Chapter 4 Chapter 4: Seacare scheme performance 2003 – 2004

4.1 Seacare scheme performance overview 2003 – 04

Seacare scheme performance showed mixed results in 2003 – 04. On a number of indicators, performance has improved in 2003 – 04 relative to 2002 – 03 and previous years, while on other indicators performance has deteriorated.

The key indicators which reveal improved or stable performance reported in this annual report include:

the scheme has completed another year without a work-related fatality;
the injury frequency rate(1) has declined(2);
days lost per seafarer continue to trend down, even though there was an increase in total days lost and in days lost per seafarer in 2003 – 04 relative to 2002 – 03;
the cumulative cost of workers’ compensation claims per seafarer declined in 2003 – 04 relative to 2002 – 03;
the number of incidents reported to AMSA has remained stable, and dangerous occurrences reported declined significantly in 2003 – 04 compared to 2002 – 03;
the return to work rate and durable return to work rate in the Seacare scheme, derived from the National Return to Work Monitor survey results, show an improvement in 2003 – 04 relative to 2002 – 03 and are comparable with, or exceed, the national average;
the proportion of seafarers who returned to the same duties following an injury, derived from the National Return to Work Monitor survey results, remained the same as in 2002 – 03, is higher than the national average and is the highest of any scheme in Australia in 2003 – 04;
the number of long tail claims(3) being supported by scheme insurers is lower than at any time over the past five years; and
the average time taken from lodgement of a matter with the AAT, until a decision, fell considerably in 2003 – 04 relative to 2002 – 03.

The key indicators which reveal a deterioration in performance reported in this annual report include:

the injury incidence rate(4) has worsened relative to previous years;
on present trends the Seacare scheme is unlikely to meet the five year or 10 year injury reduction targets set in 2001 – 02 for the maritime industry;
the claim frequency rate(5), which shows the likelihood of receipt of a compensation claim, has risen in 2003 – 04;
the number of workers’ compensation claims reported to AMICA in 2003 – 04 has increased, as have accepted compensation claims;

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1 The injury frequency rate reports the number of compensation claims (a proxy for injuries) per million hours worked by seafarers covered by the Seafarers Act. The lower the rate the better the performance on this measure. Compensation claims includes all accepted claims except journey claims and property only claims (see row 11 of Table 7).

2 The injury frequency result for 2003 – 04 is influenced by a change in the hours of work calculation method which commenced on 1 July 2003 (see the explanation at section 4.3.3 and at Note 2 under Table 7).

3 Long tail claims are claims of one or more year’s duration.

4 The injury incidence rate reports the number of accepted compensation claims (a proxy for injuries) per 1 000 employees covered by the Seafarers Act. The lower the rate the better the performance on this measure. Compensation claims includes all accepted claims except journey claims and property only claims (see row 11 of Table 7).

5 The claim frequency rate is the ratio of seafarers employed under the Seafarers Act to the number of claims lodged (see row 1 of Table 7). It shows the number of compensation claims that can be expected to be lodged relative to seafarer numbers. The higher the rate the better the performance on this measure.

the number of claims lodged by employees in the older age groupings (over 45) increased in
2003 – 04 relative to 2002 – 03;
the number of OHS incidents reported to AMSA involving an incapacity of an employee for five or more successive days off work increased in 2003 – 04 relative to 2002 – 03;
the total cost of compensation claims lodged in 2003 – 04 and the cost per claim has increased relative to 2002 – 03;
the average premium rate paid by Seacare scheme employers rose significantly in 2002 – 03 relative to 2001 – 02 (premium rate data remains one year behind most other data reports);
the second tier (AAT) dispute rate has increased in 2003 – 04 relative to 2002 – 03; and
rehabilitation and return to work performance remains problematic.

Employers and employees are adopting a range of strategies and techniques to minimise the risk of injury in the maritime industry

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4.2 Data sources used in this report

The primary source of data used for reporting
on Seacare scheme performance, including OHS performance, is workers’ compensation claims data. The workers’ compensation claims data used in this report is derived from claim forms lodged by employers with AMICA, irrespective of whether the claim is covered by the employer’s insurance policy. As there is no statutory obligation on an injured seafarer to lodge a workers’ compensation claim form if injured, it is recognised that not every injury results in a claim being made on the employer. Further, not all claims lodged by employees with their employer are forwarded to AMICA by the employer, or to the employer’s insurer, though clearly the majority are.

It is nationally recognised that compensation claims data is the most reliable available data for outcomes reporting on both occupational health and safety, as well as on compensation and rehabilitation performance.

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4.2.1 Compensation claims data

Compensation claims data used in this report is collected and recorded by the AMICA Ltd. AMICA receives data on claims lodged with an employer by employees, irrespective of whether the claim
is lodged with an insurer, subject to the employer forwarding a copy of the claim form to AMICA.

