Notice Type
Accident Rehabilitation and Compensation Insurance Act 1992 Consultation on Proposed Changes to 1999/2000 Premium and Experience Rating Regulations ACC proposes to recommend changes in the employer and earner premiums and experience rating regulations to the Minister for ARCI. The Government has directed ACC to move from pay-as-you-go to a full funded reserving basis. Full funding means ACC must collect enough premiums in the year the injury occurs to cover the full ongoing cost of that injury into the future. 1. Employment Premium Regulations ACC proposes to recommend a reduction to the workers' compensation (Employer Account) premiums. This recommendation reflects lower scheme costs resulting from improved scheme performance. As this account is a mature account (that is, it has been operational for 24 years), the move to full funding has little impact on premium rates. There are two components to the 1999/2000 premium rates: The insurance component which is a full funded price for new claims accepted from 1 April 1999; and A ``reserves portion'' of the employer premium to fund existing claims as at 31 March 1999 for the next 15 years and to ensure sufficient reserves are built up to fully fund the Employers' Account at that stage. The recommendations are: Average Rates For: Proposal Cost per $100 liable earnings Current Comparison Cost per $100 liable earnings Insurance Premium $1.24(full funded) $1.70 (pay-as-you-go) Reserves Surcharge $0.60 $0.65 Composite Premium $1.84 $2.35 When the Accident Insurance Bill currently before the House of Representatives is enacted, all employers paying premium in arrears will be required to make a cessation adjustment. The Corporation proposes to recommend that the cessation adjustment for arrears payers be based on the 1998/99 ``pay-as-you-go'' premium rate (i.e., $1.70 per $100 of liable earnings (excluding G.S.T.)). 2. Earners Premium Regulations The Earners' Account pays for the cost of non-work and non-motor vehicle accidents for all earners (e.g., injuries at home and leisure time). ACC proposes to recommend an increase to the earner premium. This increase reflects the move from a pay-as-you-go to a full funding reserving basis. The Earners' Account is an immature one which has been in operation for only 6 years (i.e., the current scheme covers only 6 years' costs). The shift to full funding requires the cost of all future liabilities to be funded by today's premiums. The Corporation proposes to recommend to the Minister for ARCI that the premium rate be increased from $1.20 to $1.30. 3. Experience Rating ACC proposes to recommend that the Experience Rating Regulations be amended so that: Small employers receive any 1998/99 experience rating discount using the new experience rating formula, but are not charged any resulting experience rating loading; and Experience rating assessments and any subsequent reassessments cease after 31 December 1999. Written Submissions ACC invites premium payers to make written submissions on the above proposals. Discussion papers and the proposed regulations are available by writing to Premium Consultation, ACC, P.O. Box 242, Wellington or by contacting Trish Millward on (04) 918 7304 or the ACC Premiums help-desk on 0800 222 776. Copies may also be obtained from ACC's website Submissions close on Thursday, 3 December 1998.