ACC long-term injury levy expected to fall

By RICHARD BRADDELL

WELLINGTON - The ACC expects the levy that covers the unfunded portion of long-term injuries to drop below 35c following a further reduction in the number of claimants.

The surcharge has dropped progressively from a high of 67c to a scheduled 40c.

But although the ACC yesterday reported a surplus of $17.6 million in the six months to December, that was down sharply from $145 million in the same period of 1998.

It blamed the fall on the privatisation of workers' compensation - which pared premium income $169 million to $660 million - lower investment income and costs associated with the restructuring for privatisation.

However, the corporation claimed success in reducing accidents, with programmes targeting rugby flattening out the bulge normally associated with mid-winter.

New claims were down 7 per cent for the second year in a row.

Chief executive Garry Wilson said a further $625 million reduction in the future cost of claims would push the ACC close to a $800 million surplus for the year to June, and that would enable another cut in the long-term claims levy, probably to between 32c and 35c.

Cost reductions over the last three years had been helped by rehabilitation rates that had halved the number of claimants still receiving benefits after 21 months.

Mr Wilson said ACC's actual costs were below 70c - compared with an average premium of $1.20 - or well under 90c when administration and collection charges were taken into account.

This performance would be similar for workers' compensation if ACC (the Accident Rehabilitation and Compensation Insurance Corporation) was still in that market.

However, the corporation's actuaries were reluctant to drive premiums so low since a combination of consistently favourable factors could not go on forever and there was likely to be a glitch some time.

Mr Wilson also produced ACC data casting doubt on recent Insurance Council claims that the private market had produced a much better outcome in terms of workplace deaths, injuries and time off work.