What if we didn’t have ACC?

We keep being told ACC is the world’s best no-fault accident insurance scheme.

If a scheme which has a $12.8 billion gap between its net assets and claim liabilities is the best, what would the worst be like?

What would happen if we didn’t have ACC?

People who had minor accidents would look after themselves and most of those who needed treatment would get it through the public health system. If they had on-going problems they might end up on a benefit.

What they wouldn’t get, unless they had their own accident insurance, would be earnings related compensation.

How many would try to sue? I don’t know the answer to that. But if you take away accidents in which the victim is at fault because of carelessness or stupidity and others for which no-one else could be blamed I doubt if it would be a very big number.

Tomorrow the government will announce changes to the scheme to address the gap between income and outgoings. It will leave us paying more for less.

If a compulsory accident insurance scheme is so good, why has no-one suggested we have compulsory health insurance too? If the answer to that is that compulsory health insurance wouldn’t be a good idea, we need to look at ACC and ask if we’d be better off without compulsory accident insurance too.

Those who wanted accident and earnings related insurance could pay for their own. The rest would take the risk of having to rely on public health and benefit systems.

And if Macdoctor is right, we’d have fewer accidents because people might start taking a bit more care.

UPDATE: Liberty Scott has a prescription for improvements.

5 Responses to What if we didn’t have ACC?

  1. libertyscott says:

    Well given no other country has followed the ACC model you might ask why this “much lauded” system isn’t simply an overpriced form of transfer from the careful to the careless.

    I’d first individualise it, open it up to competition then return the right to sue, in those steps. There needs to be a fundamental assessment of the costs and benefits of this whole system

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  2. The ACC system hasn’t been copied elsewhere because the insurance industry elsewhere is typically awash in money and has powerful political friends. Lawyers would also be averse to any scheme that reduced the scope for lucrative litigation.

    The “gap” between ACC’s net assets and expected liabilities is an artifact of the recent market crash. If the present government did nothing at all, this gap would close as markets recover from the crash.

    There is no problem unless the markets of the world stay on the floor….and they haven’t, with the largest market indices rising by 20% or more in the past few months. In due course, this will be reflected in ACC’s accounting.

    It boggles the mind to think that any configuration of private provision could be cheaper than ACC as private providers would not have any control at all over the damages and ongoing costs.

    The ONLY way it would be cheaper would be if people currently covered by ACC found themselves no longer covered. That would be *great* for insurers…and bad news for everyone else. One never knows when life is going to deal one a harsh hand….and the madness of of having to sue in court for years to get compensation and support needed TODAY (and have lawyers get a huge chunk of the money) is why ACC was brought in.

    ACC is the best solution for people. Insurance companies and their political clients / allies HATE that. This dynamic is why the United States has the terrible system it has today. The people come second to a profits for vested interests.

    I hope the National government doesn’t follow this model. I’m frankly amazed anyone thinks a private model would be better to EVERYONE. There is so much evidence demonstrating that is complete nonsense.

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  3. I should add that by “cheaper” I mean the amount people pay into it and the provision of the support the service is intended to provide. One only has to look at the cost of private health care to begin to see the sort of monthly bills that private cover would entail for a system like ACC…and the benefits of universality is completely ignored in the private model.

    I’ve participated in “workplace compensation” schemes overseas providing this kind of cover. ACC is by FAR the best around from the point of view of the average person….employed or not. Private schemes offer full-time parents and people on low wages nothing. They can’t afford to sue and they can’t pay the premiums either.

    ACC is best by every measure…..other than insurance company profits.

    Is ACC perfect? No. It’s large bureaucracy like any and with any bureaucracy the consequences of human failure and dishonesty imposes waste and cost on everyone – whether the bureaucracy is public or private.

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  4. gravedodger says:

    What sold ACC to NZ’s people at the time was to be able to avoid the lottery that was the remedy at the time for compensating victims of work accidents or other victims where a person causing damage could be identified could be sued. With contributory negligence as a defense, the lopsided awards of damages, the well resourced strong employer entities, perps who had the better lawyers, and sometimes ignorance of the law led to many apparent injustices. Remember, as a nation we were still basking in the embryonic welfare state that was, at its inception, seen as a major step forward in the delivery of social justice and it had not caught on as the lifestyle option it has become today. So a scheme that seemed a good deal as regards access to treatment,rehab and compensation at an affordable cost had widespread appeal. Everyone was fair minded and the system seemed a good step forward. I don’t recall much in the way of opposition but there will be some who then or with the benefit of hindsight raised doubts but I was unaware of any prediction of where we have finished up.
    Sooner rather than later we have to, as a nation, get our collective head around the fact that nearly all welfare is becoming unaffordable with our inherrent reluctance to accept personal responsibility for our selves at work,at play and when we get old. Either we insure our selves or accept the suffering.
    BTW in my emergency response work I always ask any patient who may be from overseas for their insurance details and put that on the patient report form but it has come to my attention that it is ignored and all tourists receive ACC as of right, if true it is another rort paid for by our wealth creators as they are the easy target and collection of the levy is a piece of cake.

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  5. Libertyscott says:

    Truthseeker: The whole world is beholden to a conspiracy of insurance companies is it? All those powerful governments in Europe tremble at the knees at the thought of doing what NZ has done? Too simplistic and glib an answer.

    It is a nonsense that without ACC everyone would have to sue. A simple alternative is to have compulsory accident insurance for everyone to buy, from competitive suppliers for non work related accidents. Then you could buy the cover you wished, and people would pay premiums according to risk, which may make people think more about their driving behaviour and risking extreme sports.

    What’s your “so much evidence” against private providers? The evidence of opening up the employer account to competition is substantial savings that pleased those paying – who really should be the ones measuring success.

    You say “private schemes offer full-time parents and people on low wages nothing. They can’t afford to sue and they can’t pay the premiums either”. Full time parents can have cover bought by the earning parent and people on low wages would have employer paid insurance as well. Of course you could always help them yourself.

    ACC is an expensive fraud. The student who gets her life ruined because of an accident does not get earnings related compensation, only the employee does. However, everyone pays into ACC, regardless of quality of service. I have firsthand experience of ACC denying coverage, and then do you sue? No.

    What is ignored is that New Zealand is a dream for anyone introducing new products, medical techniques and the like, because nobody is liable if anything goes wrong. ACC’s coverage and compensation is truly absymal by world standards. On top of that, the existence of ACC has meant the layer of “Health and Safety” regulation on top of it, as employers don’t face insurance premiums or law suit risks from unsafe workplaces. So it has resulted in regulation to cover the poor incentives ACC creates.

    A shift to a competitive compulsory system where everyone paid according to assessed risk, employers for employees and customers where relevant, and individuals for personal risk including motor vehicles, would make a big difference in addressing poor performance of ACC as a monopoly, and providing incentives for better performance.

    After all, you can still sue for illness, and choose to insure for illness. Nobody has dared approach putting this under ACC for the obvious reason of cost.

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