ACC on track to be self-funding in six years
Accident Compensation Corp, whose board and executives were purged last year in the fallout of major privacy breaches, is on track to fully fund its accident coverage, paving the way for significant and long-term cuts in future levies.
Chairwoman Paula Rebstock told parliament's transport and industrial relations committee the state-owned insurer is "very much on track" to full funding in six years, which could give ACC room to deliver cheaper levies.
"That sets us up really for an overall situation where going forward we could see significant reductions at some point in levies," she says. "We think those significantly reduced levies could be sustained on our projections for very long periods of time."
The turnaround in the corporation's fortunes comes just three years after former chairman John Judge warned of a $12.8 billion shortfall between future liabilities and ACC's net assets, prompting a cost-cutting programme that delivered a surplus the following year.
The cost of those forward liabilities increased as interest rates were slashed during the global financial crisis, meaning expected returns on investments would be lower. As interest rates increase, those forward liabilities reduce.
Ms Rebstock says ACC's earners account is already fully funded, while the work account is "very close" and the motor vehicle account is on track to "reach the targets that have been set for us".
ACC is still working to improve on its privacy breaches, which prompted a boardroom and executive clean-out last year, and Ms Rebstock says the corporation is looking at a "major transformation programme" to invest in infrastructure to move from a paper-based system to a digital one.
ACC can improve on its injury prevention programmes to help reduce future costs by taking a different approach when reviewing the return on investment, she says.
"The corporation has tended to take too short a view on payback period. If you take a slightly longer view I think you'll find there are very effective injury prevention measures the corporation could and should be using."