter’s costs in deciding on the calculation are to be paid by the parties in equal amounts. ˙ ‘ Payment of amount for total or residual liability ‘ 116.(1) The amount the old insurer must pay the new insurer for the total or residual liability is the amount agreed to by them (the “agreed amount” ) or, if there is no agreement, the amount decided by the arbiter (the “decided amount” ). ‘ (2) The old insurer must pay the agreed or decided amount— (a) within 3 months after the consent day; or (b) on a later day agreed to by the parties. ‘ (3) The agreed or decided amount paid to the new insurer must be adjusted by the actuary of the old insurer to take into account— (a) compensation and damages payments made between the assessment day and the day the new insurer assumes liability; and (b) claims lodged against the employer or member between the

s 11 22 s 11 WorkCover Queensland Amendment (No. 1) No. 153, 1999 assessment day and the day the new insurer assumes liability. ‘ (4) If WorkCover is neither the old insurer nor the new insurer, the old insurer must advise WorkCover of the following no later than the day total or residual liability is paid— (a) the amount of the liability; (b) the day the new insurer assumes liability; (c) details of the parties and the member leaving or becoming part of the self-insurer. ˙ ‘ Transfer of claims information ‘ 117. The old insurer must give the new insurer claims information in relation to the liability no later than the day the agreed or decided amount is paid. ‘ Division 3—Liability after cancellation of self-insurer’s licence ˙ ‘ Purpose of div 3 ‘ 118. This division sets out the process for the calculation of an amount for a former self-insurer’s liability for the Act, section 129. 6 ˙ ‘ Appointment of actuary ‘ 119. WorkCover and the former self-insurer must each appoint an actuary to calculate an amount for the liability. ˙ ‘ Calculation ‘ 120.(1) The calculation must— (a) be prepared under the actuarial standard; and (b) apply a central estimate of the liability; and 6 Section 129 (Assessing liability after cancellation) of the Act

s 11 23 s 11 WorkCover Queensland Amendment (No. 1) No. 153, 1999 (c) as far as practicable, be based on the former self-insurer’s claims experience; and (d) apply the risk free rate of return; and (e) include claims administration expenses of 7% of the liability; and (f) not include a prudential margin. ‘ (2) The calculation must be based on data as at the last day (the “assessment day” ) of the financial quarter immediately before the day the former self-insurer’s licence is cancelled (the “cancellation day” ). ˙ ‘ Former self-insurer to give actuaries information ‘ 121. The former self-insurer must give the actuaries, in the form approved by WorkCover, the information necessary to enable the actuaries to complete the calculation within the time mentioned in section 122(3). ˙ ‘ Actuarial report ‘ 122.(1) After completing the calculation, each actuary must prepare an actuarial report on the calculation the actuary made. ‘ (2) The report must— (a) be prepared under the actuarial standard; and (b) clearly state the key assumptions made for the calculation and how the assumptions have been derived, including— (i) the average amount of claims for compensation against the former self-insurer; and (ii) the average amount of claims for damages against the former self-insurer; and (iii) claims anticipated to have been incurred by the former self- insurer for which no formal claim has been lodged; and (iv) the frequency of claims for compensation against the former self-insurer; and (v) the frequency of claims for damages against the former self- insurer; and

s 11 24 s 11 WorkCover Queensland Amendment (No. 1) No. 153, 1999 (vi) the net amount of the claims after allowing for future inflation ( “inflated value” ); and (vii) the net present value of the inflated value after allowing for income from assets set aside by the former self-insurer to pay the liability; and (viii)the rate of inflation used; and (c) state the following about the data used in the calculation— (i) the nature of the data; (ii) the actuary’s assessment of its accuracy; (iii) how the actuary interpreted the data; and (d) state the actuarial model used in the calculation; and (e) state the results of the calculation; and (f) state the actuary’s confidence in the results of the calculation. ‘ (3) The actuaries must complete the calculations and the reports within 35 days after the cancellation day. ˙ ‘ Summary report ‘ 123.(1) The actuaries must jointly prepare a summary report that— (a) includes the individual actuarial reports; and (b) states how the individual reports agree or differ. ‘ (2) The actuaries must give the completed summary report to WorkCover and the former self-insurer within 2 months after the cancellation day. ˙ ‘ Agreement ‘ 124. WorkCover and the former self-insurer may agree on the calculation having regard to the summary report. ˙ ‘ Reference to actuarial arbiter if no agreement ‘ 125. If WorkCover and the former self-insurer can not agree on the

