State Insurance Regulatory Authority Towards risk-based regulation in practice

Carmel Donnelly Executive Director, Workers and Home Building Compensation Regulation

28 February 2017 sira.nsw.gov.au

AGENDA 1. Strategic context

2. Challenges

3. Approach

• policy reviews

• insurer supervision model

• operating model

4. Questions

2015 Structural Reform *reflects the structural change implemented 1 September 2015

Re

gu

lati

on

SafeWork NSW

State Insurance Regulatory Authority

(SIRA)

Motor Accidents Insurance Regulation

Workers Compensation

Regulation

Home Building Compensation

Regulation

Deputy Secretary of Better Regulation

and Chief Executive, SIRA Motor

Accidents Assessment

Service

WC Merit Review Service

DEPARTMENT OF FINANCE, SERVICES AND INNOVATION

What we do… PowerPoint title to go here xx Month 2016

SIRA regulates workers compensation insurance delivered by:

The Nominal Insurer (icare)

SiCorp Treasury Managed Fund

55 other Self-insurers

6 Specialised insurers

SIRA regulates motor accidents compensation insurance delivered by private CTP insurers SIRA also regulates the Home Building Compensation Fund which is administered by SICorp in icare.

About SIRA

About SIRA Corporate Model

PowerPoint title to go here xx Month 2016

Governance

GOVERNANCE: Board appointed by the Minister – Trevor Matthews (Chair), Nance Milne (Deputy Chair), Abby Bloom, Graeme Innes, and Anthony Lean (Chief Executive) STRUCTURE: Statutory corporation reporting to Minister for Finance, Services and Property

The big picture….. Strategic context

Better Regulation PowerPoint title to go here xx Month 2016

SIRA

Its better regulation

NSW Fair Trading

Office of the Registrar General

Commerce Regulation Program &

Policy

SafeWork NSW

Workers Compensation System Objectives

Section 3 1998 Act

Secure workers’ health, safety & welfare while preventing work-related injury

Provide prompt treatment & rehabilitation to assist injured workers to return to work

Provide income & treatment payments to injured workers & their families

Provide a fair, affordable & financially viable system

Deliver an efficient & effective system.

Workers compensation

insurance

Nominal Insurer

(icare)

Self Insurance

Specialised Insurance

SICorp TMF

(icare)

About 283,000 policies

About 170 policies

6 licenses

55 licenses

61,033 15,553

10,317

7,002

65%

7% 11%

17%

CLAIMS

PER YEAR About 90,000 new claims per year About 30,000 serious injuries per year SNAPSHOT About 84,000 open claims About 40,000 open claims with weekly benefits

About 3.2bn in premiums per year

System overview

Some key challenges

Prevention Mitigation Insurance Incident or diagnosis

Acute response Recovery Support

Confidence through affordable protection

Purchaser experience and outcomes

Wellbeing through recovery and restoration

Claimant experience and outcomes

Workers Compensation System Better experience Better outcomes

Involvement in the process is stressful (Grant et al, 2014)

Lengthy claims process Medico-legal assessments Poor claims information

Perceived injustice by claimant leads to amplified pain perception and is associated with poor recovery (Sullivan, Yakobov, Scott & Tait, 2014)

‘Compensation factors can impact participant health.’ – Harris et al 2008 and Grant et al 2014

Adversarial relationships lead to negative outcomes (Elbers et al, 2012)

Better Regulation - Consultative - Evidence-informed - Risk-targeted - Outcome-focused - Performance-based - Impartial - Person-centred

Stakeholder engagement model

Implementation of 2015 reforms

Remake of the Regulation & projects

Market Practice & Premiums Guidelines

Reviews:

Self-Insurance Licensing

Claiming Workers Compensation & Permanent Impairment guidelines

Financial and premium supervision

Review of Specialised Insurer Licensing

RTW programs and guidelines

Review of IME framework

Baseline system performance report

Customer centric design & customer experience measures

Injury prevention and rehabilitation strategies

Insurer supervision model

Workers Comp. program

Insurer supervisionmodel

•Conduct •Claimant outcomes

•Financial & Premium

Insurer supervision & system performance

Injured worker and employer experience & satisfaction

Procedural fairness

Information provision

Market practices

Compliance with standards and guidelines

Complaints & disputes

Return to work

Health outcomes

Data quality , audits & reporting

Financial performance benchmarks

Prudential risk management

Premium principles

MEASURING & REPORTING

Improvement towards excellence

Portfolio Manager uses the Insurer Supervision Model metrics to assist them to identify high risk areas for an insurer.

A meeting is held with the Insurer. The Insurer validates data on risk results presented and then provides SIRA with an action plan to mitigate the risks. SIRA monitors impact.

Case Study

Self Insurer

Data Timeliness

Data Quality

RTW

Disputes

High Risk Areas (ISM)# Actions taken by Self Insurer

Insurer action plan to improve data submitted to SIRA

Insurer investigating effect of above Data Issues on RTW statistics RTW action plan Request from WIRO of details of cases – diagnosis and action.

Insurer

Supervision

Model

Better Regulation

How we work

Conflicted Impartial

Prescriptive – influence via rules

Performance based – influence via data and leadership

Leveraging legislation Leveraging licensing conditions –

Insurer / provider supervision

Compliance focus Outcome focus

Reactive, opaque methods Proactive, transparent, and

accountable methods

Data rich but analytics poor Rapid data analytics tools & culture

– evidence and risk

Perceived ‘Defender’ mindset

Open to improvement mindset

Poor stakeholder engagement

Excellent stakeholder engagement

Distant from customer Strong customer understanding

and impact

Culture not enabling innovation

Encouraging innovation

FROM TO

Teamwork

Workers & Home Building Compensation

Regulation

Insurance Policy Insurer Performance Claimant Outcomes Injury Prevention and Rehabilitation

Data Analysis and Reporting

Enforcement and investigations

Design, review, engagement

Monitoring KPIs & driving improvement

Evaluating claimant outcomes & leading change

Expert insight & leading innovation in wellbeing

Enabling evidence, analysis and reporting

How we work

Wellbeing

Focus on “can do”

Inclusiveness

Productivity

Improvement mindset

Outcome focused

Change agents

Alignment and teamwork

Fair and flexible

Accountable decision making

Engaged & consultative

Data analytics culture

Constructive, influencing

Active supervision

Risk based targeting

Person-centred

Thank you.

Questions?