If It Ain't Broke Why Fix It
Following the announcement today that the new Accident Insurance business is now costed at $458 million the Insurance Council has encouraged Labour in the new coalition government to resist Alliance pressure to reverse accident insurance because the support for the accident insurance environment is so strong.
In it’s 1997 annual report the ACC valued accident insurance at $1.19 billion. That is the sort of costs being incurred by business in New Zealand.
Insurers are receiving positive messages from around the country on the new accident insurance environment.
Nationalising Accident Insurance will be enormously damaging because;
- It will immediately raise
premium costs by $300 million to return to the old ACC
- It will cost up to $50 million to rebuild ACC as a state monopoly.
- Govt will right off $20 million in set up costs for it's @work SOE.
- Govt will return to pay as you go which built up an $8 billion "tail" liability.
- Nationalising industry in NZ will damage our international investment reputation.
- Govt Departments will pay $52 million more for ACC premiums.
- Job creators around the country have applauded choice and competition.
- Local govt will pay (Wellington City Council saved $500,000)
- Health will pay (Capital Coast Health saved $1 million)
- Workers will pay ( health and safety jobs have jumped dramatically)
- These factors will devastate the incoming government's first budget.
The Insurance Council believes that the Alliance is now clutching at straws in justifying its ideological stance on accident insurance. The Alliance is currently making a number of wildly inaccurate statements relating to accident insurance, simply because it is unable to identify any faults in the current system. This is despite predictions just months ago that accident insurance would be a disaster.
The Alliance is expected to push for Ms Laila Harre to take the ACC portfolio to keep the pressure on Labour to nationalise industry.
The Insurance Council has no influence over prices quoted by individual insurance companies. However reports coming back to the Council indicate insurers are comfortable with current market prices which have saved workers $300 million. The only reason the Alliance is claiming prices are too low is because there is nothing else they can find wrong with the current accident insurance environment.
Insurers say the gross inefficiencies of the old ACC system produced the lower insurance rates. Insurers are very comfortable with the long-term future of accident insurance.
Insurers say that the consistently used example of rising premiums in Western Australia is simply not an accurate comparison with New Zealand. In Western Australia premiums have risen because the Government had control of the benefit levels and it was the politicians who drove these up. In addition, New Zealand has a no-fault system which makes comparison difficult with Western Australia’s workers compensation scheme.
The success of the accident insurance environment was one of the most significant achievements in the last electoral cycle. Despite attempts to destroy the reforms by a number of interested parties throughout the process, the sheer success means that Labour should not reverse the legislation.
Under ACC Accident Insurance was valued at $1.1 billion making accident insurance an area of enormous impact on New Zealand's fiscal position if it goes wrong and is underwritten by the tax payer.
Insurance companies and employers have indicated that prices are appropriate, but most importantly real benefits in terms of safer workplaces are now evident. This is where the Labour Party should be concentrating its efforts. The fact that the Alliance has concentrated on price structures as opposed to the safety of workplaces indicated their priorities are wrong and that they fail to understand the real nature of success in accident insurance.
When the coalition talks begin and the price of the coalition governments policies are detailed the cost of Accident Insurance nationalisation will be the biggest spending item on the agenda and is likely to be dominated by the Alliance.
It is for this reason that accident insurers are still confident a centre left labour part will ensure the successful business of protecting employees in the workplace through effective insurance will continue.