Details Of Acc PremiumsAccident Insurance
ACC Minister Murray McCully today released details of ACC premiums proposed by the Corporation to apply from 1 April 1999 which will be the basis of public consultation over the next month.
The ACC legislation requires an annual consultation process based on a proposed premium, followed by a firm recommendation being made by the ACC Board, and then a decision by the Government.
"Despite the fact that the whole nature of ACC provision will change for employers and the self-employed from 1 July 1999 provided the Accident Insurance Bill is passed into law, the Government has decided to let the process continue," said Mr McCully.
"This effectively means that for employers, consultation is taking place on premiums which will apply for only three months -from 1 April until competition is introduced on 1 July 1999."
Mr McCully said while the consultation round was an annual requirement, premiums proposed by ACC were "merely a basis for discussion". In each of the last two years, the decisions finally made by the Government had been different from those recommended by ACC, once public submissions, advice from the ACC Board and advice from officials and actuaries were considered.
To ensure ACC has sufficient funding set aside in its reserves so everyone injured today can have their future rehabilitation needs covered, the Corporation plans to consult on a proposed premium of $1.30 per $100 of liable earnings over 1999/2000, for the non-work accidents of wage and salary earners.
At 10 cents per $100 more, this represents an increase of just over 8% in the earners' premium, or around 50 cents per week for someone earning $35,000 per year-from $420 to $455 per year.
Mr McCully said he was "hopeful that the proposed 10 cent increase in the earners' premium could be avoided."
"There is a good deal of water to flow under that bridge over the next month. In addition to public submissions, I will receive advice from officials and actuaries before making a recommendation to colleagues."
The Minister said the $1.84 per $100 (currently $2.35) average employer premium proposed by ACC would be tested by a number of factors before decisions were reached.
"First, the policy direction I have issued today requires ACC to identify a premium based on a fully funded scheme, including a margin for prudence which a private sector insurer would also require. The ACC Board will consider this issue in making a recommendation.
"Second, I am pleased that ACC is confidently focussed on reducing the cost of accidents to our community. However the actuaries advising both the Department of Labour and The Treasury have taken a more conservative view. Their more recent assessments have placed average employer premiums somewhere in the range between $2 and $2.15," said Mr McCully.
"The consultation process will assist the Government in making its final judgements on the future ACC premiums."