Date: 22/06/2016 RUTH FORREST MLC to VANESSA GOODWIN: LEADER OF GOVERNMENT BUSINESS
During budget Estimates hearings we were assured the Tasmanian Risk Management Fund - the TRMF - is fully cash-backed and thus will have cash backing of $230.8 million in 2017 with the majority of claims against the fund being for medical and personal injury claims, with only a small proportion being for property, motor vehicle and liability claims. In light of the recent floods -
(1) What likely claims could and will be made against the Risk Management Fund; and
(a) from which parties are the claims likely to be made?
(2) What are the likely costs to the TRMF as a result of damage to property as a result of the recent floods?
(3) What are the likely costs to the TRMF as a result of damage to motor vehicles as a result of the recent floods?
(4) What are the likely costs to the TRMF as a result of other liability claims that may arise?
(5) What support if any will be available from the Australian Government in disaster relief or other funding that may reduce the claims against the TRMF?
Mr President, I thank the member for Murchison for her question.
(1) There have been 18 claims made to date relating to the loss of, or damage to, property owned by government agencies, including flood damage to schools, houses and national parks and wildlife infrastructure. It is also understood that a number of bridges have been damaged, but the relevant details are yet to be submitted. The claims submitted to date range in estimated cost from $3700 to $460 000, with the average housing claim being around $23 000 and the average infrastructure claim being around $316 000.
(a) Agencies will submit claims to the TRMF administration agent, Jardine Lloyd Thompson, for processing.
(2) The current estimate for property claims submitted to date totals around $2.2 million as per the status report. It is expected that more claims will be submitted as floodwaters recede and assessors review the damage. Accordingly, the total costs are unknown at this point in time.
It is also understood that a number of bridges have been damaged as a result of the storm event with the costs still being assessed. Bridges owned by the Department of State Growth are covered under the TRMF with a $5 million excess applying. Therefore the TRMF will effectively not cover any of these costs directly with the costs either needing to be funded by DSG or covered through the catastrophe risk insurance policy in the event that total costs of the storm event exceed $5 million.
If claim costs escalate, the likely maximum cost to the TRMF for the June storm event will be $5 million, as in the event that total costs of the storm event exceed $5 million, Treasury has an insurance policy in place with an external insurer to cover catastrophe risk to state-owned assets (with the exception of those assets owned by state-owned companies, government business enterprises and local government assets). The policy provides up to $1 billion for any one event ($500 million for any one loss), with a retention level (or excess) of $5 million, reflecting the cap for property cover provisioned within the TRMF.
(3) To date, there has been one claim lodged for damage to a motor vehicle as a result of the storm event, with an estimated cost of $30 000.
(4) To date, there have been no other liability claims lodged and it is considered unlikely that there will be any claims of this nature submitted as a result of the storm event.
(5) The state will be reimbursed by the Australian Government for some costs relating to the storm event under the Natural Disaster Relief and Recovery Arrangements - NDRRA - for losses not covered by insurance.
The first threshold for NDRRA assistance is 0.225 per cent of state revenue. The state can seek NDRRA funding if the cost of eligible natural disaster claims in 2015-16 exceeds $11.6 million. If the costs exceed the first threshold the Australian Government meets 50 per cent of the above first threshold and below second threshold costs. The second threshold for NDRRA assistance is 1.75 times the first threshold. That is, if the cost of eligible natural disaster claims in 2015-16 exceeds the second threshold of $20.3 million, the Australian Government meets 75 per cent of costs above this threshold.
Provided the cost of each individual event exceeds the threshold of $240 000, it can be included in the calculation of the total threshold cost for a particular year. The cost associated with this year's bushfire emergency means the second threshold has already been reached. Therefore, for the purposes of the June storm event, the claim on the Australian Government will be for 75 per cent of any costs.