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Nats’ ACC policy all about ideology

Written By: - Date published: 6:23 am, July 18th, 2008 - 13 comments
Categories: election 2008, national, workers' rights - Tags:

National’s ACC privatisation policy is another of its one page wonders (this time with three page backgrounder skimming the history of ACC and restating the policy in longer sentences with no more detail). In the policy documents and in the interviews by National and its allies, no evidence has been provided that privatised ACC will provide cheaper or better coverage or reduce accidents. There is just an ideological assumption that private sector is better. We shouldn’t base these decisions on ideology, we should do what works. The studies show ACC works well compared to other systems, there is no evidence from National that private companies will do better. Private companies need to make a profit, ultimately, that money has to come from Kiwis’ pockets. That’s only justified if better treatment and coverage will be available, there’s no evidence it will be.

The idea that businesses want privatisation so they can spend more on insurance to buy better coverage is laughable. Businesses are already permitted to by additional insurance. They want privatisation to decrease their premiums, not raise them.

There’s also a danger of employers refusing to allow claims to be made or trying to fob them off on ACC, rather than going through their private insurer. As with the 90 Day No Rights policy, it’s a charter for abuse by bad employers.

In Australia, one in ten claims wind up in a legal dispute compared to one in five hundred here – private insurers try to avoid payouts or pass the buck, hence there are more disputes. That’s bad for workers, and bad for the legal system because limited judicial resources are tied up needlessly. Insurers use their legal resources to avoid payouts, the taxpayer is left footing the bill for the Courts and the claims.

It’s simple, National can argue from it’s ideological position all it wants but the equation is clear:
Current Pool for claims = world-leading accident cover.
– minus $200 million in profits to insurers
– minus businesses taking lowest premiums
– minus higher admin costs from insurers (lawyers, marketing)
= smaller pool for claims = less coverage for workers

13 comments on “Nats’ ACC policy all about ideology ”

  1. ghostwhowalks 1

    An explanation for the half way measure to only “investigate” allowing private insurers into the workers compensation is that they can further extract large donations from the aussie insurers.

    Maybe the aussies looked at the polls and thought they were a dead cert to win so only gave token amounts to national this election cycle. Not that we will find out if a series of $250,000 donations were made.
    AS for competition lowering the prices, Ah yes the Max Bradford effect as its known in NZ.
    This can sometimes apply in discretionary purchases but workers comp is compulsory so the insurers will want premiums to rise .

    Having worked in this feild many years ago in Aussie, there were often instances of customers getting huge discrepancies in quotes for the same business from different underwriters working for the same company!

  2. Tom Thumb 2

    I see so it’s a policy purely through principle and ideology rather than a policy bought by the Insurance Council.

    Make up your mind, Steve. Your position is very confusing.

  3. Lew 3

    TT: I don’t see how the two are exclusive.

    L

  4. djp 4

    I guess that national would probably argue is that you are missing a component in your equation. That is a cut in monopoly encouraged bureaucratic waste.

    Also are you sure ACC do not do any marketing?

  5. djp. The PriceWaterhouseCooper’s report is clear – ACC is administratively very efficent, you would have more ‘bureaucratic waste’ in a privatised system than in ACC.

    ACC does some public service announcemnt-type advertising around being safe aroud the home, but being a monopoly they don’t have to spend a sizeable percentage of their revenue trying to attract and keep customers like private companies would have to do.

  6. ghostwhowalks 6

    Any competing businesses have to spend big on marketing, including sales staff of fat commissions. Look at the rise in marketing costs for public tertiary institutions since they have to compete for ‘bums on seats’.

    Dint expect the media to chase up whether national has had any donations from insurer’s who will benefit from this policy change.
    Oh noooo!

    Thats too hard ( Audrey are you listening ?)

  7. insider 7

    Interesting left wingers decrying others for doing things due to ideology. I expect ideology to drive politics. Have you never heard of the anti nuke policy

    Ben Thomas has an interesting article on the subject re some employers effectively enjoying a ‘privatised’ scheme. Seems no ideological issue there.

    Some employers are better than others. The problem with ACC is that it can be inflexible. I worked in a company classed as industrial yet 95% of staff worked in offices in Wellington. As a result all staff were classed as working on industrial sites with hazardous products and so we paid a high premium based on that. It was very difficult and time consuming to get ACC to recognise the real nature of the business was different from their labelling system.

    Competition could improve responsiveness to change because we could go and get an alternative supplier.

    Similarly the one size fits all approach could actually encourage poor standards. If you are concerned about worker safety, shouldn’t you be interested in rewarding employers who have similar concerns. The current one size fits all approach means it all gets washed up so there is reduced competitive advantage in high standards. A competitive system could allow good employers to be rewarded through demonstrated performance, and bad employers could be disincentivised by high premiums. Where is the issue with that?

    And if it is so world leading a scheme,why has it apparantly not been replicated in more than 30 years?

    PS I think you’ll find ACC and LTSA are some of the country’s biggest advertisers

  8. Snelly Boy 8

    “And if it is so world leading a scheme,why has it apparantly not been replicated in more than 30 years?”

    Simple really. Too many powerful bodies with vested interest in maintaining status quo such as legal fraternity and insurers and the inbedded culture of suing in all other jurisdictions.

    Imagine, politicians floating the idea of removing the right to sue to the US public. A Tui’s billboard if I’ve ever seen one!

    I can assure you the ACC scheme is the envy of the world. My job is to ‘sell’ clients’ risk to the global insurance markets. In particular, their lack of risk.

    When explaining ACC to underwriters in the UK, Europe or US for the first time it’s amazing to see their faces fill firstly with bewilderment followed by wonderment.

    Ever wondered why NZ enjoys the cheapest insurance rates in the world? Biggest factor is ACC with the removal of right to sue for bodily injury.

  9. insider 9

    Snelly

    But on the other hand we have had dozens of countries come into existence in the last 30 years or go through significant political system change, many of which had no such suing mentality (eg eastern bloc) and strong centralised welfare approaches yet none have adopted such a scheme? NZ should be selling this to the world if it is so good. ACC should have a marketing and consultancy arm doing that. Perhaps it’s a case of world leading in NZ (no shame in that).

  10. insider. It always feels weird explaining basic public policy facts to someone named ‘insider’.

    It’s not the job of NZ to actively go and promote its domestic policies to other countries – it’s an affront to sovereignty to tell other countries how to go about their internal business unless there is a human rights issue at play.

    Rest assured though – I can tell you both as someone who has studied personal injury law overseas and worked in diplomacy that ACC is admired by experts around the world and officials from other countries visit NZ to learn more about ACC. It is one of a surprisingly broad range of policy areas in which NZ is considered a worldleader.

  11. Snelly Boy 11

    insider, perhaps those new nations have simply taken their lead from their neighbours in pursuit of desired commonality and the EU pot of gold.

    My only experience is with all the Stahn countries where the ambulance chasing industry is in its infancy but growing. Shame isn’t it?

  12. insider. With the all of the communist bloc, the successor nations were nearly universally ruled by a new capitialist ruling class, advised by American neoliberal economists – the result was cowboy capitalism, which was fun for a while but left a lot of people behind and was not good conditions for building social institutions like universal injury insurance.

    Also, other countires have no fault insurance for various types of injury, all that is special about New Zealand is that is covers (nearly) all types of injuries.

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