• Jenny Shipley
Accident Insurance

"Motorists will be pleased to know that healthy reserves have now been re-established in ACC's Motor Vehicle Account, which means they are likely to pay a lower vehicle registration fee next year," the Minister for ACC Jenny Shipley said today.

Speaking to the Bus and Coach Association Conference in Waitangi, the Minister said ACC was about to begin a process of consultation on the Motor Vehicle Account.

The account, which covers the cost of injuries which result from road accidents, is funded by a component of the motor vehicle registration fee - $90 for most vehicles - and a two cents per litre tax on all petrol sales.

ACC is required to hold a reserve of six months' normal expenditure in the account, but as the reserve currently stands at more than nine months' expenditure, the corporation has room to lower its component of the registration fee to $81, a 10 per cent reduction, and hold it at that level for three years.

ACC will later this week begin consulting on premium alternatives for the Motor Vehicle Account, prior to making a final recommendation to Government later this year. ACC will also consult on funding options for the account, and will present its findings to the Government for further consideration. ACC's funding options are intended for discussion purposes, and are not Government policy.

"It is appropriate that these issues are being explored at the same time as the Land Transport Pricing Study is being completed," Mrs Shipley said.

"This study is to help us decide how New Zealand roads and road safety issues are funded and managed."

At the same time, ACC will consult with the motoring public on the idea of moving to a more risk-based approach for funding the account, in recognition of the fact that there are varying risks of road accidents depending on factors such as vehicle type, driver experience or distance travelled.

Mrs Shipley says while the current "flat rate" funding method is relatively easy to administer, it does not take into account the varying exposure to risk of road accidents.

"Under a flat rate method, people who drive less, or use safer kinds of vehicles, are effectively cross-subsidising people who make much more use of the roads, or drive vehicles which incur higher accident costs."

ACC is putting three premium level options to premium payers - one of which is to retain the current rates.

The alternative funding options that ACC will put forward for discussion are:

Removing the ACC component from the annual registration fee and adding about five cents per litre to the price of petrol. This would mean those who travel more - and expose themselves to a greater risk of accident as a result - would pay more towards injury costs than those who travel less.

Setting vehicle-based premiums to reflect relative risks by size and type of vehicle. Research shows there is a greater crash rate and more serious injuries in vehicles with engine sizes of 2600 cc or larger. A further derivative of this option is to introduce a premium surcharge for vehicle owners under 25 years.

Setting driver licence-based premiums based on driver age and gender. Research data shows that driver experience and age has an important bearing on the risk of having an accident.
The options are being publicised in newspaper advertisements over the next week, and the motoring public will be invited to make submissions on their preferences.

"As Minister, I am delighted that lower ACC premiums are on the horizon. It is the Coalition Government's goal to rebuild public confidence in ACC by restoring it to a world-leading, 24 hour, comprehensive but affordable accident cover. This is a positive step in that direction." Mrs Shipley said.

Costs of motor vehicle injuries last year to ACC totalled $288 million dollars.

"The Coalition Government is also committed to improving road safety and reducing the rate of death and injury on our roads. As well as saving the human trauma, this will also reduce the costs on ACC, and eventually the cost to premium payers. Wearing both my Ministerial hats, of ACC and Transport, I again urge New Zealanders to remember the four road "life-savers" - don't drink and drive, always wear a seatbelt, drive at the appropriate speed for the conditions, and stay alert," Mrs Shipley concluded.