New Zealand’s Accident Compensation Corporation, nationalised last year after less than a year in private sector hands, has lost $313 million from premiums of $1.9 billion. Worse, the ACC’s underwriting loss is $539 million.

Leading NZ economists predict the ACC will continue to accrue deficits following Government decisions to increase benefits and hold premiums at unsustainable levels.

The result may give the NZ industry heart. Most underwriters and brokers see the recovery of the underwriting function as a major NZ market growth factor – and leading opposition politician Richard Prebble said premiums for the self-employed will rise by about 25% and motor vehicle injury costs by $20. He also claimed that actuarial reviews have put the losses much higher, and blamed the ACC’s “political” board for the problem.

NZ Council of Trade Unions President Ross Wilson – a former ACC Deputy President – said the losses have been caused by “the ACC’s obsession with slashing premiums” below the level offered by the insurance industry in 1998/99.

“This obsession ultimately risks bankrupting” ACC, he said. It won’t be a new experience: ACC went broke in 1986 and 1992.