New Zealand Law Society - ACC posts deficit, hit by falling interest rates

ACC posts deficit, hit by falling interest rates

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Volatility in global markets coupled with falling interest rates saw ACC post a deficit in the 2015/2016 financial year, according to its recently released annual report for the year to 30 June 2016.

ACC posted a net deficit of $3.4 billion for the year, against a budgeted surplus of $129 million. The deficit came despite investment income growing 10.2% to $3.3 billion, $1.6 billion higher than budgeted.

New funding policy implemented

The Government's new funding policy for ACC came into force in September 2015, as part of the Accident Compensation (Financial Responsibility and Transparency) Amendment Act.

Acting Minister for ACC, Nathan Guy, said that the new policy ensures the scheme is adequately funded to withstand economic volatilities while ensuring levies are kept as low as possible and stable over time.  He said ACC's levied accounts are now fully-funded. "This is a significant milestone as it means ACC holds sufficient funds to meet the lifetime costs of existing claims," Mr. Guy said. He added that levies will now be set every two years, rather than annually. 

Claims rise

ACC accepted 1.93 million new claims in the year, up 5.2% on the previous year, and paid out $3.5 billion. ACC said while claims growth followed expected patterns for the first two quarters, it was higher than expected in the last two quarters.

Transformation programme

During the year ACC started the delivery phase of its Shaping Our Future Transformation programme, which is designed to improve the outcomes and experiences of stakeholders – be they injured people, health and other service providers, business customers and levy-payers. 

ACC chief executive Scott Pickering said there has already been an impact from the changes. "We have shortened the time between an injury and people receiving weekly compensation payments. People suffering sexual assaults are able to commence counselling sessions more quickly following the redesign of out sensitive claims service." 

Other changes include simplifying levy invoices so business can better understand what they need to pay and implementing a post-call customer service assessment so customers can say what the think of the level of service they received. "Improvements like these help increase the public's trust and confidence in the service we provide."

Looking further ahead, Mr Pickering said over the next five years a full programme of improvements is planned for its systems and processes as well as working towards building a "more transparent and customer-centred organisation".

Privacy breaches down, but still above target

Privacy breaches have dropped from a rolling average of 68 breaches per month in June 2012, to a rolling average of 20 by the end of June 2016 – still eight above the ACC's target 0f 12.  ACC has developed a plan outlining its privacy activity for the next four years and from next year it will change the way it reports privacy breaches, using a new framework that scores the severity and impact of breaches on both itself and its customers.

2016 by the numbers

  • 1,933,629 new claims were accepted by ACC
  • 491,202 clients received physiotherapy
  • 37,562 clients had surgery
  • 111,403 received rehabilitation services
  • 97,581 received weekly compensation
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