The significant insurance excesses, which are a feature of workers’ compensation insurance policies under the Seafarers Act, mean that employers are often directly liable for the initial costs of the claim. Employer excesses range from zero to $100 000 or more (majority in the range $5 000 to $50 000). Where the claim cost falls within the excess, the employer generally maintains responsibility for managing the claim, rather than the insurer. However, increasingly, employers are advising insurers on claims at an early stage, as part of improved claims management and injury management practice.

The claims data used in most tables and figures in this report are accepted claims, which excludes claims which are pending, in dispute, withdrawn or rejected. As some pending, disputed or rejected claims from previous years become accepted during the following year, they are reported the following year as accepted claims. This explains the variations in accepted claims in the tables reporting claims each financial year.

Accepted claims are further adjusted for reporting on OHS performance in this report by excluding journey claims and property only claims so the claims data used reflects claims where there was an injury at work (or in training, including both on and off duty), irrespective of whether there was any time off work. This key claims data are highlighted at row 11 of Table 7 below.

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4.2.2 Occupational health and safety (OHS) incident data

Compensation claims data used in this report for OHS reporting are complemented by data on accidents and dangerous occurrences (incidents) collected and recorded by AMSA in its capacity as the OHS inspectorate under the OHS(MI) Act. Incidents are reported to AMSA where there is an accident that causes the death of, or serious personal injury to, any person, or where an accident causes an employee to be incapacitated from performing work for a period of five successive days or more.

Shipping operators covered by the OHS(MI) Act are required by the OHS(MI) Act and regulations to notify an accident or dangerous occurrence to AMSA within four hours and to report in detail on those notified accidents and dangerous occurrences within 72 hours. The initial notification is known as the OHS incident alert and the follow up report as the OHS incident report.

4.2.3 Seacare Authority data – employee numbers and hours worked

The Seacare Authority maintains responsibility for collecting and recording data on the number of employees covered by Seacare scheme legislation (sometimes also referred to as the population or exposure data) and on hours worked by employees. Employee numbers and hours worked data is collected six monthly through the Authority’s Employee and Ships Details (ESD) reporting system. Annual employee numbers are derived by adding the two six monthly totals and dividing by two, while hours worked are aggregated each six months to arrive at an annual total.

The employee data collected through ESD reporting seeks to record all employees who worked for the employer during the year, irrespective of the period of employment or hours worked by the employee (this data is not adjusted by the Seacare Authority to a full time equivalent (FTE)). This methodology for determining employee numbers was chosen because each employee is potentially a workers’ compensation
(or injury) statistic and each employee could potentially generate a workers’ compensation claim. FTE employee data under the Seafarers Act was separately collected in 2003 – 04, but is not used in this report.

The Authority also collects ship details including the ship name, the number of days a ship is operational over the year, and ship berth details.

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4.2.4 Comparative Performance Monitoring report data

In recent years comparative performance data extracted directly from the National Comparative Performance Monitoring (CPM) report, which reports comparative performance data across all Australian workers’ compensation schemes as well as New Zealand data has been included in the Authority’s Annual Report. As the 6th CPM report, which reports to 30 June 2003, will not be approved by Workplace Relations Ministers’ Council (WRMC) for release by the date of publication of this report, such comparative data in not included in this report. It will be available on the Seacare website www.seacare.gov.au when published.

4.2.5 Australasian Return to Work Monitor data

Some return to work data used in this report is derived from the ARTW Monitor 2003 – 04. The ARTW Monitor establishes a national benchmark for measuring RTW and durability of RTW across Australian and New Zealand (NZ) workers’ compensation schemes. In 2003 – 04 the ARTW Monitor summarises the findings of a survey of 50 injured seafarers.

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4.3 Methodology behind performance reports

4.3.1 Coverage

In some previous years the Authority’s annual report has recorded employee numbers in two parts. Part A represented the total of all Australian seafarers where the employer conformed with the provisions of the Seafarers Act irrespective of whether the employer was legally bound by the provisions of the Seafarers Act, while Part B represented the number of seafarers on ships which were, at the time, thought to be specifically covered by the Seafarers Act.

The seafarers included in Part A were described as seafarers serving on ships where the entitlements and benefits of the Seafarers Act are applied through an industrial award or agreement. These seafarers, wholly in the offshore sector, were considered, up until the 1998 – 99 annual report, to be excluded from coverage by the Seafarers Act. In each year up until 1998 – 99 the higher figure or Part A figure was nevertheless used as the basis of reporting in the annual report.

