Celebrating 50 years of operation, the Accident Compensation Corporation (ACC) recently revealed its annual report with significant updates. The corporation highlighted an increase in new injury claims by 3.6% from the previous year, and weekly compensation claims also saw a hike by 3.9%, reporting a total of 165,000.
ACC’s financial report for 2023/24 year has shown a significant deficit of $7.2 billion. This has been attributed mainly to a surge in its outstanding claims liability (OCL), which is indicative of the estimated lifetime cost of existing claims. The OCL saw an increase by $8.7 billion this year and has subsequently pushed the total liability to a staggering $60.2 billion.
Despite the daunting deficit, the public has been assured by ACC that it can fulfill its obligations towards its clients. However, growing OCL might suggest escalating costs that could potentially affect future funding mechanisms. On the occasion of ACC’s 50th anniversary, ACC’s board chair, Dr. Tracey Batten, reiterated the organization’s commitment to supporting the people of New Zealand.
ACC CEO, Megan Main, emphasized on escalating concerns about rehabilitation performance, bringing to light an increase in injury claims that have workers needing days off from work, subsequently leading to extended recovery periods.
Being proactive in addressing these issues, ACC has declared improving rehabilitation performance as one of its top priorities. Substantial work has been put taking aim at this challenge. ACC boasts an investment fund of $51.6 billion, meant to aid future cost of claims. The fund produced a return of 7.6% before costs. This is crucial in assuring that the scheme can offer support to long-term injuries without pressing excessive financial burdens on levy payers.
In response to the increasing challenges regarding rehabilitation, ACC rolled out a three-year investment plan aimed at enhancing client outcomes. The key aspects of this plan include the development of a more personalized case management system specifically for low-complexity weekly compensation claims and the constitution of a team primarily focused on supporting long-term clients in their journey towards independence. The CEO is optimistic about the effectiveness of these efforts and believes that initial signs of improvement in short-term recovery rates are already observable.
Investing in injury prevention is another key area for ACC. The corporation has dedicated a whopping $80 million for various programs in 2023/24. A few of these include Rugby Smart, Ride Forever, and Farmstrong, which aim to reduce preventable injuries, a significant factor in overall claims.
Apart from prevention efforts, ACC conducted a public consultation concerning levy rates in September and October. The consulting process drew almost 8,700 submissions. The primary focus of the feedback revolved around proposed amendments to motor vehicle and motorcycle levies.
Highlights from the feedback revealed strong disapproval towards suggested increases, with a significant 94% of participants opposing changes to the motor vehicle levy and 90% rallying against increased contributions from motorcycle owners. Other participants mentioned concerns predominantly about the expense burden on small businesses, raising queries about the data ACC used to put forth the proposed changes.
The insights gathered from the consulting procedure will contribute to ACC’s final suggestions to the Minister for ACC. It is expected that the government will decide on levy rates by November 2024, and any alterations will come into effect from April 2025.
Through continuous commitment to New Zealanders, ACC continues its 50 years long journey, focusing on improvements, prevention, and maintaining financial stability while meeting challenges head-on.
