The last decade at ACC has been largely marked by decline, and the agency is in the midst of a turnaround effort.
At the end of last year, the scheme’s net deficit was $1.5 billion, and its outstanding claims liability was $63.6b, which eclipsed the $51.1b investment scheme intended to meet the cost.
The turnaround plan targets a net surplus of $2b by 2030 and aims to rein in the claims liability funding gap – which is affected by factors other than claims, such as interest rates.
Megan Main will leave the top job at ACC on Friday.
Photo / Supplied
The statutory Crown entity, which covers those hurt through accident, has passed an important marker in the restoration of its financial health.
The report shows the number of clients off work and on income replacement for a year or more, in what’s called the Long Term Claims Pool (LTCP), fell by 0.4% to 24,454 in the year to June, after years of growth.
This is shy of ACC’s target of 24,000 in the pool, but it nevertheless marks a considerable reversal.
Total long-term claims peaked in March at 24,846, roughly double from a little over 12,000 in 2016.
Growth in the LTCP peaked in late 2024 at an annualised 15%, much of it was driven by non-serious injuries including strains and fractures.
The strongest growth in the pool took place squarely in Main’s tenure.
Asked about this part of her record, she said that ACC, “is a big ship to turn”.
She said that abandoning a one-to-one case management model for dealing with clients and introducing a one-to-many model, underway when she arrived at the agency, drove many of the insurer’s problems.
“We started making changes, probably over three years ago now, to build that case management muscle and capacity, so it has taken time to see that show up in the numbers,” she said.
Dr Oliver Hartwich, executive director of The New Zealand Initiative, is concerned that work has not been done to understand whether ACC’s clients are leaving the insurers’ books and actually returning to work.
The report also recorded that 92% of clients now return to work or independence within one year, which is on target.
ACC also hit its 28-day return-to-work target and missed its 10-week and nine-month return-to-work targets.
Weekly compensation costs in the year were lower than expected by approximately $250m.
Main also noted that the agency has done considerable work with health providers, for example to make sure that if clients “can recover at work, then they’re not signed off fully unfit”.
ACC isn’t required to track how many of its clients who move off its books actually return to work, it measures only “work readiness”.
Observers, including Oliver Hartwich, executive director of the New Zealand Initiative, have raised this as a concern.
Unless the agency is returning people to work and productivity it’s not doing its job, a financial turnaround is only halfway there, Hartwich told the Herald this month.
ACC previously conducted one-off research to track the proportion of its clients exiting the LTCP and moving to a Ministry of Social Development main benefit.
However, Main confirmed there is no work underway to update that research.
The report also said ACC has slowed growth in the cost of rehabilitation and treatment, which rose from $2.3b to $5b in the last decade, “well above demand, population and inflation growth”.
It said that more work has to be done to reduce this cost.
Minister for ACC, Scott Simpson, confirmed that the Government drafted legislation last year to tighten ACC’s scheme boundaries and help the agency contain costs, but ultimately abandoned the plan.
Photo / Mark Mitchell
Disputes up 20%
Main acknowledged that the agency’s efforts to improve its books and rehabilitate clients more quickly have prompted a big jump in reviews.
In the past 12 months there were roughly 17,000 reviews of decisions to deny a claim or care, up 20% on the previous year, Main said.
About 73% of formal reviews indicate ACC “is making the right decision for our clients” the report said.
While ACC has changed how it records this measure, Main said the percentage split in favour of ACC and clients is holding steady.
The report claimed that public trust and confidence “remains high” at 63%, however, ACC has lowered its target for this measure in recent years.
Five years ago its target was 64% and actual trust and confidence sat at 67%.
A remaining strain
The agency’s books remain under strain because of a rise in “sensitive claims” from people subjected to sexual assault or abuse.
“While ACC is focused on doing everything possible to turn around performance, the scheme’s financial position also reflects factors outside our control. Significant increases in sensitive claims continue to put pressure on our long-term claims pool and non-earners’ account,” the report said.
The 2023 court ruling, ACC v TN, broadened the scheme’s boundaries and increased the financial help it owes many with sensitive claims.
Last year, the Government drafted, then abandoned, legislation to rein in the widened cost to ACC.
Sid Miller will take the reins at ACC on September 21; his experience includes leading EQC from 2017 to 2022 and working ACC, including managing claims, from 2012 to 2016.
Deputy chief executive Stewart McRobie will be acting chief executive in the interim.
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