• Murray McCully
Accident Insurance

The decision to open up about half the ARCI Corporation's existing business to competitive bidding will give it a strong incentive to continue improving service delivery, said ARCI Minister Murray McCully, and Associate Minister Deborah Morris.

The Ministers emphasised that the ACC scheme's existing legislated cover and entitlements would remain. This means that people injured at work could still expect at least the level of assistance they currently receive, or better, from competing insurers.

"We anticipate the introduction of competition to the Employers' scheme will also provide incentives to give clients faster access to medical and rehabilitation services, resulting in a quicker return to productive work," they said.

"In the short term, there will be some increased costs, but in the long term there will be overall gains, including efficiency gains, increased economic activity and employment, and savings to society and the economy with the improved focus on injuries and helping people back to work that competition will bring," the Ministers said.

"It is expected that commercial insurers will develop new insurance products to improve consumer choice, providing even further competitive stimulus to the ARCI Corporation," they said.

"In order to enter the market, insurers will need to be assured of the stability of the policy and the regulatory environments. Historical claims information will be available so that they can set competitive premiums," the Ministers said.

"We are committed to maintaining a stable policy environment for the workplace accident insurance market. This will be reflected in the thorough work programme over the coming months to ensure introduction of the regulatory environment necessary to support this new element of competition."

The ARCI Minister and Associate Minister said they would closely oversee the development of the new injury insurance market, and ensure that commercial insurers entering the market would be able to offer employers and the self employed competitive premiums for workplace accident cover.

"There will be strong incentives for employers to focus on the safety of their workplace and become more involved in the rehabilitation of injured workers as a result of insurer risk audits, and the rating of employers based on their accident records," the Ministers said.

"Employers are also aware that they will continue to be subject at any time to random workplace safety checks from Labour Department Occupational Safety and Heath Service (OSH) inspectors. "All employees and the self-employed will have access to legislatively mandated entitlements in the event of insurer or employer insolvency.

Mr McCully and Ms Morris said ACC, as the fourth largest area of government-managed expenditure, remained critical to the Coalition Government achieving important social objectives.

"The existing ARCI Act sets an overall objective of restoring the independence of a person to the extent that the person's independence has been lost by personal injury. "The concept of community responsibility in the Act will be retained in the new competitive environment by continuing the compulsory aspect of ACC.

"But the Government also believes more individual responsibility is necessary if the personal and financial costs of injuries are to be reduced. "Decisions will be taken this year on the independent regulation of competing insurers, and on restructuring of the ARCI Corporation to form a new Crown entity that will compete fairly," they said.

"There will be a fair and low-cost dispute resolution system, including the right to appeal to the District Court, but the exact structure is still to be finalised.

The Ministers predicted that commercial insurers would need a lead time of several months after the final form of the empowering legislation was known before they were able to compete with the ARCI Corporation for ACC Employers' scheme business.