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Insurance and Risk Management

Finance administers the Australian Government's self-managed insurance fund, Comcover, and works in partnership with Australian Government agencies to promote a risk management culture supported by effective risk management practices. The principal way Comcover influences cultural change is through the pricing signals sent to fund members through its premium setting process.

In the years since its inception in 1998, Comcover's premium pool rose steadily as new members joined the fund and, more recently, in response to higher premiums as a result of the tightening of the general insurance market following the events of 11 September 2001 and fund members' claim experience. Fund membership has now stabilised at 192 members. It is expected that in 2004–05, Comcover average premiums will level off or fall marginally compared to 2003–04.

In years where claims were lower than expected, Comcover built its reserves consistent with appropriate prudential practice. Claims estimates are based on actuarial assessments of fund members' risk profiles and the overall level of reinsurance purchased each year.

Comcover's annual fund member survey found that fund member satisfaction regarding insurance achieved an overall satisfaction rating of 65 per cent. The survey found that 57 per cent of agencies were satisfied with the risk management services provided by Comcover overall. Comcover has developed strategies aimed at continued improvement in fund member satisfaction in future years.

To promote an improved understanding of risk management in agencies, Comcover conducts an annual risk management training programme. In 2003–04, Comcover conducted 40 training courses with over 580 attendees. The training is designed to assist those responsible for risk management in understanding the principles of risk management. The training also provides guidance in the more complex areas of risk profiling and helps attendees better understand risk in relation to contracting, tendering and providing advice.

Comcover also recognises the importance of providing the opportunity for fund member agencies to network and share their ideas and experience. This is supported through the delivery of the following programmes and activities:

  • The CEO Risk Management Forum – held annually, recognises the importance of executive leadership of risk management within Australian Government agencies. The theme of the 2003 forum was "Risk Management for Better Commonwealth Business – Creating Value for Your Organisation". The keynote speaker was Dr Peter Shergold, AM – Secretary of the Department of the Prime Minister and Cabinet, and the guest speaker was Ms Karen Hamilton, Executive General Manager – Issuers and Market Integrity, Australian Stock Exchange.
  • Comcover's Risk Management Panel – through this panel, agencies are able to receive mentoring and assistance in developing enterprise-wide risk management frameworks. Since its commencement in September 2003, the panel has provided assistance to 22 fund member agencies. The panel providers are engaged via deeds of standing offer, which expire on 30 June 2005.
  • Getting Wired for Risk Management seminars – three seminars were held in 2003–04, with 586 attendees from fund members. The seminars addressed topics such as Governance and Risk Management (27 August 2003), Achieving Excellence in Risk Management (24 February 2004), and Integrating the Management of Risk and Insurance Within Agencies (10 June 2004).
  • Australian Government Risk Manager magazine – released quarterly, this magazine covers presentations from key Comcover events and provides advice on insurance and risk management issues occurring within government.
  • Comcover Awards for Excellence – the inaugural awards for excellence programme was launched on 19 August 2003 and culminated with an awards ceremony held on Thursday, 27 November 2003, and attended by Special Minister of State, Senator the Hon Eric Abetz. The annual event is designed to support one of Comcover's key objectives – to bring about a culture of risk management within the Australian Government by recognising agencies that excel in the practice of risk management. The 2003 awards saw 22 nominations received from 19 agencies. Awards were made to eight agencies across four award categories.

As part of Comcover's key strategy to send pricing signals to fund members, Comcover also evaluates members' progress in implementing risk management through its annual benchmarking programme. The programme enables both Comcover and Comcover fund member agencies to make informed decisions about how risk management is being implemented within agencies. The benchmarking programme has been integrated into Comcover's risk management and insurance services and includes price discounts for good risk management performance.

The benchmarking programme is designed to:

  • benchmark effectiveness in establishing processes for managing risk from an enterprise-wide perspective;
  • benchmark effectiveness in establishing processes to ensure that insurance is used as a cost-effective means of risk transfer; and
  • provide a guide for organisations wishing to improve performance.

In 2003–04, 120 organisations participated in the annual benchmarking survey. Of these, 75 were Comcover fund members and the remainder consisted of state and local government organisations. The participation of non fund members provides a more robust benchmark as it incorporates a broader range of experience within the benchmarking pool. The 2003–04 survey saw the introduction of a new benchmarking scale and, based on performance. Comcover fund member agencies were able to achieve between one and five per cent discounts on their insurance premiums. The total value of insurance premium discounts awarded to fund members was $5.3 million in 2003–04.

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