Doomed, but still hard @Work on ACC change

By RICHARD BRADDELL

WELLINGTON - Condemned by the Government's re-nationalisation of workers' compensation, @Work - the crown-owned competitor in the private market - has been helping ACC rebuild for when it takes back control of accident compensation this year.

@Work's chief executive Sam Knowles told Parliament's finance and expenditure committee it had been assisting ACC to get its processes in place. He said the biggest issue was one of culture and how that focuses on improvement.

Mr Knowles was in effect singing the crown entity's swansong at the select committee, since its focus was now on getting itself out of business - even though its custom-built software and processes have seen it performing well above what was expected of it.

A closing offer of best wishes for the future from Labour's committee chairman Mark Peck proved too much on the National side of the committee, which laughed derisively.

Mr Knowles said it would cost between $4 million and $5 million to wind the company up, with about $900,000 of that going on redundancy.

Finding new jobs for the nine staff already put off had proved difficult because of soft market conditions in Wellington.

In the first half of its financial year, @Work had produced a $5.9 million profit, after claims costs of $5.6 million came in considerably lower than the expected $14.9 million, based upon @Work's statistical modelling.

Mr Knowles told the select committee that its performance could be attributed to aggressive management of claims, with all employers contacted within 24 hours to ensure accident causes were being remedied. Another factor was aggressive medical intervention as soon as the accident was reported.

While medical costs were higher than historically were the case at ACC, numbers of days lost requiring compensation were down sharply.

Mr Knowles said that $12 million in outstanding premiums at the half year had halved since, as confusion between whether levies were paid to ACC or @Work was resolved.

"Where people have refused to pay for various reasons, we are moving to a vigorous legal collection process," Mr Knowles said. Around $6 million in value of reinsurance could potentially be transferred to ACC.

But while @Work has performed well, it ended up with much less market share than expected.

Forecast to have between 10 and 20 per cent of premiums allocated to it from employers who failed to take out insurance, it ended up with less than 3 per cent. However, in the competitive market, a much stronger performance left it with an overall market share of 11 per cent.

Costs of managing the allocated share were high because 120,000 employer names submitted by the regulator were eventually whittled down to 22,000 as those who had ceased to be employers or had actually made alternative insurance arrangements were eliminated.

Plans to target the self-employed market in particular had been hoped to give @Work a 20 per cent market share over two years.