Hindsight Adjustment Methodology
Hindsight Adjustment methodology was developed by SICorp as an incentive mechanism for workers compensation and motor vehicle lines of business.
It provides an adjustment to contributions paid by an agency and is designed to reflect the actual claims costs to the fund.
The objectives of hindsight adjustments are to:
- maintain full funding of liabilities
- return unused contributions to icare tmf agencies.
The Hindsight Adjustment methodology states that benchmark funding, deposit contribution and surplus/ deficit positions are all recalculated using the same formulae as the deposit contribution calculations but with actual experience from the fund year.
A hindsight refund is payable if an agency’s claims experience has improved, while a payment is required if the agency’s experience has deteriorated.
Workers compensation contributions have two hindsight adjustments which are calculated at three and five year intervals post fund year. Motor vehicle claims are reported and finalised within a short period of time therefore there is one hindsight adjustment calculated 18 months after the commencement of the fund year.