Sunday, October 18, 2009

Kicking the tyres on ACC - secret plans to charge all claimants $100 excess

National is planning to reduce costs on ACC, but some of the suggestions are those that even insurance companies would never do. Like charging all claimants an excess with no option for recovery.ACC calls such moves " kicking the tyres".

Just isolating motor vehicle accidents where pedestrians were injured, stats show that most drivers were not at fault. An excess should only be charged when the system is an at fault scheme, and one has a choice of paying premiums. ACC does not look at who is at fault in an accident. The reason this is important is because if a person has, say, a motor vehicle accident, is not at fault, and makes an insurance claim, he can attempt to recover his excess through the other party's insurance company, or directly through the disputes tribunal or courts, often with the assistance of his insurance company.

Now, I have spent 13 years working for ACC and settling claims for various insurance companies so I know a little how they work. To ACC,as fault is irrelevant, recovering an excess for the injured is also irrelevant. But ACC also has used to have a system called experience rating, with employers rated based on their employees' work injuries - the more injuries in a certain industry, the higher premiums that industry bore. Back then, if an employer disputes that an ACC injury happened at their workplace, it can challenge their premium increase as well as the experience rating through an ACC review panel. It's a good system if administered properly.

So if a person was driving a company car while working, got hit by an identified third party who admitted fault, his company would be able to recover his car insurance excess, thus maintaining premium level. But, under this proposal, if he got injured and needed ACC treatment, he'd have to pay an excess and he will also have to pay extra premiums due to aggregate actions from similar drivers. And the more he earns the more he pays. He has no choice. His employer will have increased ACC premiums even though the accident was not his employee's fault.

That's why I am amazed an excess was even suggested, because it won't happen, and neither should it unless ACC reintroduces experience rating( which Nick Smith is supportive of,BTW), but with an at-fault component. I see an opening up of the Work Account to competition again.




Anonymous toad said...

Dave, ACC had a system of experience rating between 1993 and 1999, when it was abolished. It was abolished because it actually lost ACC net revenue.

So I'm a bit sceptical about experience rating, but completely agree with the other arguments in your post re compromising the no-fault basis of the scheme.

October 18, 2009 at 8:42 PM  
Blogger Swimming said...

Ah, cheers, yes of course. Post amended. I suggest experience rating was abolished because claims were not getting experience rated accurately, and consequently this led to inaccurate levels of premium setting.

October 18, 2009 at 8:56 PM  
Anonymous toad said...

It was abolished because it was losing ACC money - they were paying out far more in experience-rated refunds on levies than the revenue they were receiving in experience-rated loadings on levies.

It also created an incentive for employers to deny that an injury was a work injury and consequently put stress on the dispute resolution process.

October 19, 2009 at 10:19 AM  

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