Work insurer turns tables on doomsayers

By RICHARD BRADDELL

WELLINGTON - The Government-owned workplace accident insurer, @Work, is already in the black largely because workdays lost through injury were only half those budgeted.

The first-half net profit of $5.9 million was well ahead of an expected $6 million loss, the main factors being total claims costs of $5.6 million against an expected $14.9 million, and above-budget investment returns.

Chief executive Sam Knowles said the strength of the result had been surprising.

And while there was no tangible evidence so far that the rate of accidents had fallen, the record in getting people back to work had been considerably better.

@Work's budget for workdays lost had been based on a projection of a 15 per cent improvement in ACC's underlying trend before its exit from the workers' compensation market.

Mr Knowles said the claims rate had stabilised in August and could not be regarded as a statistical abnormality.

"The thing is that we never expected the result so soon. Had that been so, we would have priced much more aggressively."

He also said any argument that @Work had done well by being flinty hearted was dispelled by the fact that of 11,000 claims, only nine claimants had sought a review and only two or three would go to a formal hearing.

The company's performance will reinforce concerns about the economic impact of renationalisation. As well as affecting the cost of premiums, such a move will be seen as a threat to the business benefits of reduced disruption from staff absences.

Last week, the parliamentary select committee on ACC heard in submissions that the private market did away with the culture that said it was all right to rip off the taxpayer. However, it was also submitted that some lower-paid workers were being encouraged by employers to claim accidents as non-work injuries because of the fragile states of their industry.

Mr Knowles said key factors in @Work's result were more early intervention to manage injuries, employer ownership - bolstered in part by the company's policy of contacting the employer within 24 hours of a claim - and more focused attitudes of health providers.

"On the basis of the first half-year's result, a significant operating surplus and shareholder dividend would have been expected for the full-year period," he said.

The Government could also have expected a large repayment of capital since @Work's initial injection of $149 million was designed for a company with premiums of $180 million to $300 million.

Instead, its 10 per cent share of the market gave it $51 million.