Chapter 4: Seacare scheme performance 2003 – 2004
- 4.1 Seacare scheme performance overview 2003 – 04
- 4.2 Data sources used in this Annual Report
- 4.3 Methodology behind performance reports
- 4.4 Date of extraction of 2003 – 04 data
- 4.5 Seacare scheme performance relative to previous years
- 4.6 OHS positive performance indicators (PPIs)
- 4.7 Claims and injury management performance
- 4.8 Dispute resolution in the Seacare scheme
- 4.9 Rehabilitation/Return to work performance
- 4.10 Long tail claims
- 4.11 Insurance premiums data
4.9 Rehabilitation/Return to Work performance – using claims data
Table 26: Rehabilitation and return to work 1999 – 00 to 2003 – 04
Table 26 indicates that in 2003 – 04 there were 115 claimants (63.2% of claimants) who were eligible for assessment of their capability of undertaking a rehabilitation program, that is, the data shows 115 claimants had an injury which lasted 28 days or more. However, of those 115 eligible claimants, only 30 or 26.1% (down from 28.2% in 2002 – 03) were assessed by employers for their capability of undertaking a rehabilitation program. The data suggests significant non compliance with section 49 of the Seafarers Act. Of the 30 who were assessed as capable of undertaking a rehabilitation program, 18 or 60% of eligible claimants commenced a rehabilitation program.
Table 26 also indicates that of those commencing a rehabilitation program, 10 or 55.6% returned to work. It should be noted that more than 10 injured seafarers returned to work, but most returned to work without having undertaken a rehabilitation program.
Table 27: Nature of duties on return to work 1999 – 00 to 2003 – 04
Table 27 indicates that the majority of seafarers return to the same position on full duties when they return to work after injury. The data nevertheless indicates that some graduated return to work opportunities (in a supernumerary position or on a laid up ship) are being found for returning seafarers as part of the rehabilitation process and that some land based employment options are also being used to assist recovery and return to work.
4.9.1 Rehabilitation and return to work – using ARTW Monitor data
The ARTW Monitor 2003 – 04 reports on a survey of 3 582 injured workers in Australian and New Zealand workers’ compensation schemes. It aims to establish a national/international benchmark for measuring RTW, and durability of RTW, across Australian and New Zealand workers’ compensation schemes. Seacare scheme data was included in the ARTW Monitor for the first time in 2001 – 02.
Injured seafarers are interviewed by phone in four survey waves each year in August, November, February and May. Those seafarers who lodged a claim in the seven to nine months prior to the survey month, who had more than 10 days compensation paid and who had not participated in a previous survey are identified by AMICA for confidential interview. In 2003 – 04, 56 such seafarers were interviewed.
A range of survey questions was asked of seafarers to ascertain their perceptions about the way their compensation claim was managed, and their rehabilitation and return to work experience. Some of the key findings which compare Seacare scheme performance with national outcomes are reported below:
- the return to work rate in the Seacare scheme of 86% (77% in 2002 – 03 and 87% in 2001 – 02) has improved relative to 2002 – 03 and is only slightly below the national average of 87%, with two other schemes (Victoria and South Australia) recording a lower RTW rate;
- the durable return to work rate (i.e. the seafarer has remained back at work following a return to work) in the Seacare scheme is 81% (67% in 2002 – 03 and 73% in 2001 – 02), and is above the national average of 78%. Four other workers’ compensation schemes have lower durable RTW rates than Seacare;
- only 15% of Seacare scheme employees were still receiving workers’ compensation payments at the time of the interview (17% in 2002 – 03 and 18% in 2001 – 02), below the national average of 20%). As a low percentage is desirable, it suggests that injury duration is generally less than six months and that return to work, when it occurs, is durable in the Seacare scheme;
- Seacare scheme injured employees are very likely to return to the same employer following a return to work. 83% (96% in 2002 – 03 and 88% in 2001 – 02) reported returning to the same employer compared to the national average of 84%;
- 87% of Seacare scheme workers (the same as in 2002 – 03 and 90% in 2001 – 02) returned to the same duties following an injury compared to the national average of 76%. This is the highest of any scheme in Australia and probably reflects the fitness for duty requirements of the industry, the peculiarities of seagoing work and the specificity of seagoing occupations;
- Seacare scheme employees reported the highest identification with the importance of the workplace, and felt well valued by their employer;
- Seacare scheme employees indicated a high level of ease of access to information in making a compensation claim at 82% (83% in 2002 – 03 and 87% in 2001 – 02), compared to the national average of 83%, possibly due to the self contained nature of the workplace;
