ACC A Cost Effective Workers Compensation Scheme or A

							           ACC
A Cost Effective Workers
Compensation Scheme?
            or
 A Burden on Business?

          David Wood
    General Manager Workaon
                              August 2004
Agenda



 •   What is the ACC scheme?
 •   Comparisons with overseas schemes
 •   Cost to New Zealand business
 •   Your responsibility as an employer
 •   2005 Levy consultation
ACC Scheme



             24 Hour



             No fault (no suing)



             Accident Insurance
Five Accounts

              Collected from      Covers

Employers     Employers           Work-related
              Self employed       accidents

Earners       Salary & wage       Sporting injuries
              earners             Non-work accidents

Non-earners   Beneficiaries       Injuries arising from
              Superannuitants     accidents

Motor         Petrol tax          Injuries from motor
              Road user charges   vehicle accidents
              MV registrations

Residual      Employers           All injuries – pre
              Self employed       1999
Insurance Cover



What              Who               Where


Personal injury   All New Zealand   In New Zealand
caused by         citizens          and/or overseas if
accident                            normally resident
                  Visitors to New   in New Zealand
                  Zealand
                                    In New Zealand
Entitlements

 •   80% compensation for loss of earnings
     – Minimum $288 per week
     – Maximum $1,449 per week

 •   Medical treatment costs
     – @ regulated amounts
     – Doctor, Physio, Surgery, Dental

 •   Social needs
     – Home help
     – Personal care
     – House modifications
Premium Assessment

 Account       Method
 Employers     Salary and wages paid @ industry rate
               Self employed income declared @
               industry rate


 Earners       $1.07 per $100 salary received


 Non-earners   Nominal 5c per $100 benefit paid

 Motor         $197.50 (average) motor vehicle
               registration
               5c per litre petrol tax

 Residual      Salary and wages paid @ industry rate
Premiums

           Average

Employer   90c per $100 payroll   • Meat Processing $5.00
                                  • Business Admin $0.10




Self       $3.10 per $100         • Fishing $3.98
employed   declared income        • Dairy Farming $1.40
                                  • Accounting $0.13



Residual   31c per $100 payroll
Scheme Comparsions

                                             South
                     Victoria    NSW         Australia   Queensland   New Zealand


    Population       4.872m      6.654m      1.520m      3.687m       3.849m


    Average          $679        $724        $642        $648         $731
    weekly
    earnings


    Scheme           ($683m)     ($2,756m)   ($22m)      $600m        ($1,441m)
    funding


    Average          $2.22       $2.80       $2.46       $1.55        $0.90
    premium


    Claims           32,000      54,000      24,000      85,000*      27,000




*       Includes Medfee claims
Scheme Comparsions

                                            South
              Victoria       NSW            Australia      Queensland     New Zealand

Cover         Work-related   Work-related   Work-related   Work-related   Stress
              stress         stress         stress         stress         resulting from
                                                                          physical injury


Weekly        95% 1–13 wks 80%              100% 1-52 wks 85% 1-26 wks 80%
entitlement   75% >13 wks                   80% >52 wks   65% >26 wks


Lump sum      $337,380 max $250,000 max $193,462 max       $195,960 max $100,000 max


Employer      10 days        $500 weekly    2 weeks        5 days         7 days
excess        incapacity     compensation   incapacity     incapacity     incapacity
              $480 medical
              costs
Scheme Comparisons



 New Zealand                  Australia

 • 24 hour no fault           • Work accidents only
 • No suing                   • Common law settlements
                                $m
 • Premiums low
                              • Premiums high
 • Large unfunded liability
                              • Large unfunded liability
Employer Responsibilities


 Health & Safety            ACC

 • Prevent harm             • Pay first week
                              compensation
 • Hazard identification
                            • Participate in rehabilitation
 • Hazard management
 • Incident recording
 • Incident investigation
 • Serious harm reporting


           All Care            Little Responsibility
Employer Responsibilities

 Health & Safety    ACC

                    • Document claim process
                    • Confirm injury work-
                      related
                    • Obtain copy of medical
                      certificate
                    • Pay first week
                      compensation
                    • Provide alternative duties
                    • Monitor accident trends
                      and costs

         All Care       And Responsibility
Claim Process


             Work       No    Visit    Time off    No
  Injury    related?         Doctor     work?


                                           Yes

                                                        Accident
                                      Sick leave
                Yes                                     leave 2nd
                                      1st week
                                                          week



            Report to         Visit    Time off    No
           Supervisor        Doctor     work?

                                           Yes
           Complete
                                        Advise
           Incident
                                      Supervisor
            Report


                                       Accident
                                        Leave
Cost to Business

                                        Average claim   Funded surplus/decifit
Account     Premium                     cost            $b

Employers   $0.90 per $100              $13,035         $0.317
            $0.31 per $100                              ($1.413)


Self-       $1.73 per $100              $14,797         $0.014
employed    $1.37 per $100

Motor       $104.96 per motor vehicle   $43,307         ($1.557)
            $87.54 per motor vehicle

                                                        ($2.642)
Issues to consider




  •   Ageing workforce
  •   Lack of choice/competition
  •   Hidden cost of injuries
ACC Levy Consultation


 Released on ACC website 5 August 2004
 Final submissions by 16 September 2004


 Major changes

 Employers           Reduce from $0.91 to $0.88

 Self-employed       Increase from $3.10 to $3.19

 Motor               No change $197.50

 Residual            Increase from $0.30 to $0.33

 Earners             No change $1.07
Conclusions




 •   ACC scheme cheap by international
     comparision
 •   Large unfunded liability
 •   Would competition be better for business?