A New Zealand Government steering group report into the Accident Compensation Corporation (ACC) has recommended private insurers should be allowed to offer compulsory accident compensation insurance.

The group’s report says competition from private is Scheme”.  

The group sees the introduction of private insurers as a way of “transferring the burden of risk-bearing for unforeseen contingencies and unfunded liabilities arising in the future from current levy payers and the Crown to shareholders of the private insurance companies”.

It also sees the move as creating greater transparency for the accident compensation system.

The likely return of private insurers to the scheme – the scheme was re-nationalised in July 2000 after one year – comes as the NZ Government moves to stem the ACC’s ongoing losses.

“This Government’s initial work on the ACC was about stopping ACC haemorrhaging after $NZ7.2 billion ($5.6 billion) in losses,” ACC Minister Nick Smith said.

In a report released by the minister on the ACC’s finances, it was found that prior to June 2009 claims liabilities were not fully revealed in the corporation’s financial statements, and that insurance premiums collected were not adequate to fully fund the scheme.

This has resulted in the ACC reporting a $NZ10.3 billion ($8 billion) loss at June 30 last year.

Mr Smith has refused to allow the ACC to increase levies, but says the ACC will reduce its net funding position from $NZ10.25 billion ($8 billion) to $NZ9 billion ($7 billion) by June 30.

He says reforming the ACC will hinge on providing a greater choice of insurers for the corporation to compete with.

“Employers will be able to choose their workplace insurer, but ACC will still be a provider,” he said.

“We will be consulting on the important policy detail this year and final decisions will occur after the 2011 election.”