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Claims Mediator Should Be Part of ACC Revamp

23 October 2009

Media Release

An Independent Claims Mediator Should Be Part of the ACC Revamp

“An independent claims review authority should be part of the package for opening the Accident Compensation Corporation’s employers account to competition from the private sector,” says Auckland Chamber of Commerce chief executive Michael Barnett.

He noted that in the short time ACC was subjected to competition in the 1990s, ACC’s premium costs halved and there was a substantial reduction in claims.

“This was acknowledged by the ACC at the time.” However, the previous private sector scheme lacked transparency and a mechanism for claim review decisions to be independently reviewed, which was a factor that became an issue when complaints developed over claims being rejected.

Both the banking and insurance industries now have an independent review mechanism which could be a useful template to develop a robust performance monitoring regime of private sector coverage of workplace accidents.

Mr Barnett said the ACC shake up was an opportunity to address a number of underlying issues surrounding the ACC scheme, and in particular the cause and effect between:

• New Zealand having one of the highest accident rates in the OECD group of countries, versus
• New Zealand since 1974 being the only OECD country providing universal 24-hour no fault coverage for all physical injuries.

“Our scheme is ‘unique’ but is it as efficient and effective as it could/should be? If it was truly a world-class scheme, by now you would think that other countries would be adopting it?”

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Mr Barnett stressed he was not out to condemn the ACC product, “but let’s use the opportunity for a robust debate on where ACC isn’t working and how it can be improved, and not just react on a basis of ideology.”

He made two further basic points:

Giving employers a simple choice on the insurer for workplace accidents – ACC or a private sector company – will maintain certainty for ensuring staff are fairly compensated and can get back to work as quickly as possible for the obvious reason that the terms and conditions of workplace coverage will still be covered by statute. “Nothing will change on that count,” noted Mr Barnett.

Secondly, opening the ACC to competition should help create better results from the ACC’s preventative activities to reduce accident rates.

This is for the obvious reason that when someone takes out insurance with a private sector company, the premium they pay is influenced by the level of risk in the activity and the number of claims. “A good accident prevention regime will help reduce premiums and costs.”

Arguably a big problem with our universal no-fault scheme is that there is no strong incentive to take committed action to prevent accidents – the ACC will pay regardless.
“Injecting some competition into ACC just might also help create an attitude change across the community to take greater responsibility to prevent accidents, and reduce our ranking for being accident-prone compared to other countries.”

“Let’s use this reform to also debate how we can improve ACC’s accident prevention track record. It’s an area that needs greater transparency and urgency reinforced by some measures to monitor ACC’s performance,” concluded Mr Barnett.


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