Liability Benchmarking and Funding
Liability benchmark contributions and funding are calculated by actuaries using industry benchmarks, agency’s claims experience, assessment of risk exposures and includes an allowance for reinsurance.
The deposit contribution funding process for principal departments and grant agencies is designed to provide agencies with a financial incentive to improve their claims outcome.
Agencies whose claims outcomes for the previous fund year are better than expected are rewarded with a funding surplus. Agencies whose claims outcome for the previous fund year is worse than expected (i.e. claims cost is greater than prediction) are invoiced to pay the funding deficit.
Reinsurance is a prudent financial tool spreading the cost of very large icare tmf claims to worldwide insurance markets. Budgeted expenses for the purchases are assessed each fund year and shared across relevant classes and pools of contributions.