At the time of preparation of the 1998 – 99 annual report, legal advice on the implications of the Tiwi Barge decision in the Federal Court for Seafarers Act coverage was not conclusive. Nevertheless, a decision was taken that the 1998 – 99 annual report should only report on employees who were considered to be clearly covered by the Seafarers Act. As a result, the lesser (Part B) figure was used in the 1998 – 99 annual report. This meant that some employees on ships in the offshore sector were excluded for reporting purposes. However, to maintain the time series data for comparative purposes, the 1998 – 99 annual report included an Appendix 4 which sought to maintain time series data using the higher (or offshore included) employee figure.

As the legal advice on the Tiwi Barge decision now indicates that employees on ships in the offshore sector are potentially covered by the Seafarers Act, the pre 1998 – 99 time series tables were restored in 1999 – 00, without the need to qualify the data. This also meant that only one employee figure was necessary for the 1999 – 00 and subsequent annual reports. This pattern continues in this report.

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4.3.2 Employee numbers

Up until and including the 1999 – 00 annual report, the methodology used to obtain employee numbers data was as follows. The Authority obtained a quarterly written return from each employer identifying its ships, the number of crewed berths on each ship and the days the ship was operational over the quarter. The berth details were then multiplied by the percentage of the year the ship operated which was then multiplied by the crew to berth ratio (CBR – obtained from the Bureau of Transport Economics – BTE) multiplied by the number of ships. This calculation revealed an annual employee figure. In the case of the 1999 – 00 annual report data, the crew to berth ratio was the average of the figures provided by the BTE for the September and December quarters 1999 – 00, after which the BTE discontinued production of
the CBR.

Following the change to company-based employment from 1998, the basis for reporting on employee numbers has changed. Employee and hours worked data used in the 2000 – 01 and 2001 – 02 annual reports, and in this report, is an aggregation of data provided to the Authority in the ESD report by Seacare scheme employers, which represents the actual number of seafarers employed by each employer covered by the Seafarers Act.

Seafarers engaged on Floating Storage and Offloading facilities (FSOs) and Floating Production Storage and Offloading facilities (FPSOs) are included in the employee numbers because there are (short) periods when the operations of such ships clearly fall within the application provisions of the Seafarers and OHS(MI) Acts eg when delinked from the riser to avoid a cyclone or when in transit – noting that for the majority of the time the operations of such ships generally fall outside the application of Seacare scheme legislation. A very small number of claims made by employers of seafarers on FSO facilities and FPSO facilities are included in claims data in this report.

Seafarers engaged on dredges, while the dredge is working inshore (within 12 nautical miles seaward of baselines) will not generally be covered by the Seafarers Act unless the ship is the subject of a section 8A or section 8AA declaration under the Navigation Act. Workers’ compensation claims reported to AMICA which occurred on dredges operating inshore are not included in claims statistics in this report.

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4.3.3 Hours worked

The hours worked data used in this report are based on a formula agreed between the Seacare Authority and employer associations on behalf of scheme employers. The formula is:

The standard complement of seafarers engaged on each ship at any one time (i.e. ship berths) X the number of hours (on average) per day the crew are on board, whether at work or not X the number of days the ship was operational (and was operating under the Seafarers Act) in the reporting period = hours worked:

for example, on a trading ship with a crew complement of 17, where the ship operates 24 hours per day throughout each year, and the reporting period is 6 months (182 days), the inputs using the formula would be: 17 X 24 X 182 = 74,256 hours worked; or
if the employer operates in the offshore sector, where the crewing complement might be say
11, and the ship completed a contract part way through the reporting period e.g. it operated
for say 142 days from total available days of 182, the inputs using the formula would be as follows: 11 X 24 X 142 = 37,488 hours worked.

This new method of calculation of hours worked commenced on 1 July 2003 and is to be applied for all hours worked data lodged with the Authority. The basis of this change is that the Seacare Authority and all sections of the industry agree that as the Seafarers Act provides an entitlement to compensation for all times the employee is on board a ship (and on most ships this is 24 hours per day) the hours worked calculation should be based on 24 hours per day.

Given the new methodology, the use of hours worked as the denominator for calculating the injury frequency rate (claims per one million hours worked) means that Seacare is commencing a new time series data set for the injury frequency rate from 2003 – 04, and terminating another time series data set. It will not be until the 2004 – 05 Annual report that there will be a consistent set of data over two years for comparing the injury frequency rate.

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4.3.4 Compensation claims data

Readers should note that the explanation for different compensation claims figures applying to previous years and used in this annual report, when compared to previous annual report data, is that some claims which were not accepted at the extraction date in previous years (pending determination for example) have since been accepted. They are therefore now included. For example, this report identifies the 2002 – 03 accepted claims figure as 149 whereas it was reported as 145 in the 2002 – 03 annual report – four claims have since been accepted.

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Chapter 4

Chapter 4: Seacare scheme performance 2003 – 2004