Government Policy on the Self-Employed Work Account Direction to the Accident Compensation Corporation relating to Government policy on the Self- Employed Work Account established under the Accident Insurance Act 1998 (``the AI Act''). To the Accident Compensation Corporation (``ACC'') Background The purpose of this Direction is to reflect decisions taken by Government on the role of the Self-Employed Work Account. Due to affordability and market capacity issues, Government agreed on an `opt out' model, whereby ACC would operate as the default insurer of self-employed, but that self-employed would be able to choose another insurance provider. Hence, the AI Act establishes the Self-Employed Work Account for self-employed work-related accidents. The existing Earners' Account will continue to cover self-employed non-work, non-motor vehicle injuries. To ensure that the existence of ACC in providing self-employed cover does not unduly hamper the creation of a competitive market, Government has decided that premiums in the Self-Employed Work Account will be set on a competitively neutral basis from 1 July 2000. Self-employed persons will continue to pay an earners' premium on the same basis as other earners. The timing of the introduction of the competitively neutral premium and compulsory quoting to self- employed for 1 July 2000 was designed to accord with expanding market capacity. Government was concerned that the market would not be able to provide competitive quotes to both employers and the self-employed in time for 1 July 1999. Consistent with the `opt out' model, the AI Act places ACC in a residual role of covering those who do not opt out so as to ensure that self-employed remain insured for work and non-work related accidents. Where a self-employed person decides to purchase from another insurer, ACC must be informed of that decision. This monitoring role and ACC's non-commercial structure requires that ACC must not act as a commercial insurer in providing accident insurance to self-employed persons. Policy Direction Pursuant to section 339 of the Accident Insurance Act 1998, I hereby direct the following: Provision of statutory entitlements: The entitlements available to self-employed are specified in the AI Act, and no additional entitlements or services such as top up cover may be provided. The intention of the Self-Employed Work Account is that entitlements will be provided to self-employed persons on the same basis as they would be provided to persons covered under the Earners' Account. Where ACC has any discretion over the provision of entitlements, self-employed persons, as a category, should not be favoured over any other claimant. Provision and use of information: Consistent with Government's objective of ACC providing default cover and enabling a competitive market to develop, Government considers that ACC must provide to self-employed persons information about the statutory minimum package that it is able to provide. Such information, which may include premium and entitlement information, must be provided on the same basis as ACC currently provides information to premium payers or claimants in the other Accounts. In addition, this material must clearly and separately identify all the premium and levy payments that a self-employed person is required to make. Any information provided should not imply that ACC is offering a commercial product. Rather, it should be clear that ACC can only provide the statutory minima at a regulated price, in accordance with the AI Act. In addition, consistent with the role given to ACC under the AI Act and through Government policy, information should be provided that accurately reflects the ACC's role as insurer of self-employed who do not choose another insurer. Information must also be provided on the steps that must be undertaken if a self-employed person wishes to select another insurer. To facilitate a self-employed person's decision to select another insurer, ACC must promptly provide that person's insurance number on request. To enable the development of a competitive market, ACC must not undertake any activities that have the objective of maintaining or increasing market share. Under section 177 of the AI Act, ACC will have information on all self-employed, including those who have selected another insurer. ACC must not use this information to attempt to encourage those self-employed to select ACC as their accident insurer. This Direction continues in force until revoked. Dated at Wellington this 9th day of August 1999. MURRAY McCULLY, Minister for Accident Insurance.