THE ACC SCHEME BACKGROUND INFORMATION

  • Murray McCully
Accident Insurance

The ACC scheme is a compulsory, government regulated, 24 hour, no fault, accident compensation scheme. It covers all New Zealanders, employers, self employed, earners, non-earners and motor vehicle owners, for physical injuries that happen at work and outside of work.

Major scheme benefits include 80% weekly income compensation, death and funeral benefits, medical treatment, vocational rehabilitation, social rehabilitation and the independence allowance. The scheme is managed and delivered by a Crown monopoly, ARCIC, which employs more than 2000 people.

There are six accounts: Employers', Earners', Non-earners', Motor Vehicle, Medical Misadventure and Subsequent Work Injury.

Currently, all accounts are based on a pay as you go system where premiums are set each year to recover the expected actual costs of the scheme for that year. About 85 cents of every dollar of the current premium in all accounts is paying for injuries that occurred in previous years.

Employers' Account (year to June 1997)

  • meets the cost of all work-related injuries;
  • meets the costs of injuries that happened outside of work before 1992;
  • paid for by employers;
  • policyholders made up of 162,000 employers, 328,000 self-employed and 50,900 shareholder employees;
  • income to Corporation $1232 million; and expenditure by Corporation $867 million;
  • the expected cost of current claims in future years (the outstanding claims liability) is approximately $5.2 billion.

Earners' Account (year to June 1997)

  • meets the costs of workers' injuries that happen outside of the workplace, eg sports injuries
  • paid for by earners;
  • policyholders are the 1.7 million people in the workforce;
  • income to Corporation $346 million; and expenditure by Corporation $287 million;
  • the outstanding claims liability is approximately $1.04 billion.

Non-earners' Account (year to June 1997)

  • covers injuries to people not in the workforce;
  • paid for by Government;
  • expenditure by Corporation $173 million;
  • outstanding claims liability is approximately $0.6 million.

Motor Vehicle Account (year to June 1997)

  • meets the costs of injuries from accidents involving motor vehicles on public roads;
  • paid for through motor vehicle registration and petrol levy;
  • 2.49 million vehicles registered and 2,860 million litres of petrol sold annually;
  • income to Corporation $305 million; and
  • expenditure by Corporation $289 million;
  • outstanding claims liability is approximately $1.3 billion.

Medical Misadventure (year to June 1997)

  • pays for injuries arising from adverse outcomes from treatment by a registered health professional and for medical error;
  • funded from the Earners' and Non-Earners' Accounts;
  • expenditure by Corporation $9.9 million.

Subsequent Work Injury

  • covers the costs resulting from the recurrence of a previous injury, or its aggravation by a new injury;
  • funded from the Employers', Earners', Motor Vehicle and Non-earners' Accounts;
  • expenditure by Corporation $803,000.

The ACC scheme:

  • is the fourth largest area of government managed expenditure;
    • processes 1.5 million claims annually
    • - 92% are minor claims
    • - basic medical attention;
    • - 8% are moderate to serious injuries;
  • more than 135,000 people received support in the year to June 1997 for past injuries;
  • includes approximately 28,000 people who have been on the scheme for more than one year;
  • transfers 1.7% of GDP;
  • had a 1997 pay as you go cost of $1.6B;
  • has an outstanding claims liability of around $8.2B;
  • charges premiums to employers that range from 1% to 9% of payroll;
  • charges premiums to earners of $1.07 (plus GST) per $100 earned;
  • charges premiums to motor vehicle owners of $90 plus 2 cents per litre of petrol used; and
  • cost the Crown $172 million for non-earners.