Balancing Care and Sustainability: The Actuary’s Role in Injury and Disability Schemes

Australia’s injury and disability scheme system is complex. There are 11 different workers compensation schemes, eight compulsory third party (CTP) schemes and several other injury schemes, including the National Disability Insurance Scheme (NDIS), each governed by different laws and varying in the modes of operation.

So, how can actuaries apply their expertise to help Australian schemes function better?

It has been a year since the last Injury and Disability Schemes Seminar (IDSS) where industry leaders from across Australasia came together to exchange insights on the future of these schemes.

Ahead of IDSS 2025, we’ve compiled a list of the issues at front of mind to understand how actuaries can support schemes to achieve better outcomes for individuals, while integrating holistic, system-wide support – a goal cognisant of the IDSS 2023 theme, “Whole person, whole system”.

Common challenges and pressure points facing injury and disability schemes

While different schemes grapple with unique localised issues, it is clear that many face similar challenges, albeit at different stages of addressing them. Some of the key themes include:

• Mental injury claims: Many schemes are seeing an increasing number of claims relating to mental injuries as a primary cause, as well as an increasing propensity to develop secondary psychological injuries on top of primary physical injuries.
• Claims management effectiveness: Schemes note there can be capability and consistency issues impacting the effectiveness of claims management. High turnover of staff and high workloads are pivotal factors contributing to this.
• External disruption: Evolving technology such as wearable devices, integrated medical records and automatic emergency notifications have the potential to assist the claims management process. Schemes are striving to leverage these while balancing issues such as privacy and cost.
• Changing nature of work including digitisation, remote working, outsourcing, AI and automation are all leading to different causes of injuries and different models of injury support.
• Cost pressures: Deriving from several areas, increases in costs of support services can result in:
  • Shortages of carers, GPs, case managers, allied health providers
  • Increasing prevalence of mental injuries
  • Fraud.
• Community behaviours: As injured people are becoming more aware of their entitlements and are more comfortable claiming, this can put upward pressure on propensity to claim.
• Scheme viability: Meeting the needs of supporting injured clients and balancing the need to ensure schemes remain affordable and viable.

Looking ahead: How can actuaries assist schemes?

As actuaries, we are renowned for our strong numerical and analytical skills which we can use to support schemes through monitoring emerging experience, costing scheme design changes, evaluating scheme performance, assessing liabilities and premium determinations.

However, actuaries also hold a multitude of other skills that make us well-placed to add value to schemes and support them to achieve the goal of “Whole person, whole scheme”. These include: 

• Understand schemes: Leveraging market and scheme knowledge to advise investigations and evaluations. Actuaries understand the importance of considering both financial and non-financial inputs. In particular, the importance of qualitative information, be it subject matter expertise, community behaviour or claims management nuances. This provides useful inputs into understanding the workings of the schemes and developing impactful solutions to address business issues.
  A theoretical example of, say, a recent increase in physiotherapy expenditure may imply increasing servicing or costs of these services. However qualitative information provides additional information, showing new internal initiatives reducing approval requirements and enabling a speeding up of service provision and more timely provision of treatment.
• Understand claimant trajectory: Understanding scheme’s structure and mechanisms can impact access and treatment provision, leading to different outcomes for injured individuals. For example, considering and assessing the impact of two plausible trajectories for a person with a back injury. One injured person receives timely and appropriate treatment, fast tracking their recovery and return to health compared to the other who experiences delays in accessing the scheme and assessment of their injury, leading to lengthy delays in receiving treatment and possible deterioration of their injury. This creates disengagement with community and work environments and potential development of secondary psychological injuries.
• Understand the longitudinal nature of schemes and flow on effects of early interventions to longer durational impacts. Actuaries are able to consider lifetime costs and long-term trends, enabling useful consideration of fairness and sustainability of schemes over time.
• Holistic perspective: Actuaries understand the broader eco-system of scheme operation, their financial implications and how they affect both sides of the schemes’ financial reporting; the needs of different stakeholders (e.g., injured people, medical practitioners, claims managers); and the legislative framework in which they operate.
  Schemes are often thought of as social insurance businesses. Through consideration of the linkages between these facets, actuaries can consider financial implications and social consequences, applying a lens to balance several, sometimes conflicting, objectives such as supporting the recovery of injured individuals, appropriate delivery of services and scheme sustainability.

• Articulate uncertainty: Actuaries are comfortable with uncertainty and addressing “what ifs”. Understanding there may not be an exact answer, actuaries use different techniques to provide insights on different outcomes for unknown issues to guide decision making.
• Communicate complexity: Actuaries can distil complex findings into key insights and business outcomes.
• Work with other specialists: Actuaries engage with operation areas to develop partnerships with business managers, subject matter experts, medical practitioners and agents to design analysis and implement solutions.
• Control cycle approach: Actuaries undertake this review process to design strategic initiatives, develop performance metrics aligned with scheme goals, monitor emerging trends, and analyse the effectiveness of the implemented strategy. We evaluate these insights to update and refine strategies for greater effectiveness.

Through leveraging these capabilities, actuaries can be impactful thought leaders, supporting schemes in addressing their issues and achieving favourable outcomes

So, what’s next?

IDSS 2025 provides another opportunity for stakeholders to reflect on progress and explore emerging trends. Whether addressing mental health, technological innovation or financial stability, the focus will remain on how schemes can adapt and evolve. With actuaries’ notable capabilities and understanding of scheme structures and mechanics, we are well placed to continue to help schemes address their emerging challenges and better support those in need.

CPD: Actuaries Institute Members can claim two CPD points for every hour of reading articles on Actuaries Digital.