Australian insurers are in the box seat to benefit if the National Party wins the upcoming New Zealand election and once again privatises the Accident Compensation Corporation (ACC), according to a leading market analyst.

Merrill Lynch analyst Andrew Kearnan says privatising the no-fault personal injury scheme could double the size of NZ’s premium pool to $NZ5.5 billion ($4.3 billion) and add $NZ200 million ($158 million) to industry earnings. All the major insurance players in NZ are Australian-based.

“The Australian-listed insurers should have advantages in capturing this risk pool and writing it profitably,” Mr Kearnan said in a report.

“It appears to us that all the major Australian insurers… are likely to seek major stakes in the ACC market if it did privatise.”

As much as $NZ2.1 billion ($1.7 billion) in new premium would flood into the market from the ACC’s three primary accounts – the $NZ640 million ($506 million) workers’ account, the $NZ590 million ($466 million) motor account and the $NZ905 million ($716 million) account for non-work injuries.

IAG is currently number one in the NZ market, with a 34% market share, followed by Vero with 22%. QBE has a relatively modest 7% of the market.

Any move into the market could grow IAG or Vero’s gross written premium by 5-7%. IAG’s reported earnings could lift by as much as 8%, while Vero’s could benefit by 3%.

But the two insurers could run into problems funding any move into the NZ market. Mr Kearnan says QBE’s access to capital means it is best placed to take advantage of any move to privatise part of the ACC.

“Of the three listed Australian P&C insurers, QBE is the only one with any meaningful surplus capital, and therefore capacity to underwrite without raising capital, reinsuring extensively or redirecting capital from other business lines, the ACC market,” he said.

The ACC made a profit of $NZ267 million ($211 million) last year on net contributions of $NZ3.2 billion ($2.5 billion).

The National Party is yet to finalise its ACC policy, but leader John Key has indicated he would like to introduce some element of competition into the market.

Mr Kearnan says if the National Party wins the election later this year “there is a strong chance it would move quickly to privatise the Accident Compensation Corporation”.

Recent polls have confirmed the National Party holds a commanding lead of up to 25% over Helen Clark’s incumbent Labour Government.