Accident compensation regulatory system

This page describes the Accident Compensation Regulatory System, its objectives and our qualitative assessment of it. It also lists the main statutes and changes to regulation either planned or in progress.

System description and objectives

System description

The accident compensation regulatory system restricts the ability to sue for personal injury and substitutes New Zealand’s accident compensation regime. The regulatory system includes coverage of injuries, entitlements to compensation and the provision of treatment, decisions and review of decisions, establishment of the Accident Compensation Corporation (ACC), management of the scheme and setting and collection of levies, management of injury related information, and the accredited employer regime and other aspects of the scheme.

It is a key social and economic institution tasked with promoting injury prevention and providing rehabilitation and compensation entitlements to people who are injured so that they can return to normal life as quickly as possible.

It excludes regulation of insurance and investment within the financial markets conduct regulatory system.

Objectives

The objective of the accident compensation system is to provide for a fair and sustainable scheme for managing personal injury that has, as its overriding goals, minimising the overall incidence of injury in the community, and the impact of injury on the community (including economic, social, and personal costs).

The scheme is guided by five principles, which have endured over the scheme's 40 year history:

  • community responsibility: the community shoulders an individual’s loss when their ability to contribute to the general welfare by their work is interrupted by injury
  • comprehensive entitlements: all injured people are entitled to a consistent level of assistance for a similar level of incapacity/need regardless of the causes which gave rise to their injury
  • complete rehabilitation: injured people should be supported to achieve timely physical and vocational recovery
  • real compensation: payment of income-related benefits for income losses for the period of incapacity and in recognition of permanent bodily impairment
  • administrative efficiency: all aspects of the scheme should be managed in a timely, consistent and economical way.

Ministerial portfolio and key statute

Portfolio Key statute
ACC(external link) Accident Compensation Act 2001

Regulatory agencies and their roles

Agency Role
MBIE Responsible for advising the Minister for ACC on matters relating to the scheme including broader scheme direction and performance as well as the legislation and regulations governing the scheme. MBIE also administers the appropriation for the Crown-funded Non-Earners’ Account and provides advice on the setting of levy rates including the engagement of independent actuarial review of the levy proposals.
Accident Compensation Corporation (ACC) Delivers the scheme as framed in legislation, focusing on effective delivery of injury prevention initiatives and no-fault personal injury cover for everyone in New Zealand, including overseas visitors.
The Treasury Monitors ACC’s performance, leads advice to the Minister on ACC accountability documents, and supports the Board appointments and evaluation process. Treasury also supports the Minister of Finance directly with advice for Crown Financial Institutions, of which ACC’s investment function is one, and policy and fiscal advice.

Collaboration and information-sharing between regulatory agencies

MBIE and ACC, and MBIE and Treasury, have close working relationships in order to ensure the scheme operates effectively.

The division of responsibility between MBIE and ACC reflects ACC’s status as a Crown Agent and allows ACC to focus on the effective and efficient delivery of the scheme.

The ACC Board is the primary monitor of ACC performance. Treasury employs the ‘It Takes Three(external link)’ operating expectations for statutory Crown entities in delivering its monitoring responsibility.

Regulated parties and main stakeholders

Regulated parties:

  • Employers
  • ACC

Main stakeholders:

Everyone in New Zealand is covered by ACC’s no-fault scheme if they’re injured in an accident. This includes children, beneficiaries and students.

Other key stakeholders include:

  • Employers and employees
  • Advocates
  • Health sector.

Processes for engagement with regulated parties and stakeholders

Customer Advisory Panels (Serious Injury, Sexual Violence, Older Persons, Scheme Customer Advisory Panel): provide insights about ACC services and policies and scheme settings. Complement ACC’s research, analytics, staff feedback, and customer co-design.

Public consultation on policy proposals: discussion documents / issues papers.

Direct engagement with key stakeholder groups: Mainly carried out by ACC.

System's fitness for purpose

Effectiveness

System performing well against criteria.

ACC is expected to remain in a strong financial position in future years. Recent reductions in levies seek to reduce forecast surpluses in ACC funds in accordance with the government’s funding policy.

There is still work to be done on injury prevention and continual monitoring of entitlements and boundary issues.

ACC is redesigning the way it delivers case management. This work focuses on providing better outcomes and experiences for its clients. This approach will be trialled from late 2017.

Efficiency

System performing well against criteria.

The implementation of the government funding policy together with biennial levy setting has provided for a clearer, more transparent, and longer term focus for the scheme, with more stable levies.

Resilience

System performing well against criteria.

Previous policy decisions on moving from Pay As You Go to a fully-funded model were aimed at futureproofing the scheme.

There is continued focus on management of the interface (including transitions) between ACC and the health and welfare systems, especially given social and demographic change (eg, occupational illness, aging population, gradual process).

