How the Fund works

Overview

The Tasmanian Risk Management Fund (the Fund) is the Tasmanian Government's self-insurance fund. It was established on 1 January 1999 and provides a whole-of-government approach to funding and managing specific identified insurable liabilities of participants.

On 1 July 2001, the Fund merged with the Tasmanian State Service Workers' Compensation Scheme, which had previously been established (on 1 July 1989) to meet participants' obligations under the Workers' Rehabilitation and Compensation Act 1988.

The Department of Treasury and Finance is responsible for the administration and management of the Fund and reports to the Treasurer on policy issues. See Roles and responsibilities for further information.

Mission

Minimise the cost of risk to government through the management of an efficient self-insurance arrangement.

Objectives

The Fund's objectives are to:

  • ensure adequate financial provision is made for the cost of risk;
  • be responsive to changing conditions in the insurance environment; and
  • provide an efficient and effective claims administration service to participants.

Purpose of the Fund

Overview

All inner-Budget agencies are required to participate in the Fund and, subject to its date of joining, are covered for identified risks to which it is exposed or for which it wishes to accept responsibility and which the Fund agrees to cover. A number of other Government entities also participate in the Fund and may only be covered for specific risks (see Entities covered by the Fund). The risks covered by the Fund include:

  • workers' compensation/personal accident;
  • legal liability;
  • property; and
  • travel.

Marine hull and travel insurance are insured through the private sector: the former due to cost efficiencies, the latter in order to benefit from a worldwide emergency assistance scheme. All other categories of risk are self-insured. A detailed description of the cover extended to participants is provided in the relevant section under "Incident Management".

The Fund operates on a cost-recovery basis with contributions set to ensure adequate financial provision for the cost of risk now and in the future. All participants pay annual contributions to meet claims costs, administrative expenses, and where applicable, insurance premiums and reinsurance costs. The level of a participant's contribution is determined by an independent actuary and reflects their coverage, risk exposure, claims experience and nominated excess amounts.

In setting contributions, the Fund aims to achieve:

  • the collection of sufficient moneys each year to fund claims costs and alleviate the financial impact of large unexpected events;
  • equity for participants with minimal cross-subsidisation;
  • stability in contributions over time; and
  • incentives for risk management, through recognition of claims experience.

The Fund's finances are managed through the Tasmanian State Service Risk Management Account in the Special Deposits and Trust Fund.

Statement of the Fund

The Fund is not an insurer, but a self-insurance arrangement, to manage a set of well understood, identified insurable risks. The Fund does not deal with, nor cover, all insurable risks for Government nor does it provide cover to all Government entities.

Information on the identified, insurable risks covered by or through the Fund is provided in the relevant section under "Incident Management". See Entities covered by the Fund for information on the entities covered by or through the Fund.

The general approach for determining whether cover will be extended for new risks outside those detailed under "Incident Management", whether this arises through the acquisition of an asset or the undertaking of a new activity, is for a participating entity to:

  • make a formal decision that it is prepared to accept the risk;
  • contact Treasury and provide information necessary to enable Treasury to evaluate whether the risk can be properly identified, assessed and covered either by the Fund or through the Fund.

When determining whether a matter should be covered by or through the Fund, Treasury will have regard to:

  • whether the risk arises during the normal course of business for the participating entity;
  • the nature of the risk exposure, quantum of any potential loss and adequacy of notification period;
  • actuarial advice taking into account the viability of the Fund for the already identified set of risks covered by the Fund, the overall liabilities of the Fund and the capacity to provide effective provisioning for the new risk through the Fund over the long term; and
  • insurance industry advice on the cost and scope of insurance cover provided by external insurers which might otherwise be available.

Where a decision is made that the risk will be self-insured by the Fund, the Fund's Actuary will determine an appropriate contribution.

Where a decision is made that the risk should not be self-insured but the risk is one which should be covered through the Fund, Treasury will coordinate the purchase of external cover through the Fund Administration Agent and seek reimbursement from the relevant participant(s).

Where a decision is made that the risk should not be covered either by or through the Fund, then all decisions relating to, and management of, the risk will reside fully with the participant.

