Employers run for cover

By Richard Braddell

A prime reason for opening workplace accident insurance to private competition is that market disciplines would produce lower premiums that would benefit employers.

But those employers who have not arranged cover by the end of today with one of the six private insurers registered to compete in the market will be too late if they want to freely negotiate those benefits.

As of this evening, the voluntary market will end. For the next three months anyway, firms and their employees will automatically be covered by @Work, the company the Government has set up to compete alongside the private sector.

While @Work has been established to operate in most ways like a private company, it also is required by law to provide insurance to all those employers who have not bothered to make provision.

Two weeks ago, that number was looking like it would be quite large, with estimates that only 10 per cent of employers had organised new cover. But a last minute rush was always expected and the industry has been working flat out this week finalising insurance contracts. The chief executive of @Work, Sam Knowles, thinks the proportion of companies that will have insurance when the voluntary market ends tonight will be closer to 80 to 90 per cent.

Even so, a sizeable number of smaller employers are expected to end up with @Work, with guesstimates ranging from 30 to 50 per cent of the country's 235,000 employers becoming clients.

That might be so, but Mr Knowles thinks that @Work's share of market premiums will be much lower, possibly between 10 and 15 percent, since the majority of large employers will have shopped around to get the best deal on cover.

Mr Knowles says one of the surprises in the new market has been the intensity of price competition. Everybody thought it would be fierce, but Mr Knowles says that between 25 and 30 per cent could be wiped off a premium market that was worth $1.1 billion under ACC.

The interesting figure, however, will be that of how many employers have actually done nothing. As the chief executive of the Wellington Regional Chamber of Commerce, Claire Johnstone, recently observed, many small employers have found the transition to the private market simply too hard. "The thought of getting three pieces of paper together, no matter how simple that sounds, is simply too difficult," she said. Those three pieces of paper are a claims record provided by ACC, an insurance number allocated by the Department of Labour, and an Inland Revenue number.

Relying on IRD data, employers who have not taken insurance by this evening will be contacted by @Work from Monday to set up insurance. Those employers who do not respond, face stiff penalties of up to five times the premium @Work would have imposed.