Compensation

The ACC Scheme

Since 1974, New Zealand has managed a system of 24 hour, comprehensive, no-fault insurance cover for everyone injured by accident.

A key feature of New Zealand's Accident Compensation Scheme is that it is compulsory - all must participate - and that it provides specified support in return for giving up the "right to sue".

The Accident Rehabilitation and Compensation Insurance Corporation, a Crown agency better known as the ACC, manages and delivers the scheme.

The ACC scheme provides all injured New Zealanders access to a wide range of medical, social and financial support.

Major benefits include 80% weekly income compensation, death and funeral benefits, medical treatment, vocational and social rehabilitation, and an independence allowance.

Currently these services are funded through the premiums paid. There are four main sources of income:

• Employers - pay a premium on their total wage bill. The level of premium reflects the risk of the industry and the employer's work injury record. Most premiums paid by employers are paid into an account currently administered by ACC known as the Employer's Account. It is from this Account that ACC meets the cost of all work related injuries (except for work related motor vehicle injuries).
  
• Earners - people earning an income pay a premium on their earnings which is collected with their PAYE tax. Most of these premiums enter the Earner's Account which meets the costs of injuries occurring to earners outside their workplace.
  
• Motor Vehicles - premiums are collected together with the annual vehicle re-licensing fees and from a tax on petrol. These premiums fund the Motor Vehicle Account which meets the cost of all motor vehicle injuries on public roads.
  
• Government reimburses payments made on behalf of people who are not earning an income. This income enters the Non-Earners Account.

From 1982 the scheme has been funded on a pay as you go basis. This means that premiums have been collected every year to meet the costs of funding costs for that year regardless of when the injury happened. This funding system has resulted in large outstanding claims liability of over $5 billion.

Under this funding system today's premium payers have had to pay for accidents that occurred in the past. In 1997 Government moved to a full funding system for the Earners' and Employers' Accounts. Under this system enough premium is collected in any one year to cover the future costs of any claims lodged in that year.