ACC’s transformation program will ensure it delivers consistent, high-quality customer service through IT and other service improvements. The government continues to be focussed on ensuring ACC has a good understanding of, and processes to manage, the cost pressures within its business. The transformation programme will happen over a number of years, and the transformation will continue over the next 10+ years.

Changes in operating context, including technological developments and emphasis on better customer service and cross-government collaboration, present new challenges and opportunities for the scheme and its administration. We are also seeing changes that are blurring the boundaries of the scheme (eg, Increasing co-morbidity with an ageing population).

There may be scope to better equip the scheme to respond to such challenges and opportunities by ensuring the legislation provides flexibility where appropriate (eg, to enable responsive business processes)and certainty where it matters (eg, cover and entitlements).

Fairness and accountability

System performing well against criteria.

The levy setting and policy development processes involves comprehensive stakeholder and public engagement. Individual decisions on coverage are subject to a comprehensive review and appeal process. A 2016 independent review of a report into dispute resolution processes recommended changes to how the dispute resolution scheme operates and is funded. These recommendations are being considered and some are in the implementation phase.

Proposed regulatory changes

Consideration of regulatory reform is on hold until after the report-backs of the Welfare Expert Advisory Group(external link) and the Health and Disability System Review(external link), given their potential to impact on the accident compensation scheme and the interfaces between the welfare, health, disability and mental health systems.

Business as usual regulatory activities are noted in the table below. The timeframes for improvements noted in this table are indicative and may change. We will review this information at least quarterly and update timeframes as required.

Matter name Policy intent Planned consultation Status
Accident Compensation (Liability to Pay or Contribute to Cost of Treatment) Regulations 2003

Matter type: Legislative Instrument
This review will consider the rates paid to treatment providers by ACC specified in the regulations, following a statutory annual review undertaken by ACC. If the Minister agrees to a change to the rates, there will be targeted consultation on the proposed changes in mid 2019. A recommendation is required to be provided to the Minister by 1 December each year the review is carried out. Following the 2018 review, the reviews are carried out every two years.
Injury Prevention, Rehabilitation, and Compensation Act (No 2) 2005 Commencement Order 2017 and the Accident Compensation (Definitions) Regulations 2017

Matter type: Legislative instrument
An Order in Council to bring into force the remaining provisions of the Injury Prevention, Rehabilitation, and Compensation Amendment Act (No 2) 2005 together with associated regulations.

The changes would move the definitions of 'treatment provider' and 'registered health professional' to regulations and update them.
Public consultation was undertaken on the proposals in April/May 2017. Policy decisions have been taken, finalisation of drafting is underway, with commencement expected in 2019.
Accident Compensation (Review Costs and Appeals) Regulations 2002 Matter type: Legislative instrument Review the basis for, and level of, costs (legal, expert medical, etc) paid to claimants taking reviews of ACC decisions. Public consultation first half of 2019. Policy decisions expected by the end of 2019, and regulation change in 2020.

Planned service and operational changes

The timeframes for improvements noted in this section are indicative and may change. We will review this information at least quarterly and update timeframes as required.

Matter name Planned change Timing Status
Claims management system upgrade Upgrade of core claims management system to improve operational resilience, reduce complexity for ACC staff (to support Next Generation Case Management and client payments changes). The system is used by 2,000 ACC staff to manage 1.9 million claims annually. 2018/19 Development is completed and testing is underway with go live scheduled for the second half of 2018/19.
Upgrade of levy and billing system Upgrade of new levy and billing system to ensure supportability and maintainability of system 2018/19 Implemented in October 2018.
Claims lodgement and cover decision New processes to improve speed and transparency of claims lodgement and decision-making on whether a claim is covered. Clients are notified of cover decision more quickly. 2018/19 A new lodgement tool was successfully launched in September 2018 automating 49% of claims.
A second phase is planned for 2019/20.
New client payments system for weekly compensation New system (replacing legacy system) to enable customers to manage their weekly compensation payments online, and receive their payments more quickly and accurately due to improved integration with Inland Revenue. The system makes $1.5 billion weekly compensation payments annually to 100,000 clients.

Replacement of legacy system means a more resilient and reliable payments system and improved efficiency of payments processing.
2018/19 - 2021/22 Client Payments Phase 1 is on track to go live in second half of 2018/19 which builds the capability to process weekly compensation payments from ACC’s Claims Management System. There will be a phased rollout starting with a few payments and ramping up over a several months.

Phase 2 is scheduled to start in 2019 and will enable other entitlements to also be incorporated into the Claims Management System.
Next Generation Case Management Redesign of case management model to improve client recovery outcomes and drive productivity improvements for ACC. 2018/19 - 2020/21 Consultation has commenced with staff to inform delivery options in 2018/19 and 2019/20.
Last updated: 01 July 2018