Despite the Accident Compensation Corporation, or ACC, operating in its current form since 1974, there is a degree of misunderstanding and indeed a lack of appreciation of just how the system works and how accident victims are benefited.
ACC is a no-fault accidental injury scheme that provides financial compensation and support to citizens, residents and temporary visitors who have suffered personal injuries, including physical injuries, mental injuries and death. Only injuries caused by an accident or as a result of medical treatment are eligible for financial compensation.
ACC is the sole and compulsory provider of accident insurance in New Zealand for all work and non-work injuries. Because of the scheme’s no fault basis, anyone who has suffered personal injury does not have the right to sue any at fault party, except for exemplary damages.
The scheme provides a wide range of entitlements to injured people, with the vast majority of claims being for treatment only. The remainder receive weekly compensation for lost earnings paid at a rate of 80% of pre-injury earnings and vocational and social rehabilitation, including the cost of home or vehicle modification for the seriously injured. One-off payments are available to people whose injuries have left them significantly or permanently impaired and there are a number of accidental death entitlements. Levies are also invested in a number of injury prevention programmes.
ACC is primarily funded through a combination of levies and government contributions. The source of the income collected determines which one of four accounts the funds are paid into – the four accounts being Work, Earners, Non-Earners and Motor Vehicles.
The Work account covers work related injuries and is funded from levies collected from employers and self-employed people while the Earners account covers non-work related injuries by income earners and is funded by levies collected by way of employee’s PAYE deductions. The Non-Earners account covers non-work injuries by non-income earners (children, elderly, unemployed and visitors) and is funded by a government contribution. Motor vehicle injuries are funded from levies included in petrol and motor vehicle license fees.
As mentioned previously, the weekly compensation for lost earnings is limited to 80% of pre-injury earnings and in many cases this may not be adequate. ACC Coverplus Extra was introduced to enable self-employed workers and business owners to ensure they are adequately covered by agreeing on a set level of compensation in the event of an injury that will require time off work. Because the amount is pre-determined, businesses do not have to prove loss of income and therefore have certainty in the event of injury.
The current system of accident compensation has stood the test of time. Over the years there have been significant funding issues, but the system is now well funded. There have been a number of reviews but there has never been a review of the fundamental principles of the scheme.