Accident compensation regulatory system

System description and objectives

System description

The accident compensation regulatory system restricts the ability to sue for personal injury and substitutes New Zealand’s accident compensation  scheme. The regulatory system includes provisions dealing with:

• injury prevention
• coverage of accidental injuries
• entitlements to compensation
• rehabilitation and the provision of treatment
• decisions and review of decisions
• establishment of the Accident Compensation Corporation (ACC)
• management of the scheme and setting and collection of levies
• management of injury related information, and
• the accredited employer regime and other aspects of the scheme.

The scheme is an integral part of New Zealand’s social contract. It is a key social and economic institution tasked with promoting injury prevention and providing rehabilitation and compensation entitlements to people who are injured so that they can return to normal life as quickly as possible.

It excludes regulation of insurance and investment within the financial markets conduct regulatory system.

Objectives

The objective of the accident compensation system is to provide for a fair and sustainable scheme for managing personal injury while minimising the overall incidence of injury in the community, and the impact of injury on the community (including economic, social, and personal costs).

The scheme is guided by five principles, which have endured over the scheme's 40 year history:

• community responsibility: the community supports an individual when their ability to contribute to the society by their work is interrupted by injury
• comprehensive entitlements: all injured people are entitled to a consistent level of assistance for a similar level of incapacity/need regardless of the causes which gave rise to their injury
• complete rehabilitation: injured people should be supported to achieve timely physical and vocational recovery
• real compensation: payment of income-related benefits for income losses for the period of incapacity and in recognition of permanent bodily impairment
• administrative efficiency: all aspects of the scheme should be managed in a timely, consistent and economical way.

Ministerial portfolio and key statute

Regulatory agencies and their roles

Collaboration and information-sharing between regulatory agencies

MBIE and ACC, and MBIE and Treasury, have close working relationships in order to ensure the scheme operates effectively.

The division of responsibility between MBIE and ACC reflects ACC’s status as a Crown Agent and allows ACC to focus on the effective and efficient delivery of the scheme.

The ACC Board is the primary monitor of ACC performance. Treasury employs the ‘It Takes Three(external link)’ operating expectations for statutory Crown entities in delivering its monitoring responsibility.

Regulated parties and main stakeholders

Regulated parties:

• Employers
• ACC

Main stakeholders:

Everyone in New Zealand is covered by ACC’s no-fault scheme if they’re injured in an accident. This includes those not employed such as children, beneficiaries and students.

Other key stakeholders include:

• Employers and employees
• Advocates
• Health sector.

Processes for engagement with regulated parties and stakeholders

Customer Advisory Panels (Serious Injury, Sexual Violence, Older Persons, Scheme Customer Advisory Panel): provide insights about ACC services and policies and scheme settings. Complement ACC’s research, analytics, staff feedback, and customer co-design.

Public consultation on policy proposals: discussion documents / issues papers.

Direct engagement with key stakeholder groups: Mainly carried out by ACC.

System's fitness for purpose

• Learn more about the fitness-for-purpose assessment and ratings

• Date of assessment: 2017

Effectiveness

System performing well against criteria.

ACC is expected to remain in a strong financial position in future years.  Being a long-tail scheme, ACC’s liabilities are highly sensitive to external economic factors such as changes to interest rates. Historically low interest rates contributed to ACC’s $8.7 billion deficit at the end of June 2019. This deficit represented an accounting valuation of ACC’s treatment, rehabilitation and compensation costs far into the future. ACC will have enough funds to support those who need ACC care despite this accounting deficit.

There is still work to be done on injury prevention and continual monitoring of entitlements and boundary issues.

On Injury Prevention, ACC continues to work with providers on pilots to support customers recover more quickly from injury. ACC has also launched new workplace injury prevention grants and subsidies as part of Injury Prevention Investment in Workplace Safety. For instance, the ‘Health & Safety Advisory Subsidy’ launched in September 2019 will help small to medium sized businesses in the manufacturing sector access qualified health and safety advisory services and improve their workplace health and safety performance.

Through its Integrated Change Investment Portfolio, ACC is implementing initiatives to support improved service experience and outcomes for its customers and providers.  Some initiatives are:

• an upgrade of its claims management system, Eos
• implementation of the first phase of its Client Payment project, which moved some weekly compensation payments from ACC’s customer entitlement system into Eos; and
• expansion of its online customer service, MyACC, enabling customers to be more actively involved in managing their claims information.

Efficiency

System performing well against criteria.

The implementation of the government funding policy together with biennial levy setting has provided for a clearer, more transparent, and longer term focus for the scheme, with more stable levies.

Resilience

System performing well against criteria.

Previous policy decisions on moving from Pay As You Go to a fully-funded model were aimed at futureproofing the scheme.  Despite posting a deficit in 2019, ACC has sufficient funds (through levies and ACC’s investment fund) to support all claimants.

There is continued focus on management of the interface (including transitions) between ACC and the health and welfare systems, especially given social and demographic change (eg, occupational illness, aging population, gradual process).

ACC’s transformation program will ensure it delivers consistent, high-quality customer service through IT and other service improvements. The government continues to be focussed on ensuring ACC has a good understanding of, and processes to manage, the cost pressures within its business. The transformation programme will happen over a number of years, and the transformation will continue over the next 10+ years.

Changes in operating context, including technological developments and emphasis on better customer service and cross-government collaboration, present new challenges and opportunities for the scheme and its administration. We are also seeing changes that are blurring the boundaries of the scheme (eg, increasing co-morbidity with an ageing population).

There may be scope to better equip the scheme to respond to such challenges and opportunities by ensuring the legislation provides flexibility where appropriate (eg, to enable responsive business processes)and certainty where it matters (eg, cover and entitlements).

Fairness and accountability

System performing well against criteria.

The levy setting and policy development processes involves comprehensive stakeholder and public engagement. Individual decisions on coverage are subject to a comprehensive review and appeal process. The March 2016 Dean Review of a report into dispute resolution processes recommended changes to how the dispute resolution scheme operates and is funded. These recommendations are being considered and some are in the implementation phase.