CHOICE OF ACCIDENT INSURERS WILL CREATE STRONG INCENTIVES FOR INJURY PREVENTION AND REHABILITATION

Employers and self-employed people currently paying for ACC coverage will be able to shop around for their injury accident insurer from 1 July 1999.

"The Coalition Government wants employers to have the choice of insuring with either ACC or private insurers," said ARCI Minister Murray McCully and Associate ARCI Minister Deborah Morris.

"People with work-related injuries will receive the same, or better, benefits as those they receive now, and minimum entitlements will be set in legislation," the Ministers said. "Injuries are a huge cost to society and the economy.

The introduction of competition by providing employers and the self-employed with a choice of accident insurers will create strong incentives for injury prevention and rehabilitation. It also gives employers flexibility to arrange insurance packages that suit their particular needs and those of their workers.

"From the perspective of the employees, they will know that their employer must concentrate on injury prevention or face higher premiums. This is also an incentive for employers to focus on rehabilitation. "The Government continues to be committed to the Accident Rehabilitation and Compensation Insurance Corporation providing a 24 hour no fault comprehensive scheme for injured New Zealanders," the Ministers said.

"The Coalition Agreement foreshadowed change to ACC including controlling the costs of ACC to workers and employers, providing greater flexibility to meet individual circumstances, and modernising administration and management of ACC.

"Despite previous attempts to improve the scheme over the years, it has continued to draw criticism because the delivery through a statutory monopoly has resulted in premium payers having no choice in respect of price or service quality.

"While employers and the self-employed will retain the option of paying into ACC, we consider that an element of competition would motivate the Corporation to provide a better value-for-money service to premium payers and claimants."

Mr McCully and Ms Morris said work was currently underway on the regulatory environment that would be put in place. But commercial insurers and ACC had both been positive about their delivery of services in a competitive environment, although they were waiting to assess the final form of the governing framework.

"The limited competition to which ACC is being exposed also provides an opportunity for the Corporation to modernise its administration and management. "The Government will also review the appropriateness of ACC's structure given the emerging competitive environment. This will ensure a level playing field and preserve the Crown's interest in the Corporation."

The Ministers said that while ACC would compete with other insurers for coverage of employers and self-employed people, it would still continue to manage and underwrite all other claims including existing claims.

They said the Government was still addressing the issue of how it should fund the outstanding claims of the existing ACC scheme, which in ACC's last annual report were estimated at $8.2 billion.