In summary, the Fund will cover:

  • either by or through the Fund, the set of identified, insurable risks specified in the sections under "Incident Management";
  • the participants, in accordance with their approved risk coverage detailed under Entities covered by the Fund; and
  • any new risks/entities deemed appropriate for the Fund to accept for cover, either by or through the Fund (by applying the decision-making process above), subject to adjustments to contributions and/or payment of external premiums.

Entities covered by the Fund

Part A: Inner-Budget Agency Participants
Part B: Other Government Entity Participants
Part C: Agency-related entities
Part D: Indemnified persons

Part A: Inner-Budget Agency Participants
All inner-Budget agencies are required to participate in the Fund and are provided with cover for all risk areas referrred to under "Incident Management". The inner-Budget agencies are:

    Department of Education
    Department of Health and Human Services
    Department of State Growth
    Department of Justice
    Department of Police, Fire and Emergency Management
    Department of Premier and Cabinet
    Department of Primary Industries, Parks, Water and Environment
    Department of Treasury and Finance
    House of Assembly
    Integrity Commission
    Legislative Council
    Legislature-General
    Office of the Director of Public Prosecutions
    Office of the Governor
    Office of the Ombudsman
    Tasmanian Audit Office
    Tasmanian Health Service (formerly THO-South, THO-North and THO-North West)
Reference should also be made to Part C: Agency-related entities.

Part B: Other Government Entity Participants
The following entities are covered by the Fund as detailed below:
    TasTAFE (full cover)
    Tourism Tasmania (full cover)
    Inland Fisheries Service (workers' compensation cover only);
    Port Arthur Historic Site Management Authority (workers' compensation cover only);
    Private Forests Tasmania (workers' compensation cover only);
    Retirement Benefits Fund (workers' compensation cover only);
    Royal Tasmanian Botanical Gardens (workers' compensation cover only);
    Marine and Safety Tasmania (MAST) (professional indemnity cover only).


Part C: Agency-related entities
Agency-related entities that meet the criteria outlined in the policy statement on cover for agency-related entities and have been approved for cover either by or through the Fund are set out below. Except where otherwise indicated, full cover as detailed under "Incident Management", is provided. The inclusion of risk cover for an agency-related entity is reflected in its agency's contributions to the Fund.
    Anzac Day Trust
    Arthur Pieman Conservation Area Management Committee
    Asbestos Compensation Commissioner
    Ben Lomond Skifield Management Authority
    Community Respect Orders Program
    Environmental Management and Pollution Control Board
      Environmental Protection Policy Review Panel
      Waste Water Reuse Committee
    Integrity Commission Board
    Integrity Tribunal
    Licensing Board of Tasmania
    Local Government Board
    Looking Glass Productions
    National Parks and Wildlife Advisory Council
    Northern High Schools Sports Association Inc (legal liability cover only)
    North West High Schools Sports Association Inc (legal liability cover only)
    Office for the Commissioner for Children
      Children and Young Persons Consultative Council
      Children and Young Persons Advisory Council
      Children's Visitors Pilot Program
    Office of the Tasmanian Economic Regulator
    OTTER Customer Consultative Committee
    Parliamentary Standards Commissioner
    Police and Community Youth Clubs (excluding legal liability cover)
    Police Review Board
    Positive Ageing Advisory Committee
    Premier's Disability Advisory Council
    Premier's Local Government Council
    School Associations established under the Education Act 1994 (excluding workers compensation cover for employees of school associations)
    Schools Registration Board
    Service Tasmania Board
    Skills Tasmania
    Southern High Schools Sports Association Inc (legal liability cover only)
    Southern Primary Schools Sports Association Inc (legal liability cover only)
    State Grants Commission
    State Marine Pollution Committee
    Stronger Communities Taskforce
    Tasmanian Advisory Council of Multicultural Affairs
    Tasmanian Arts Advisory Board
      Aboriginal Arts Advisory Committee
      Grants to Individuals Panel
      Grants to Organisations Panel
      Small Museums and Collections Panel
    Tasmanian Climate Change Council
    Tasmania Development and Resources
    Tasmanian Development Board
    Tasmanian Economic Regulator
    Tasmanian Gaming Commission
    Tasmanian Heritage Council
      Archaeological Advisory Panel
      Tasmanian Heritage Council Communications Committee
      Tasmanian Heritage Council Registration Committee
      Works Application Assessment Committee
    Tasmanian Planning Commission
    Tasmanian Police Charity Trust
    Tasmanian Police Historical Society
    Tasmanian Police Pipe Band
    Tasmanian Qualifications Authority
    Tasmanian Veterans Advisory Council
    Tasmanian Wilderness World Heritage Consultative Committee
    Tasmanian Women's Council
    Teachers Registration Board
    TMD Board
    Tourism Tasmania Board
    Trustees of the Tasmanian Museum and Art Gallery
    Art Foundation of Tasmania Council
    Tasmanian Aboriginal Advisory Council
    Youth Services Education Program

