The Sunday Star Times has reported today that ACC expects the cost of compensation and treatment for those injured in the Christchurch Earthquake to be about $200 million. So far ACC has received 7666 claims, making the February quake the biggest single mass injury event in ACC’s 37-year history.
ACC’s head of injury prevention and insurance products, Peter Wood, said that although the long-term costs to the corporation would be high, they were manageable.
“Obviously additional claims from the Christchurch earthquake will increase costs and ACC funding requirements,” he said.
“However, the overall size of ACC allows for these increased costs to be absorbed with the current levies or funding structure without significant increases being required.”
The costs had to be seen in the context of ACC’s $16 billion in reserves and claims costs each year of more than $3b.
“It is therefore unlikely that the long-term cost of these claims will have an impact on ACC levy rates in the future.”
This highlights once again how crazy the National Party are to try and privatise parts of ACC. As a single, nationalised scheme, ACC is able to absorb the impact of a big event like the Christchurch earthquake without too many problems.
I blogged a couple of weeks ago about the impending collapse of AMI Insurance and how National’s ACC privatisation plans could lead to a similar outcome. I’m not at all surprised that Nick Smith is delaying announcing their preferred options. Carving off a big chunk of ACC and handing it to the private insurance industry right at the time you’re having to bail out one of the big players isn’t a good look in anyone’s book.
Then there is the issue of Nick Smith’s (sensible) move to ensure that victims of the earthquake received cover for the first week of injury if they weren’t able to work. Normally that cost would either have to be met by the employer for a work-related injury, or the individual themselves. Had the government already privatised the ACC work account, they wouldn’t have been able to do this as they would have effectively been instructing a private insurance company to provide cover over and above what the victim was entitled to.
ACC is a good scheme. Sure there are some areas that we’d all like to see improved, but National’s plan to farm it out to the private insurance industry is just nuts. They should go back to the drawing board and leave ACC alone.