ACC REFORMS A WINNERAccident Insurance
"Employers stand to save over half a billion dollars over the next two years as a result of the new ACC regime," ACC Minister Murray McCully announced today.
The forecast is based upon initial information from the Department of Labour's Accident Insurance Regulator's office, which has now registered contracts covering approximately two thirds of the total premium market, providing cover for approximately two thirds of employees.
"The ACC reforms are an outstanding success with the majority of employers making the most of their new ability to choose an insurer for workplace accident cover," Murray McCully said.
Employers had to sign up with a private insurer by 5pm Friday and those that did not will be allocated to the SOE insurer, @Work, later this week. The Department of Labour Accident Insurance Regulator has been processing raw data from insurers over the weekend.
"There are more than 110,000 contracts registered with the regulator already, 98,000 of which are employers and around 15,000 self-employed people," Mr McCully said.
"Employers have clearly taken advantage of the new environment and made the most of the choices they now have available to them.
"The contracts registered so far amount to around $370 million, which is around two thirds of an estimated total premium market of $600 million. Last year ACC reported a premium income in the Employers Account of $1.1 billion.
"It appears that businesses will save more than $200 million on accident insurance this year alone and a total of close to half a billion dollars over the next two years.
"This takes into account the residual claims levy, which this year pays for the tail of past claims at an average 67 cents per $100 payroll and next year is expected to be around 50 cents. This is because of ACC's success in improving efficiency and managing the tail of claims," Mr McCully said.
"Some of the money saved by businesses will need to be invested to manage any risk sharing arrangements with insurers, but that still means hundreds of millions of dollars that can be used to create jobs and boost our economy.
"Importantly, over a million employees, around two thirds of the workforce, are covered by the contracts that have already been signed. Although it is unclear at this stage to what extent employers are risk sharing, this sort of arrangement creates powerful incentives for employers to have safe workplaces and to focus on rehabilitation.
"These reforms are creating winners across the board," Mr McCully said. "Employers are winning from competition, employees are winning with a stronger focus on safety and rehabilitation, and New Zealand as a whole is winning with more resources freed up to invest in our future."