Cost blowout will delay NZ privatisation
The NZ Government is unlikely to open state-controlled personal injury accounts in the Accident Compensation Corporation (ACC) to insurance industry competition in the short term after revealing a $NZ2.6 billion ($2 billion) blowout in costs.
New ACC Minister Nick Smith is expected to sack the ACC chairman and board this week after it became clear that liabilities faced by the ACC now total $NZ21.875 billion ($17.17 billion) up from a previous figure of $NZ19.295 billion ($15.14 billion).
He says the ACC underwent a “culture shift” from insurance operator to welfare department under the former Labour Party administration of Helen Clark.
The new National Party government of John Key says Labour hid a $NZ2.6 billion ($2 billion) deterioration in liabilities from six months ago and $NZ3.9 billion ($3 billion) over the past year. Unfunded liabilities are thought to run to more than $NZ2 billion ($1.6 billion).
Insurance Council of NZ CEO Chris Ryan says while the Government remains open to private competition it is unlikely to do so until it has fixed the ACC’s funding position. He says the country’s major insurers, which are owned by Australian companies, should be reassured by the clean-up.
“That will give Australian insurers confidence that when it is opened to competition it will take place within a business that is run properly,” he told insuranceNEWS.com.au.
Mr Key previously said the Nationals “support the introduction of competition and choice to the ACC Work Account”.
Mr Smith blames the surge in cost on new entitlements introduced by the Clark government. “The fundamental driver has been increased costs, which were driven by cover extension, more generous entitlements, and cost increases to providers,” he told the NZ Parliament.
New Labour Party leader Phil Goff claims the Key government is using the figures to soften up the electorate before it privatises ACC accounts.
New ACC Minister Nick Smith is expected to sack the ACC chairman and board this week after it became clear that liabilities faced by the ACC now total $NZ21.875 billion ($17.17 billion) up from a previous figure of $NZ19.295 billion ($15.14 billion).
He says the ACC underwent a “culture shift” from insurance operator to welfare department under the former Labour Party administration of Helen Clark.
The new National Party government of John Key says Labour hid a $NZ2.6 billion ($2 billion) deterioration in liabilities from six months ago and $NZ3.9 billion ($3 billion) over the past year. Unfunded liabilities are thought to run to more than $NZ2 billion ($1.6 billion).
Insurance Council of NZ CEO Chris Ryan says while the Government remains open to private competition it is unlikely to do so until it has fixed the ACC’s funding position. He says the country’s major insurers, which are owned by Australian companies, should be reassured by the clean-up.
“That will give Australian insurers confidence that when it is opened to competition it will take place within a business that is run properly,” he told insuranceNEWS.com.au.
Mr Key previously said the Nationals “support the introduction of competition and choice to the ACC Work Account”.
Mr Smith blames the surge in cost on new entitlements introduced by the Clark government. “The fundamental driver has been increased costs, which were driven by cover extension, more generous entitlements, and cost increases to providers,” he told the NZ Parliament.
New Labour Party leader Phil Goff claims the Key government is using the figures to soften up the electorate before it privatises ACC accounts.