Part D: Indemnified persons
The Fund will cover personal liability where an indemnity has been provided by the Panel established to consider an application from a Public Officer for an indemnity and/or legal assistance ('Public Officer' is defined in Employment Direction No 16 (1 January 2016) - Indemnity and Legal Assistance).

 

Identified Policy Statements

Cover for agency-related entities

Claims on former agencies

Cover for agency-related entities
The policy position in respect to cover for agency-related entities, such as boards, commissions, authorities, panels and other agency-related entities, is as follows:

Cover under the Fund is generally extended only to inner-Budget agencies. Consideration is given, on a case-by-case basis, to include boards, commissions and other agency-related entities where the following criteria, as assessed by Treasury, are satisfied:

  • the entity must be part of the General Government Sector;
  • the entity must be significantly financed through the Consolidated Fund, either through an agency budget or by direct allocation; and
  • there must be a high level of agency control over the financial and operating policies of the entity.

If an agency requires cover for an entity and is willing to accept the associated risks, the agency is required to submit a formal written request to Treasury, detailing how the entity meets all three criteria for cover and including any relevant circumstances that it believes is applicable.

As the administrative arrangements and responsibilities relating to this type of entity can be complex and varied, each entity's eligibility for cover will be considered on a case-by-case basis, with Treasury considering how each entity meets the intent of the criteria. Generally cover will only be provided where the entity meets the criteria.

Treasury will advise the relevant agency once a decision on the entity's eligibility has been reached. Should cover be offered, the Fund's Actuary will then determine the appropriate additional contribution to be paid by the agency.

Claims on former agencies
Occasionally, claims are made against the Crown with respect to a government agency that no longer exists. The responsibility for managing and meeting the cost of these claims will be determined in accordance with the following principles:
  • as a general principle, the Fund will only be responsible for meeting claims for which contributions have been received, or which are recoverable from member agencies, or which will be met by a one-off or ongoing contribution from the Consolidated Fund through Finance-General;
  • agencies are responsible for meeting the cost of claims attributable to that agency prior to the date on which they joined the Fund, but if an agency receives an unusually high claim, it may negotiate with the Fund to meet the cost of the claim on the clear understanding that this cost will be recovered from the agency over time through increased contributions;
  • funding will be sought from the Consolidated Fund to meet the cost of major claims made in relation to former agencies - perhaps in the form of an annual amount over a number of years to establish an appropriate reserve (the amount to be set following advice from the Actuary);
  • if funding from the Consolidated Fund is not approved, the claims costs relating to former agencies will be met from the "government contingency" allocation, with future agency contributions to this element being adjusted if necessary to ensure that claims costs are recovered over time;
  • "associated" agencies will administer claims made on former agencies and the administration cost will be absorbed by those agencies; and
  • workers' compensation claims paid on behalf of former agencies (ie in relation to those activities that are no longer undertaken by any government agency) will be excluded from agencies' claim histories when calculating agency contributions to the Fund.

To ensure that the responsibility for claims can be readily assigned in future, agencies are required to:
  • include detailed cost centre information on claims advice forwarded to the Fund Administration Agent; and
  • reallocate past claims history and assign responsibility for ongoing management of cases as part of any agency restructuring process.

