The Federal Government’s in-house workers’ compensation scheme Comcare suffered a loss in the year to June as claims provisions boomed.

The bottom-line $564.9 million deficit compares with a $3.2 million profit last year. Provisions for outstanding claims in 2011/12 blew out to $825.4 million from $201.5 million.

“At June 30 2012 the value of the outstanding claims liability for premium claims exceeded the combined funds retained in Comcare and in the consolidated revenue funds… this resulted in Comcare reporting an operating deficit,” its annual report says.

Claims provisions grew because of “increases in the average duration of lost time for recent claims and poor return-to-work outcomes for long-term incapacity claims”.

Falling interest rates also added $152 million to future claims values.

When claims provisions are backed out, Comcare actually made an operating profit of $28.9 million, up from $7.9 million, and an underwriting loss of $2.6 million when investment revenue and government transfers are removed.

Premium income was $271.3 million, up 22.5%, while claim payments were $273.9 million, up 5.3%.

The liabilities blowout pushed the asset-to-liabilities ratio down from 94% to 65%, well below the 95-105% target range.

The Commonwealth is paying premiums of 1.41% of wages to cover its employers under the scheme, above its target of 1.4%.