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Changes To ACC - Employers Pay More

Published 01 Apr 2010

(By Tim de Lautour)

This article should disturb employers to the point that they will want to act. The solutions here are simple. They are not easy - but they are simple. If you want to know what to do, how to do it and would like the tools to do it with - please e-mail or phone us on 0800 15 8000. There are many actions any business can take to manage ACC claims better and reduce the costs. Tim can help.

Changes Made
The Govt has already made several changes to the Accident Compensation Act 2001 and some changes in the ACC systems and procedures.

What employers can reasonably expect from the ACC in the near future are higher premiums and lower benefits. We feel that until private insurers play a far bigger role in covering workplace accidents (The Work Account) everyone in NZ is going to face a head wind obtaining a fair deal. For private insurers to be more heavily involved then, there is an urgent need for deregulation and competition invited in. Until then employers face a strong head wind in obtaining a fair shake for injured employees and their businesses. Solutions lie in pre-preparing with systems and procedures.

Automatic Acceptance of Claims
Please take note that businesses should not automatically accept that a claim is work-related simply because the ACC says it is. Businesses should satisfy themselves.

Please also accept there are inextricable connections between your System of Employment, your induction and internal processes, an ACC claim, the ACC levies you pay and managing and resolving accident, illness and injury claims.

One option mentioned in our newsletters in the past was for the ACC to reduce the cover and reduce entitlements. This, in conjunction with increased levies should go some way to addressing the ACC's financial problems. Any significant value of course is reduced considerably but employers in NZ have always enjoyed insurance policies that exclude claims anyway. These changes will probably not cause any reaction of note because they are not unexpected. (????)

Act Passed (It's now law)
Last month (to be exact March 2nd 2010) the Accident Compensation Amendment Act 2010 was passed and it includes 'stage 1' and is introduced to improve the possibility of the ACC being sustained. It includes reduced cover and compensation entitlements. Whew!! Thank goodness they've woken up. The Act also moves the date for fully funding residual claims from 2014 to 2019. Residual being the 'tail' employers pay on top of their current levies from the last financial catastrophic mismanagement of funds by the ACC. What this means is employers will pay more for longer. It's now law. Employers throughout NZ rejoice. Employers can (and will) now pay more and for longer.

At the risk of presenting a balanced view - Employers Assistance Ltd would like to point out that if all employers in NZ implemented a robust accident prevention programme (OSH in other words) this would considerably contribute to the accidents and claims being avoided.

In the very near future employers will be forced to implement an OSH programme through stingingly high premiums, costly administration, penalties for breaches and very little actual cover. Best to avoid the accident really.

The Govt has also ordered a review of the costs of claims handling, purchasing costs and a stocktake of ACC accounts and see if some efficiencies or savings can result. There is a steering group appointed to assess current performance and it will be interesting to see the report, recommendations and the cost of the report.

The Changes In Brief
The amendment includes a reduction in personal cover for a work-related 'gradual process injury' (e.g. RSI or Overuse Injury) disease or infection if the injury is classed as 'work-related'. This will come about by the change in definition. A Hearing Loss claim will have a higher threshold to become an entitlement. The new level is 6% of hearing loss or - no claim. Other reductions will come as a result of the change to the definition of personal injury. Of special interest here is that if the gradual process injury such as RSI (Overuse injury) is not work-related there is no claim. This has far reaching consequences.

Compensation to be Reduced
Weekly compensation calculations to be changed include a reduced claims entitlement for casual or temporary (seasonal) employees.

Reduced claims for those claiming a personal injury before reaching 18 years of age or before obtaining full time work (potential earners).

Low earners will wait until 5 weeks of incapacity to receive the minimum wage rather than the first week as it was.

On the Positive Side
Other amendments include employer's levies can be adjusted for risk sharing with the ACC, no-claims bonuses and voluntary excesses. Deregulation regarding the involvement of private insurers and small businesses will move more quickly and benefit employers through better options than are currently available.

While some changes are now law others come into force 1st July 2010 and the steering group report is due in June 2010.

We will report on the steering group findings in July and other options for business owners as they become available. Right now though - please inquire on how employers can take the best advantage of existing options and save significant ACC payments.