Wednesday, 14 October 2009

Accident compensation

Our nationalized Accident Compensation Scheme is running a large deficit. Mostly because of increases in entitlements enacted under the previous Labour government, but also because of severely attenuated risk linking of premia.

National proposes these among other changes. I trust that opposition to these measures will be limited. Or, at least, folks who complain about these changes ought to find that every other objection they might raise to anything at all will be severely discounted. The hopefully uncontroversial changes are:
  • Reversing entitlements for willfully self-inflicted injury and suicide
  • further restricting entitlements for criminals
  • reversing income compensation extensions for non-earners

Again, this means that your injuries incurred while committing crimes or while attempting suicide led to compensation through ACC. It would be too perverse if criminals could have qualified for income compensation for on the job injuries. Surely it wasn't that bad. Was it? I mean, if they were paying ACC levies on their heist-based earnings, that would be different, but I rather suspect that they weren't.


  1. Ooo... Eric, you can't be a biker!

    I am, and the ACC changes to my levies are going to push registration through the roof. ACC are bring biker insurance costs back into line, they argue. And since both the frequency of claiming and the cost per claim is higher than other motor vehicles, there's an across the board increase for all motorbike cc ratings.

    Ok, I'm going to grumble, but deep down inside accept their reasoning.

    The bit I am grizzling about if the intra-cc allocations. The cost of ACC registration is proposed to go from (2009/10 figs in brackets):
    mopeds: $292.93 ($100.46)
    < 125cc: $292.93 ($430.54)
    < 600cc: $546.78 ($430.54)
    > 600cc: $781.12 ($430.54)

    ACC reckon the accident data suggests higher cc ratings are related to both the risk of claiming and the cost of each claim. Given that higher engines are out of reach of learner riders, then their reasoning would suggest that more experienced riders on larger machines are more likely to be in an accident than less experienced riders. Yeah... that claim I'm dubious.

    My second uncertainty relates to whether criminals crashing in the course of, say motorbike theft, are included in the numbers. I'm not sure how big a group they would be, but I suspect criminals aren't ripping off and crashing 125cc bikes.

    Heaps of questions for the biker Eric ;)

  2. I only said that restricting criminals' eligibility for compensation for on the criminal job accidents ought to be uncontroversial.

    I have absolutely no clue whether ACC is charging anywhere near actuarily-fair rates on motorbikes. They're charging well under actuarily-fair rates on most things as they're running a massive deficit, but I have no clue on motorbikes in particular. My first cut for checking, though, would be to see whether US car insurance companies (competitive markets) have similar fee gradations across engine size on bikes. If they don't, ACC would have to have a story about how NZ roads are somehow different and cause differential risks with engine size.

  3. Thanks Eric, I agree - the provision of criminal related compensation is silly. Also I am suprised that the moral hazard associated with suicide related claims snuck past anyone in ACC.

    Motor bike engine differentiation in Victoria and Tasmania was sited in ACC's docs, but I think I'll take your sage advice and peek at what's happening in the
    US. Thanks for the tip :)

  4. In the US I'd worry less about levels (as everything there is affected by heavy tort liability) and more about differentials: cars versus bikes on average, differences among bikes. Maybe there's some regulation that affects those differentials in the US, but I've never heard about it.