New Zealand is bracing for double-digit rises in national no-fault personal injury cover on the back of a $NZ4.8 billion ($3.9 billion) blowout in liability for the Accident Compensation Corporation (ACC) in the year to June.

The blowout is expected to delay the NZ Government’s plans to privatise the ACC’s workers’ compensation business, with insurers staying clear of the issue while the political aspects are worked out.

Increased claims, declining rehabilitation and a jump in the assessment of costs are being blamed for the result, which is double the $NZ2.4 billion ($1.9 billion) loss recorded in 2007/08.

The gap between claims liability and current net assets now stands at $NZ12.8 billion ($10.4 billion) – a situation the NZ Government says will take 10 years to turn around.

Levy rises exceeding 10% are expected, particularly for motor vehicle and workers’ compensation accounts and claimants can expect the ACC to be tougher.

Insurance Council of NZ CEO Chris Ryan says competition could improve the benefits for working people, but the ACC privatisation issue “is very much in the political rather than business arena” at present.

“We’re staying well out of it because the Government has pretty much said the issue of introducing competition is not on the agenda this parliamentary term,” he told insuranceNEWS.com.au. “So it will be two-and-a-half years before they consider it.

“The reality is the ACC is in such a poor state [privatisation] isn’t really an option for the Government at the moment.”