Victoria's government insurer in financial crisis - Labor to tax public service to bail it out
It has been revealed in Parliament's Public Accounts and Estimates Committee hearings that the Allan Labor Government's insurer, Victorian Managed Insurance Authority (VMIA), is in financial crisis.
In 2023/24, the VMIA paid a record $678 million in claims, which was a 26 per cent increase from the previous year. This resulted in the government insurer recording a loss of almost $100 million. The Economic Insurance Result for the VMIA was even worse, recording a deficit of $195.4 million.
The VMIA's Insurance Funding Ratio has dropped to 99 per cent, well below the 145 per cent of the preferred range.
This means, for the first time ever, that VMIA's outstanding claim liabilities now outstrips its assets, and it does not have sufficient funds to pay outstanding claims.
As a consequence of this disastrous result, VMIA has been forced to implement a 'Capital Management Plan' which will require State Government departments and agencies to pay a new "Capital Recovery Charge" to bail out the VMIA.
Shadow Minister for Finance, Bridget Vallence, said: "The VMIA's financial situation is so dire, the Allan Labor Government has resorted to imposing a new tax on the public service to bail it out."
"Despite being warned in 2023 by the Department of Treasury and Finance that the VMIA was in financial turmoil, the Allan Labor Government did nothing to prevent VMIA's precarious financial situation."
"Labor's new Capital Recovery Charge will result in higher premiums, which will mean government departments will be forced to make more cuts services."
"What is even worse, the government does not expect the VMIA to return to financial stability until 2029, another 4 years away, yet there is no credibility to this forecast given the VMIA is insuring the high-risk Suburban Rail Loop project."
"The financial crisis of Victoria's government insurer, proves once again that the Allan Labor Government can't manage money and Victorians are paying the price."
