Insurers envisage low premiums

By Richard Braddell

WELLINGTON - Further substantial savings in workplace insurance premiums are possible if a competitive market is maintained.

ACC, which is about to become the state provider again, has already said it can undercut the current $1.20 per $100 of earnings of private insurers with a rate below $1.10.

But yesterday @Work Insurance chief executive Sam Knowles told a parliamentary select committee the rate could be under $1 per $100 of earnings. Just how far under would depend on the will of its owner, the Government.

Reiterating points made when the insurer presented its half-year profit earlier this week, Mr Knowles told the select committee hearing submissions on a bill to reinstate a state monopoly on workplace insurance, that workdays lost under @Work policies were half of those budgeted When translated across the economy, that equalled savings of $250 million a year.

But he said a full dividend from improved safety initiatives would come only next year.

He also took issue with American workplace accident insurance expert Greg Krohm who said that five out of the six state monopoly providers in the United States were among the 12 most expensive systems in the United States.

A Boston researcher would soon publish a report that said monopoly and public providers were represented in the top two best and worst providers in the US, said Mr Knowles.

Mr Krohm also told the committee US unions do not share their New Zealand counterparts' hostility to private workplace accident insurance.

The former regulator for the state of Wisconsin did not profess to understand the cultural drivers behind the New Zealand unions' antipathy towards private provision, but said that US unions regarded workplace insurance as a bargaining matter and regularly negotiated benefits beyond legislated minimums and took an active role in formulation of the insurance contract.

While it was illegal for US unions to waive minimum benefit levels, they accepted that an inefficient system would cost jobs, he said.

In an exchange with the Associate Minister for Accident Insurance, Ruth Dyson, he said it was important for labour to have a place in negotiating benefits because that contributed to the stability of the system.

In the exchange, Ms Dyson expressed the view that the logical outcome of the move towards competitive provision would be to replace the "social insurance" of no-fault, 24-hour cover so that even children would have to take insurance.