The Role of the Actuary in the National Disability Insurance Scheme

The National Disability Insurance Scheme Act 2013 sets out that the National Disability Insurance Scheme (NDIS) should operate as “an insurance-based approach, informed by actuarial analysis, to the provision and funding of supports for people with disability”. In a traditional insurance setting, the actuary’s role is to advise on the financial health of insurers. Actuaries provide advice to the insurer’s stakeholders and management, to help them define and quantify their financial objectives and to control financial operations to meet these objectives. At a fundamental level, actuaries provide the public with financial confidence in an insurance company or scheme. Actuaries play a similar role in the NDIS. Specifically, the NDIS Scheme Actuary is responsible for helping the Board of the National Disability Insurance Agency make sound, evidence-based decisions in order to manage the ongoing financial sustainability of the NDIS. This chapter contextualises the role of the actuary by exploring why an insurance-based approach is a core pillar of the NDIS and why the NDIS is considered an insurance scheme. It outlines how financial sustainability is measured in the NDIS and how this differs from a traditional insurance context. The authors discuss the role of participant reference packages in managing financial sustainability, how actuaries calculate the future cost of the scheme, and the importance of measuring outcomes to ensure the scheme is meeting its ultimate test of financial sustainability: that the Australian public see the value which it delivers.