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Note 7. Other Information

Defence Service Homes Insurance Scheme
Notes to and forming part of the Financial Statements

for the year ended 30 June 2017

This section provides other disclosures relevant to DSHIS's financial information environment for the year.

Note 7.1. Explanations of Major Budget Variances

The following tables provide a comparison between the 2016–17 Portfolio Budget Statements (PBS) budget and the final financial outcome in the 2016–17 financial statements. The Budget is not audited.

Variances are considered to be 'major' based on the following criteria:

  • the variance between budget and actual is greater than 10%; and
  • the variance between budget and actual is greater than 2% of the relevant category (Income, Expenses and Equity totals); or
  • an item below this threshold but is considered important for the reader's understanding or is relevant to an assessment of the discharge of accountability and to an analysis of performance of an entity.

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Explanation of major variances Affected line items (and statement)
Claims
Claims expenses were higher than budget due to several small storms, plus the Cyclone Debbie catastrophe which occurred in March 2017. The budget only included three moderate events. The Cyclone Debbie event was over $5m and has resulted in reinsurance recoveries.
Claims expense (Statement of Comprehensive Income), Claim payments (Cash Flow Statement)
Outstanding Claims Provision
The outstanding claims provision is higher than budget ($2.1m) due to the catastrophe event discussed above. The budget included three moderate catastrophe events totalling $3.0m.
Gross claims outstanding (Statement of Financial Position)
Underwriting Result
As discussed above, the underwriting result was severely impacted by Cyclone Debbie.
Underwriting result (Statement of Comprehensive Income)
Reinsurance Recoveries
Due to Cyclone Debbie DSHIS is able to recover $1.972m from its reinsurance program which has been taken up under Trade and other receivables.
Reinsurance and other recoveries (Statement of Comprehensive Income), Trade and other receivables (Statement of Financial Position)
Investments
Due to a benign claims experience in 2015–16, and the beginning of 2016–17, DSHIS was able to invest surplus cash in 2016–17.
Interest (Statement of Comprehensive Income), Purchase of investments (Cash Flow Statement)
Staffing
Due to limited recruitment, DSHIS has been unable to fill all vacant positions. These have been filled by Labour Hires (4 as at 30 June 2017). This has resulted in an underspend in employee expenses and an overspend in suppliers (Contractors).
Employee benefits equivalent, Suppliers (Statement of Comprehensive Income), Employees, Suppliers (Cash Flow Statement)
Interest Rates
Interest rates continue to remain at record lows and have impacted on the investment revenue earned by the Scheme.
Revaluation of investments at fair value through profit or loss (Statement of Comprehensive Income), Purchase of investments (Cash Flow Statement)
Suppliers
DSHIS contributes towards DVA's running costs each year. The payment to DVA was $0.109m higher than budgeted. This is due to an increase in the proportion of DSHI to DVA staff (FTE and contractors) in 2016–17.
Suppliers (Statement of Comprehensive Income), Suppliers (Statement of Financial Position), Suppliers (Cash Flow Statement)
Fire Brigade Contributions
Fire brigade and emergency services contributions are calculated by the NSW Government. Due to the NSW Government announcing the removal of the ESL contributions DSHI removed the collection of ESL on all policies from 1 July 2017 which significantly reduced the deferred fire services contributions held which are reported under Note 2.2B—Other non-financial assets.
Fire brigade and emergency services contributions (Statement of Comprehensive Income), Fire brigade and emergency services contributions (Cash Flow Statement), Other non‑financial assets (Statement of Financial Position)
Other Payables
Due to the projected premium being slightly lower than budgeted the reinsurance adjustment premium for 2016–17 was lower than budgeted.
Other payables (Statement of Financial Position)

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