Upload
others
View
4
Download
0
Embed Size (px)
Citation preview
How system design impacts the funding mix for people injured
in accidents
Raewin Davies & Alex Gould
2
Outline
• Background
• Approach
• Assumption examples
• Model results
• Improvements
• Applications
Cost Transfers
1. Between jurisdictions
2. From scheme to individual
The Premise
A jurisdiction with generous scheme benefits may subsidise other jurisdictions – it pays for its own higher scheme benefits through premiums and pays taxes which may be used to fund
jurisdictions with less generous benefits.
Differences between schemes
Access to central safety net
Potential cost transfers + =
5
Case study: long term weekly income levels
0
500
1,000
1,500
2,000
2,500
Long term weekly income by jurisdiction - low income couple
Weekly benefits
Govt Benefits
Spouse Income 0
500
1,000
1,500
2,000
2,500
Long term weekly income by jurisdiction - high income couple
Weekly benefits
Govt Benefits
Spouse Income
6
Overview of model approach
?
But wait… there’s more ...
7
Example of individual assumptions
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Wee
kly
inco
me
Weeks post injury
High Income Family - Base Case
Spouse Income Pre Injury Income Weekly Benefits Govt Benefits
• White space represents cost borne by household • Purple space represents cost borne by government
8
Jurisdiction
[i] De Ravin, J., Fowlds, M., 2010, Inflation Risk in General Insurance. 17th General Insurance Seminar.
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Wee
kly
inco
me
Weeks post injury
High Income Family - Base Case
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Wee
kly
inco
me
Weeks post injury
High Income Family - Lump Sum
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Wee
kly
inco
me
Weeks post injury
High Income Family - Pre injury earnings
Spouse Income Pre Injury Income Weekly Benefits Govt Benefits Lump sum Income
9
Household structure
[i] De Ravin, J., Fowlds, M., 2010, Inflation Risk in General Insurance. 17th General Insurance Seminar.
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Wee
kly
inco
me
Weeks post injury
Family - Base Case
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Wee
kly
inco
me
Weeks post injury
Couple - Base Case
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Wee
kly
inco
me
Weeks post injury
Single Parent - Base Case
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Wee
kly
inco
me
Weeks post injury
Single - Base Case
Spouse Income Pre Injury Income Weekly Benefits Govt Benefits
Should benefit levels be based on household income? Are single people unduly penalised? Should the cost of children be considered?
10
Cohort – mix of claims
39%
37%
6%
18%
Household type of individuals (%)
Couple with children
Couple without children
Single with children
Single without children
11
Pre injury income level
[i] De Ravin, J., Fowlds, M., 2010, Inflation Risk in General Insurance. 17th General Insurance Seminar.
Spouse Income Pre Injury Income Weekly Benefits Govt Benefits
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Wee
kly
inco
me
Weeks post injury
High Income Family - Base Case
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Wee
kly
inco
me
Weeks post injury
Low Income Family - Base Case
Should benefit levels relate to pre-injury earnings? Should the spouses income level affect benefit payments?
12
Cohort – number of claims
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Pre -Injury
0 26 52 104 160
Prop
orti
on o
f inj
ured
coh
ort
Weeks post injury
Unemployed
RTW
Pre-injury / Scheme
Number of claimants in Base case jurisdiction
Should data on claimant
outcomes be publically available?
13
Results
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
Pre-injury
0 26 52 104 160
Ave
rage
wee
kly
paym
ents
per
hou
seho
ld
Weeks post injury
Unemployment Govt benefits
RTW govt benefits
On scheme govt benefits
Scheme
RTW
Pre-injury
Spouse
14
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
-16 -8 0 8 16 24 32 40 48 56 64 72 80 88 96 104 112 120 128 136 144 152 160
Base Case
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
-16 -8 0 8 16 24 32 40 48 56 64 72 80 88 96 104 112 120 128 136 144 152 160
Lump Sum
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
-16 -8 0 8 16 24 32 40 48 56 64 72 80 88 96 104 112 120 128 136 144 152 160
Slower RTW
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
-16 -8 0 8 16 24 32 40 48 56 64 72 80 88 96 104 112 120 128 136 144 152 160
Pre - injury Earnings
15
20
25
30
35
40
45
0 20 40 60 80 100 120 140 160
$ w
eekl
y in
com
e
Weeks Post Injury
Average government spend per injured worker
Base Case Pre injury Earnings Lump Sum
The “purple space”
16
0
50
100
150
200
250
300
350
400
450
0 20 40 60 80 100 120 140 160
$ pe
r inj
ured
wor
ker
Weeks post injury
Average cost to individual
Base Case Pre injury Earnings Lump Sum
The “white space”
17
What next – a better model?
• Replace fictional jurisdictions with actual ones
• More granular income distribution
• More realistic spousal income
• Recognition of household cost structures
• More focus on gender
• Scheme-specific demographics
18
What next – where to use results?
• Should individuals bear different costs in different jurisdictions?
• Is it fair that differences in scheme design can impact average Government funding per injured person?
• How do you balance incentivising return to work and the cost to the injured individual?
• Should the spouse’s income and number of dependant children influence the level of benefits received?
19
Questions
• Should more data on claimant outcomes be made publically available?
• Is this an actuarial issue, or is it economics / politics / health / welfare
• Is harmonisation or centralisation across states desirable?