s 11 25 s 11 WorkCover Queensland Amendment (No. 1) No. 153, 1999 calculation, the former self-insurer must refer the summary report to the actuarial arbiter for decision within 14 days after the former self-insurer is given the summary report. ˙ ‘ Arbiter’s costs ‘ 126. The arbiter’s costs in deciding on the calculation are to be paid by WorkCover and the former self-insurer in equal amounts. ˙ ‘ Payment of amount for liability ‘ 127.(1) The amount the former self-insurer must pay WorkCover for the liability is the amount agreed to by WorkCover and the former self- insurer (the “agreed amount” ) or, if there is no agreement, the amount decided by the arbiter (the “decided amount” ). ‘ (2) The agreed or decided amount paid to WorkCover must be adjusted by the former self-insurer’s actuary to take into account— (a) compensation and damages payments made between the assessment day and the cancellation day; and (b) claims lodged against the former self-insurer between the assessment day and the cancellation day. ‘Division 4—Actuarial arbiter ˙ ‘ Function of actuarial arbiter ‘ 128. The function of the actuarial arbiter is to consider the actuarial reports and the calculations of an amount for liability made under this part and decide on an amount for the liability. ˙ ‘ Appointment of actuarial arbiter ‘ 129.(1) The actuarial arbiter is to be selected by a selection panel consisting of— (a) 2 individuals nominated by WorkCover; and (b) 2 individuals nominated by the Queensland Workers’

s 11 26 s 11 WorkCover Queensland Amendment (No. 1) No. 153, 1999 Compensation Self-Insurers’ Association. ‘ (2) The individual selected must be a Fellow of the Institute of Actuaries or be an Accredited Member of the Institute. ‘ (3) WorkCover must appoint the individual selected to be the arbiter for a term of not more than 3 years. ‘ (4) The arbiter’s conditions of appointment are to be set out in the contract made between WorkCover and the arbiter. ˙ ‘ Decision of arbiter ‘ 130.(1) After considering the actuarial reports and the calculations of an amount for the liability by the actuaries, the arbiter must decide on— (a) the central estimate for the liability; and (b) an amount for the liability. ‘ (2) An amount for the liability decided by the arbiter can not be more than the higher of the amounts calculated by the actuaries and can not be less than the lower of the amounts. ‘ (3) The arbiter must give a written statement of the arbiter’s decision and the reasons for the decision within 21 days after the summary report is referred to the arbiter. ˙ ‘ Arbiter’s decision is final ‘ 131. The arbiter’s decision is final.’

27 WorkCover Queensland Amendment (No. 1) No. 153, 1999 ¡ SCHEDULE CONSEQUENTIAL AMENDMENTS section 3 1. Section 3, definitions “assessed premium” and “provisional premium”, ‘other than a self-rater’— omit. 2. Section 7(3), ‘, other than a self-rater’s premium’— omit. 3. Section 8(2), ‘self-rater or’— omit. 4. Section 14(1), ‘, other than a self-rater,’— omit. 5. Part 2, division 3— omit. ENDNOTES 1. Made by the Governor in Council on 1 July 1999. 2. Notified in the gazette on 2 July 1999. 3. Laid before the Legislative Assembly on . . . 4. The administering agency is WorkCover Queensland. © State of Queensland 1999