• Murray McCully
Accident Insurance

Today's Budget announcement that the ACC Employers' scheme will be opened to competition for employers and the self employed will deliver real choice, the ARCI Minister Murray McCully and Associate Minister Deborah Morris said today.

"From July next year, employers will be able to choose an insurer to provide cover for their employees' work related injuries," the Ministers said. "Self-employed people will also be able to choose an insurer for their work and non-work related injuries from that date.

"We want to emphasise that the ACC scheme's cover and entitlements will remain set in law. If you are injured at work you can expect at least the level of assistance that you currently receive." "There are currently no plans to introduce competition to the other ACC accounts," the Ministers said.

A Bill incorporating the changes announced today will be introduced to Parliament later this year. Members of the public will have the opportunity to comment on the proposed changes when the Bill is being considered in the appropriate Parliamentary select committee. "We have been encouraged by the ARCI Corporation's recent performance, especially its greater focus on rehabilitation. This has led to a fall in the number of long-term claimants.

The Corporation has also been successful in bringing its administration costs under control. "The ARCI Corporation's improved performance, however, should not be seen in isolation from the reality of competition that it now faces.

We believe that introducing real competition to the Employers' scheme will ensure that the Corporation's performance continually improves," the Ministers said. The ARCI Corporation has inherited the role of monopoly provider of accident compensation and related services for a scheme that began in 1974.

The changes remove monopoly provision of cover for employers and the self employed, while retaining the 24-hour, no-fault comprehensive scheme. ACC's governing legislation was updated in 1992 to focus the ARCI Corporation on injury prevention and rehabilitation, and to provide an insurance-based approach to cover and entitlements. "The changes announced today expand on the 1992 changes," said the Ministers. "The entry of competing insurers will encourage investment in health and safety systems and programmes and provide incentives for greater employer involvement in rehabilitation of their injured workers. "The relationship between risk and premiums will also be more explicit. Firms with good accident records will have this reflected in lower premiums.

"A limited form of competition was introduced to the Employers' Account in 1995 when selected employers were allowed to manage their employees' work injury claims for a limited period. "This accredited employer programme has shown positive results. There has been a significant decrease in the cost and duration of injuries in accredited employers' workplaces, partly due to employers being directly involved in the management of their injured workers' rehabilitation.

"In December last year the Government announced a two staged programme to improve the delivery of the ACC scheme. The first stage expanded the accredited employers programme, and made improvements both to ACC cover for self employed people and the ARCI Corporation's administration. "Stage two of the programme involved investigating the costs and benefits of introducing an element of competition to delivery of ACC's services.

Today's announcement sees the completion of the initial two stage policy development programme, and the start of a pre-implementation phase. The changes announced today require a programme of further work to be completed prior to the 1 July 1999 market start date.

The work includes: · restructuring the existing ARCI Corporation to enable a Crown-owned entity to compete in the new market; · establishing the regulatory functions required to oversee operation of the market; · updating systems in affected Government agencies such as IRD; and · addressing the ACC scheme's existing claims liabilities.

The ARCI Minister and Associate Minister said they would be regularly updating employer and employee representatives, the insurance industry, health providers and other key stakeholders throughout the development of the new market.

"It is important to note that by 1 July 1999, all employers and the self employed must have chosen an insurer, either with the ARCI Corporation or elsewhere, and have proof of that insurance," the Ministers said.