What about the uninsured?


This afternoon’s announcement on assistance for property owners in parts of Christchurch will apply to those who had insurance.

NZPA understands the offer that is going to be put on the table is for insured houses in the worst-affected suburbs and the payout will be at the government valuation for the houses immediately before the first earthquake in September.

The Government will pay the money upfront and then get most of it back from insurance companies and the Earthquake Commission.

What about the uninsured?

They might be eligible for welfare but they cannot receive compensation without undermining the insurance industry.

They took the risk of remaining uninsured and they will have to pay the price.

That might seem tough, but a conversation I overheard between two supermarket workers explains why that is the way it must be:

“I’ve paid premiums for 20 years and never had to claim. Why would you bother if you knew that those who paid nothing would get something?” one said.

“Well you wouldn’t would you?” the other replied.


Cars stuck in insurance limbo


Now that the immediate crisis of the Christchurch earthquake is over the city is facing the frustration of trying to get back to normal life when life is anything but normal.

Given the devastation the progress made on restoring power, water and sewerage has been impressive, although that won’t be any consolation to those still without services.

Although the initial inspection of houses has been fast tracked a lot of people are left in limbo not knowing if they will be able to return to their homes and if they can when that will be.

Businesses face similar frustrations and so do car owners.

Three parking buildings have been declared too unsafe for vehicle retrieval:

• Smiths City (Columbo Street/Dundas Street)
• Lichfield Street car park (33 Lichfield Street, near Oxford Terrace, adjacent Ballantynes)
• Farmers car park on at 194 Oxford Terrace

Engineering assessments will continue regularly to assess if and when access can be made safe.

This means it is also not possible to update owners of the condition of individual vehicles at these locations.

Supt Sam Hoyle said: “We fully appreciate it makes lives very difficult for some people not knowing when, or even if, they will get their vehicle back, or whether it is in a driveable condition. Be assured that if we can retrieve a vehicle we will, but the advice of the engineers is that some buildings are just too unsafe at this stage.”

 This puts the cars in insurance limbo.

Insurance companies won’t pay out until the cars are written off and that can’t happen until they’re retrieved.

Safety of people must come before the retrieval of vehicles and insurance companies can’t pay out on vehicles if they aren’t certain of their state.

This leaves a lot of people without their cars for an unknown time and without the resources to replace them.

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.

Nats ACC Policy


The National Party has annoucned its ACC policy  which aims for safer workplaces, certainty of coverage and more effective compensation.

National supports a comprehensive, 24/7, no-fault accident insurance scheme that delivers certainty of coverage to all New Zealanders. However, the ACC scheme can be improved. Workplace accident figures are high by international standards.”OECD data to the end of 2003 showed New Zealand’s non-fatal injury rate rising when everybody else’s except Luxembourg were falling. ACC data shows the number of work-related injury claims increased each year from 2002 to 2005, only declining in 2006.

“Either way, we can do better.                                                                                                                             
“Incentives for employers to improve safety practices are poor in a scheme in which similar premiums are charged regardless of an employer’s workplace accident record.


“Where accidents do occur, incentives for quick, high-quality rehabilitation are weak, and entitlements under the scheme for injured people are not of high quality. “

Treating people well and getting them back to good health and work as soon as possible makes sense.
“National wants a more flexible scheme that rewards employers with good workplace safety records, penalises those with poor records, and encourages employers to buy more than the basic cover.”
This would be an improvement on the current system which takes no account of individual workplace records. Farming is regarded as a relatively high risk activity, so all farmers pay a higher premium regardless of their individual safety records.

Most insurance schemes take account of individual risk and have incentives to encourage fewer claims. ACC should have the flexibility to do this too and its priority should be helping injured people towards a speedy recover and return to work.

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