ACC accounts require greater transparency

ACC accounts require greater transparency

BusinessNZ says ACC levies proposed for 2022-5 require greater levels of transparency.

Responding to ACC’s regular consultation, BusinessNZ’s submission says all ACC accounts need to be fully funded for the ACC system to work according to its insurance principles, and levy-payers should have ongoing transparency around about what they pay for and what they claim.

BusinessNZ’s submission says ACC has done a reasonable job in explaining some of the levy rate changes, however there are still ongoing concerns about levy-smoothing and significant cross-subsidisation still evident in some of the accounts, most notably the Motor Vehicle Account.

Levy-smoothing allows levies to be set higher or lower than required during a specified period, giving stability in levy amounts across time.  BusinessNZ says levy-smoothing should be undertaken over limited periods only, for example for the initial parliamentary duration of the Government of the time.

“Longer premium-smoothing, for example over a 10-year period, raises the risk that premiums will be seen, rightly or wrongly, as reflecting political goals rather than sound actuarial practice,” BusinessNZ economist John Pask said.

“While levy stability is valued by levy-payers, this is less important than getting pricing signals correct about the true costs of the scheme.”

BusinessNZ’s submission also says ACC also needs to look at the costs associated with different transport modes and their contribution to paying for road accidents, given the move away from petrol and diesel vehicles and towards alternatives such as electric vehicles.




11 Oct, 2021

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