- Seacare scheme employees reported a lower rate of having lodged a previous claim than in the previous year, at 41% (56% in 2002 – 03 and 13% in 2001 – 02), the same as the national average. Given the large variation in outcome over three years, it is difficult to determine a trend;
- of Seacare scheme employees not working at the time of the survey interview, 72% reported that they were still injured (91% in 2002 – 03 and 68% in 2001 – 02), 28% reported leaving their employment (21% in 2002 – 03 and 26% in 2001 – 02) and 10% reported being retrenched or dismissed (zero in 2002 – 03 and 6% in 2001 – 02). These results are broadly consistent with the pattern across all schemes;
- Seacare scheme employees reported the lowest involvement in development of a rehabilitation program of any scheme in Australia, at 18% (17% in 2002 – 03 and 16% in 2001 – 02), compared to the national average of 45%;
- of those who did have a rehabilitation program, 77% indicated employee involvement in development of the program (same as in 2002 – 03 and 87% in 2001 – 02), compared to the national average of 80%, and 54% indicated the rehabilitation program was helpful (54% in 2002 – 03 and 52% in 2001 – 02), compared to the national average of 74%;
- 79% of Seacare scheme employees reported feeling ready to return to work when they returned (81% in 2002 – 03 and 88% in 2001 – 02), compared to the national average of 77%, though only 46% indicated they were given suitable duties on return to work (68% in 2002 – 03 and 77% in 2001 – 02), compared to the national average of 79%;
- Seacare scheme employees reported by far the lowest partial or graduated return to work of any scheme, at 3% (4% in 2002 – 03 and 5% in 2001 – 02) compared to the national average of 21% – the next lowest being Qld at 15%. This undoubtedly reflects the lack of access to graduated return to work opportunities for seafarers;
- the mean age of injured seafarers who were part of the survey cohort was 49 (46 in 2002 – 03 and 45 in 2001 – 02), the oldest of all schemes with the Australian mean being 42 years of age;
- the average (mean) cost per claim by seafarers interviewed was $19,745 ($14,717 in 2002 – 03) which is significantly higher than any other scheme and considerably higher than the Australian average (mean) of $8,999; and
- the average (mean) cost of rehabilitation of seafarers was $930 ($809 in 2002-03)
compared to the Australian average of $1,344.
Selected tables developed from data reported in the ARTW Monitor 2003 – 04 are reproduced below.
Figure 17: Seacare comparative return to work performance
Source: Australasian Return to Work Monitor, Campbell Research & Consulting
Figure 17 shows that the Seacare scheme return to work rate has improved relative to 2002 – 03 and is above the Seacare Authority’s benchmark established in 2000 – 01. In 2003 – 04 the Seacare RTW rate is close to the national average.
Figure 18 Seacare comparative graduated RTW
Source: Australasian Return to Work Monitor, Campbell Research & Consulting
Figure 18 shows a further small deterioration in graduated or partial RTW in the Seacare scheme compared to the two previous years, though the rate remains slightly above the 2000 – 01 benchmark established by the Seacare Authority. However, the graduated RTW rate remains well below the national average of 21%.
Seafarers face unique problems in attempting to return to work which need to be considered when interpreting Seacare results. To facilitate graduated RTW for an injured seafarer, a supernumerary position or position on a laid up ship needs to be created, and there are limited opportunities for this to occur. Also, there are several barriers to be surmounted to include shore based duties as a part of a graduated RTW,
as the seafarer’s onboard shift arrangements are quite different to shore based work and many seafarers live in different locations to their employers’ on shore operations. Additionally, injured seafarers need to be passed as medically fit to return to sea going duties.
Figure 19: Development of a rehabilitation program
Source: Australasian Return to Work Monitor, Campbell Research & Consulting
Figure 19 shows that rehabilitation programs do not appear to be a significant feature of seafarer return
to work arrangements, and only slight improvements have occurred over the last three years. The Seacare scheme is well below the national average on this measure.
4.9.2 Seacare Authority rehabilitation and return to work benchmarks for the maritime industry
In November 2001 the Authority agreed on six benchmarks against which to monitor rehabilitation and return to work performance in the maritime industry, as part of implementation of a rehabilitation and return to work strategy for the industry.
The benchmarks and benchmark measures, along with performance against those benchmarks, are set out in Table 28. Benchmarks one and two are derived from Seacare data. They were determined on the basis of average 1999 – 00 and 2000 – 01 performance, while benchmarks three to six are derived from the Australasian Return to Work Monitor results for the Seacare scheme for 2000 – 01.
