Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

ACC monopoly on workplace insurance to end

ACC monopoly on workplace insurance to end

by Paul McBeth

Dec. 21 (BusinessDesk) – ACC Minister Nick Smith plans to end Accident Compensation Corp.’s monopoly on workplace insurance coverage, and open it up to private providers.

Releasing the much-anticipated stock-take on ACC, Smith said the government has agreed in principle to open up the sector to private providers in what’s anticipated to be a $200 million windfall for insurers.

Any changes won’t be implemented until after next year’s election, though the Cabinet wants to hear back from officials by the end of June. The initiative marks the second time a National-led government has sought to open up the work account.

It was opened in the late 1990s, only to be closed again by the Labour-led administration when it came to power in 1999.

“The direction of these reforms is towards greater choice and contestability, but we are advancing these in a pragmatic and considered way,” Smith said in a statement. “Employers will be able to choose their workplace insurer, but ACC will still be a provider.”

The National-led government campaigned on investigating ways to open up workplace cover to private parties in 2008, and a research note from Merrill Lynch at the time said privatising the workers’ compensation and motor vehicle accounts could unlock up to $2.1 billion in new premium income for net gains of $200 million the industry’s after-tax earnings.

The report flagged insurers IAG New Zealand Ltd., QBE Insurance (International) Ltd., and Suncorp Group as the major beneficiaries.

Included in the information dump was the Steering Committee report ordered in August last year, which strongly supported opening up the workplace account.

The report, completed in June and led by former Finance Minister David Caygill, said the current system was “inefficient” and “distorted the pattern of insurance purchase for the New Zealand population as a whole, while denying private insurers the ability to offer consumers more efficient packages of insurance cover.”

The group’s report expected private delivery of compulsory insurance would transfer the burden of risk from the government, and remove the potential for unfunded liabilities to drag on the Crown accounts.

It predicted greater transparency and would allow competition to improve performance.

It would also create a clearer distinction between what is insurance and what is social welfare.

The report didn’t see the need to introduce the right to sue, with all of the “socially important features of the ACC scheme” able to be preserved through private cover.

The steering group recommended if private insurers are given access to the market that ACC should not compete, but focus on efficient management of outstanding claims to allow for an orderly process.

Smith said ACC won’t increase its levies next year, and it will extend risk-sharing options such as the Accredited Employers’ Programme.

It will also carve out ownership of the Disputes Resolution Service, and bring in experience rating into the work account, offering discount bonuses to large employers with few accidents and no-claims bonuses for small employers.

(BusinessDesk) 13:22:58

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Retail: International Websites To Pay GST

New rules would be aimed at imported goods valued at or below $1,000. Customs would retain responsibility for collecting GST on imported parcels valued more than $1,000. More>>

ALSO:

High-Level Advice: PM’s Business Advisory Council Membership Announced

The Prime Minister’s Business Advisory Council brings together a mix of experts, six women and seven men with small to large business experience, from across New Zealand, to provide advice. More>>

ALSO:

Improving: Report Shows New Zealand Air Quality 'Good'

Our air 2018, produced by the Ministry for the Environment and Stats NZ, shows that while some previously known issues persist, progress has been made and levels of some pollutants are declining. More>>

ALSO:

Greenpeace: Govt Extends OMV Exploration Permit

The Government has just granted oil giant OMV a two-year extension to drill in the Great South Basin, despite issuing a ban on new oil and gas exploration permits in April. More>>

ALSO:

Collective Bargaining For Contractors: Working Group's Model For Screen Sector

A recommended model to allow collective bargaining for contractors in the screen sector has today been unveiled by the Government-convened Film Industry Working Group. More>>

ALSO:

Kauri Dieback: DOC Closing Tracks To Protect Trees

The Department of Conservation will close 21 tracks across kauri land to help prevent the spread of kauri dieback. An additional 10 tracks will also be partially closed and the open sections upgraded... More>>