Important Information

Accuracy of information
Advice on cover
Asset information
Claims management
Date of claim
Excesses
Making a claim
Multiple claims
Period of cover
Personal injury cover - duty of care
Property not to be replaced

Accuracy of information
When the Fund agrees to provide cover or to pay a claim, the decision relies on the accuracy of the information given to it. As a result, participants must disclose relevant information, including asset information, to the Fund accurately and in a timely manner.

Marine hull cover is purchased from an external insurer, therefore only those vessels that are specifically declared to the external insurer are insured. If a vessel is not declared it is not insured.

Agencies must ensure that all claim and payment documentation is complete, accurate and appropriate. The Fund Administration Agent has the authority to refuse incomplete or incorrect claims for payment.

Advice on cover
If a participating entity is unsure of whether cover is extended in relation to any particular circumstances, advice can be sought from Treasury.

Asset information
Information on the value of assets provided to the Fund to enable contributions to be determined should represent the full replacement value.

Agencies must advise Treasury of any significant (+10 per cent) change to property assets held by it as the changes occur, to ensure that contributions are adjusted to properly reflect the risk exposure of the agency and/or any necessary changes to any externally placed insurance (such as marine hull) are made.

Information on all relevant assets is to be provided to Treasury in Treasury's biennial review of agency assets. This includes assets where a decision has been made by the participant that it does not intend replacing those assets in the event of loss/damage. All asset information is required to ensure that cover is available for costs associated with making safe damaged or potentially dangerous sites, clearing away debris or making partial rectification to damaged assets. Also, as noted under Accuracy of Information, in some cases a failure to specifically declare certain property may result in external cover not being available.

Claims management
Participating entities are ultimately responsible for the management of claims and must instruct the Fund Administration Agent and the Office of the Director of Public Prosecutions regarding the management of those claims. This responsibility cannot be handed over to another entity.

Specific responsibilities regarding the management of claims are detailed in the relevant section under "Incident Management".

Date of claim
If a claim is made in relation to a latent medical condition (eg asbestosis), the date of the claim will be taken to be the date on which the condition was first medically diagnosed.

Excesses
If a claim is made, a participating entity may be required to pay one or more excesses. The descriptions of these excesses and the circumstances in which they are applied are determined at the commencement of each financial year by each participating entity. Information on excesses is available in the relevant section under About the Fund.

Under-excess claims must be met by the participating entity.

Making a claim
Claims should be made in accordance with the guidance provided in the relevant section under "Incident Management". Advice and assistance can be obtained from the Fund Administration Agent, Jardine Lloyd Thompson Pty Ltd.

Multiple claims
Where multiple claims arise from a single occurrence at different locations, each claim is to be separately lodged and will be treated as an individual claim for the purposes of claims management under the Fund. Multiple claims may not be grouped together in order to reduce excess requirements. For example, where a severe storm results in damage to a number of Parks huts in a particular region of the State, a separate claim is to be lodged for each location, regardless of the fact that all were damaged as a result of the same event.

Period of cover
The Fund will meet all legitimate claims costs (less nominated excesses) relating to incidents that occurred after participating entities joined the Fund and for which that entity is provided with cover (see Entities covered by the Fund for information on the extent of cover provided).

In relation to agency-related entities, the Fund will meet all claims relating to incidents that occurred after the agency-related entity is approved for cover and for which the agency-related entity is provided cover.

Subject to the policy statement on claims on former agencies, entities are generally responsible for claims costs relating to incidents which occurred prior to these dates.

Any specific risk area limitations on the period of cover are included in the information relevant to that risk area under "Incident Management".

Note: Claims relating to incidents that happened before the establishment of the Fund are generally not covered by the Fund, regardless of when the claim is received.

Personal injury cover - duty of care
Participating entities must ensure that employees are safe from injury and other health risks whilst at work in accordance with the requirements of the Work Health and Safety Act 2012 (see section 19 regarding duty of care).

Employees must also take reasonable care of their own health and safety, and reasonable care that their acts or omissions do not adversely affect the health and safety of other persons (section 28).

Property not to be replaced
In circumstances where destroyed premises are not to be rebuilt, payment outside of clean up costs is not automatic and will be determined on a case by case basis by Treasury following a submission by the participating entity.

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