Labour: ACC revamp will lift costs for most drivers

Opposition ACC spokesman David Parker. Photo / Mark Mitchell

Higher personal injury insurance charges for owners of older cars are likely if the Government accepts recommendations for the privatisation of ACC which go beyond what it has previously campaigned on, Labour warned yesterday.

National said before the last election it would investigate opening up the Accident Compensation Corporation's work account to competition from private insurers.

Late last year, after considering the final report of its ACC steering group, the Government said it had agreed "in principle" to allow that competition, but would not proceed unless the plan was endorsed by voters at this year's general election.

But ACC Minister Nick Smith also said officials would investigate introducing private sector competition in other ACC accounts such as the earners account, which covers non-workplace injuries, and the motor vehicle account, which covers road-related injuries.

The steering group said ACC's motor vehicle account was "a natural fit" with existing first- and third-party insurance bought by most motorists.

It argued for compulsory personal injury motor vehicle insurance to replace the ACC Motor Vehicle Account.

Opposition ACC spokesman David Parker said private sector involvement in motor vehicle-related injury insurance was likely to result in lower levies for owners of newer cars but higher charges for owners of older vehicles.

"A few people will be better off through that and most people will be worse off."

The steering group also said there was "a clear rationale" for private sector insurers to provide accident insurance for non-workplace injuries.

The "natural fit" between that sector and workplace insurance meant private insurers should be allowed to enter both markets simultaneously.

But the group noted industry concerns about the cost of entering the market before an election that could result in a change of government.

"Insurers have therefore indicated that the ideal date for competitive private delivery to begin would be six months following the election of a government committed to this policy, which suggests April 1 2012."

Constraints on the industry's ability to make necessary investments suggested the introduction of private competitive delivery into the motor vehicle account should occur from April 1, 2013. Officials are to report back to the Government on the competition proposals by July.

TARGETED:

Earners' account: Covers claims for people in paid employment who are injured outside work, eg on the sports field or at home. Is funded by levies on everyone in the paid workforce.

Motor vehicle account: Covers claims for all injuries involving motor vehicles on public roads in NZ. Is funded by a levy included in the price of petrol and the licensing fee.