The Insurance Council of New Zealand (ICNZ) has questioned planned cuts to Accident Compensation Corporation (ACC) levies and argued for a switch to a competitive injury insurance model.

The state-owned ACC provides no-fault injury cover, with no private insurer involvement and no right to sue for personal injury.

Employers, self-employed workers, employees and motorists pay levies to fund the scheme, and the Government proposes cutting these next financial year.

The move has gained more attention since the ACC reported a $NZ4.93 billion ($4.34 billion) surplus, thanks partly to a stronger investment performance. See other story.

ICNZ questions whether levies should be cut because of that. “It is essential that levy reductions are not reliant on investment income improvements, which will always fluctuate.”

The council says under a competitive model, levies would be priced to risk and investment returns would be reserved to meet long-tail claims, “not to artificially reduce premiums”.

It says the ACC’s rehabilitation spending is set to increase this financial year.