Work Announces Positive Release
WORK ANNOUNCES POSITIVE RELEASE
Work Insurance, the state-owned workplace accident insurer, today announced a strong financial result with a tax paid profit of $5.9 million for its first six-month period ending 31 December 1999. Work's Chairman Michael Cashin says this result surpassed expectations for the company in its start up year.
Mr Cashin attributed the result to the quality of Work's claims management processes and to strong investment returns.
He said the company's target for claims costs and underwriting had been based on a projection of trends in historical ACC performance, prior to the introduction of competition. He was pleased Work had significantly improved on ACC's projected performance and that it had been able to offer lower premium prices.
"Despite adding a considerable margin for performance improvement in the claims management area, Work has even surpassed the aggressive targets it set.
"On the basis of the first half year's result, a significant operating surplus and shareholder dividend would have been expected for the full year period. This turns around the previously expected year one operating deficit."
Work covers 33,000 employer and self-employed policy holders, representing around $51 million in gross written premium. In addition to covering a large number of smaller employers, Work customers also include some of New Zealand's largest and most high profile organisations including Fletcher Challenge, the NZ Rugby Football Union covering the All Blacks, and the IHC.
Chief Executive Sam Knowles said the company's injury management performance had been very strong, and had made a valuable contribution to the safety and productivity of New Zealand workplaces. As a consequence, total claims costs at $5.6 million were considerably less than the expected $14.9 million.
Work's investments contributed to the overall financial result by performing above benchmark. Mr Knowles said Work's positive financial result was achieved alongside a high level of customer satisfaction.
"Work's employer and employee customers have responded very positively to the company's more active management approach with a higher level of awareness of and commitment to workplace safety and claims management."
Mr Knowles said formal applications by its customers to review claims decisions made by Work were tracking at very low levels.
"Of the nearly 11,000 claims Work had accepted by 31 December, only 9 review applications had been received and the majority of these had been resolved internally to the customer's satisfaction. We have had very positive feedback from customers about the effectiveness of the company's claims and accident investigation processes which work closely with employers."
As a consequence of the new Government's intention to remove competition from the workplace insurance industry, the Government currently intends to disestablish Work as a stand-alone State-Owned Enterprise. The company is now working with Shareholding Ministers to assist the Government establish a new workplace insurance environment which will best deliver its aims.
Chairman Michael Cashin said the company was proud to have been able to deliver substantial improvements in both the cost and provision of workplace insurance to tens of thousands of New Zealanders.