Chrome 38+
Firefox 33+
Microsoft Edge+
Accident Compensation Claims Levies are Rising for Employers
New Zealand is currently experiencing a challenging market across many insurance classes. This can mean premium increases, more stringent and difficult underwriting, and reduced capacity for insurance products.
Wellnz, part of Mercer Marsh Benefits™, can assist employers with managing their injury and claims management programs, and in turn significantly reduce future costs as part of the Accident Compensation Corporation (ACC) scheme.
Future ACC trends - Levies are increasing
ACC’s annual report, released in late 2020, highlighted that future ACC levy increases would need to occur as a result of the following trends:
- ACC Recorded Deficits – In the two year period between 1 July 18 – 30 June 2020, ACC recorded NZ$14.6 billion in deficits.
- Increased Claims Numbers - There has been an increase in the number of claims resulting in over seven days off work. This number has increased by nearly 10% in 2016/17, to 124,768 in 2019/20.
- Increased Claim Duration - Not only are there more claims requiring time off work, but they are also increasing in duration. Long-term claims are injured workers who have been off work for more than 365 days. In 2016/17, there were 12,691 long-term claims, but this increased in 2019/20 to 15,993, an increase of 26%.
- Increased Administration Costs per active claim - In 2018/19, the average cost per active claim was $2,629, but in 2019/20 this increased to $2,875.
What does this mean for your business?
The cost and duration of a claim, plus the ACC administration costs of managing each claim have increased significantly.
As a result, employers should expect the average ACC levy rate to increase from the current 0.67% to 0.86% of payroll/liable earnings [1]. This is a 28% increase in the ACC levy employers currently pay based on present trends and performance. This is subject to change if performance and trends improve.
What options are there for large employers?
Wellnz are currently working with some 10% of the New Zealand workforce in reducing costs associated with managing ACC claims, including both levies and claims. On average, employers who have engaged Wellnz have been able to achieve savings of 30-40% in ACC costs annually. Additionally, Wellnz also helps companies improve outcomes for injured employees.
ACC Spotlight: Transport Operator
Problem:
A NZ transport operator was receiving levy discounts from ACC for a number of years as well as a dedicated point of contact. When the ACC model changed, levy doubled in two years, jumping from $140k to $310k. Additionally, there was no longer a point of contact for managing claims. These changes lead to a loss of productivity, with staff off work for longer and the employer spending more time following up information required to make decisions.
Large claims over $300k should typically not have been accepted, however due to the lack of consultation with the employer, significant penalties were incurred.
Solution:
Through joining the Accredited Employers Programme (AEP), ACC’s self-insurance option, Wellnz provided options for the client to:
- lower their risk;
- access to a single point of contact in decision-making;
- annual discount opportunities to reward good performance;
- and accountability for people managers to be more active in managing return to work cases.
Outcome/achievement:
Clear and efficient decision-making – The employer is now aware of decisions being made on every work claim, why actions are being taken and access to known points of contact, resulting in significant improvement in efficiency of information flow.
Quicker return to work – Positive outcome for both employer and employees. Given the majority of employees who are off work only receive 80% of earnings, quicker and effective rehab leads to greater job security, return to full earnings, increased productivity, as well as a reduction in potential for depression and other long term mental health issues.
Cost Savings – Over 50% savings in levy were achieved by the employer. Pro-active participation in return to work has led to a 40-day reduction in time off work per weekly compensation claim. This translates to over 1,100 days saved per year in productivity and direct ACC cost savings.
Wellnz
Employees are an organisation’s greatest asset, so injury, illness and diminished wellbeing can have a profound impact on a business.
Wellnz aims to mitigate this, working closely with organisations to manage injured employees by maximising the value of Accident Compensation Corporation’s (ACC) Accredited Employers Programme. We also provide comprehensive rehabilitation services through our specialist case managers, providing employees with support to overcome their injuries safely and get back to their pre-injury activities.
If you would like to learn more about managing your work injury claims and reducing your costs, please talk to your Marsh Client Executive today.
[1] https://www.acc.co.nz/assets/corporate-documents/annual-report-2020-acc8234.pdf - Page 61