Table 28: Seacare Authority rehabilitation and return to work benchmarks and performance against those benchmarks 2001 – 02 to 2003 – 04
Table 28 indicates that the number of claimants who have been assessed as capable of undergoing a rehabilitation program relative to the total population eligible to be so assessed has deteriorated and remains well below the Seacare benchmark of 52%. There has also been a fall in the number of claimants commencing rehabilitation relative to those assessed, although it sits at the level of the Seacare Authority benchmark. The return to work rate and durable return to work rate have both improved and are above the Seacare Authority benchmark. The partial or graduated RTW rate has again fallen.
4.10 Long tail claims
Table 29 below contains details of long tail claims obtained from scheme insurers, defined as those claims that have received more than one year’s weekly compensation payments that were active during each of the last five years.
Table 29: Number and cost of long tail claims 1999 – 00 to 2003 – 04
Year 1999–00 2000–01 2001–02 2002–03 2003–04
Number of long
tail claims at 30
June
Cost of long tail claims in the year
63 60 48 43 36
$2 377 087 $3 129 718 $1 979 225 $2 347 857 $1 428 087
Source: Taylor Fry Pty Ltd report to Seacare Authority of June 2004
Table 29 shows that both the number of long tail claims and their annual cost is reducing over time. Additional data obtained from Seacare scheme insurers shows that the average duration of long tail claims being supported by both major scheme insurers is 2.84 years. An analysis of the long tail claims data shows that the longest duration long tail claim since commencement of the scheme has been 7.85 years. The design of the Seacare scheme as provided in the Seafarers Act, being a continuing benefits scheme, potentially provides for a high number of long duration long tail claims. However, the data indicates
a relatively small number of long duration claims, though the long tail claims which exist are adding extensively to costs in the scheme.
4.11 Insurance premiums data (for the five years to 30 June 2003)
In late 2003 the Seacare Authority engaged Taylor Fry to collect comprehensive Seacare premium data from insurers for 2002 – 03. Taylor Fry obtained comprehensive data from all Seacare scheme insurers.
The data collected revealed an average raw premium rate of 4.90% based on a wages pool of $273.1 million. It also revealed that some $13.5 million was collected in premiums from the industry in 2002 – 03. These results are summarised in Table 30 below.
The Seacare Authority commissioned Taylor Fry to calculate an adjustment to the raw premium rate to convert it to a five day deductible (excess) equivalent (a five day deductible or excess being the most common deductible across Australian workers’ compensation schemes). The five day deductible premium rate using the Taylor Fry conversion is 7.69% for 2002 – 03.
The data provided by insurers for 2002 – 03 was based on earned premiums, including adjustments to burning costs policies, which provides a more accurate picture of premiums information than reporting deposit premiums only, which has been the basis of premium reporting up to 2000 – 01.
Table 30: Seacare premiums data 1999 – 00 to 2002 – 03
Table 30 shows an increase in the premium rate in 2002 – 03 relative to 2001 – 02 – an increase of
30.6%. One explanation for the rise in the premium rate is that the premium rates negotiated by employers and insurers were more fully adjusted to account for the stable wages pool (remuneration) in 2002 – 03 and to recover from the reduced premium rates agreed for 2001 – 02.
Table 31: Numbers of policies in premium rate bands 1999 – 00 to 2002 – 03
The data in Table 31 shows the number of policies in each premium band from <1% to >10%. It indicates that in 2002-03 the majority of policies fall in the five to >10 per cent range (57%), while 43% of policies are in the zero to five percent range.
Taylor Fry also obtained comprehensive data on the excesses negotiated by Seacare scheme employers in seafarer workers’ compensation insurance policies, and on the extent of identified burning cost policies. A summary of the range of employer excesses and policies based on burning costs is contained in Table 32.
Table 32 shows that of the 48 policies reported in 2002 – 03, 21 or 43.8% contained an excess of $10
000 or less, while 16 or 33% contained excesses of $50 000 or more. The relatively high excesses in the Seacare scheme appear to be reducing the actual premium paid by employers because in many cases, claims are being met directly by the employer with no call on the insurance policy, i.e. the risk is being shifted to the employer.
This proposition is supported by anecdotal evidence from Seacare scheme employers which indicates that the principal mechanism utilised by employers to reduce the cost of their workers’ compensation insurance has been to progressively increase the employer excess. The result is that only a small percentage of accepted compensation claims are being referred to insurers for payment against a policy. Taylor Fry consider that some characteristics of the Seacare scheme are similar to self-insurance.
The highly specialised nature of shipping operations requires innovative solutions to maximise return to work options for injured seafarers
Table 32: Seacare Scheme - employer insurance excesses 1999 - 00 to 2002 - 03
