Monday, 12 September 2011

Privatising ACC contrary to...?

Don Rennie, a Wellington Lawyer, sent a letter to the editor of the Listener, which was published in the August 6th issue.

If, as recent opinion polls suggest, we end up with a National-led government for the next three years, the new administration will no doubt claim it has a mandate to privatise ACC and sell off other state assets.

The issue is whether private insurers, or any third party, should ever be given the responsibility of determining cover and delivering statutory entitlements to injured people who have lost their legal right to sue to recover damages for their injuries. As the law has always stated, that is the responsibility of the ACC.

The ACC is not insurance. It is a unique scheme in a common law legal environment where the right to sue to recover damages for personal injury suffered by accident has been abolished and replaced with a statutory system that gives every accident victim cover and statutory entitlements on proof of accidental injury. Cover and entitlements are not dependent on payment of a levy or premium. They cannot be "purchased" by employers for their employees, by self-employed people or by anybody else.

Insurance law is based on contract that states the circumstances under which cover is given, the entitlements available and the conditions applicable, which include the payment of (usually) an annual premium. Cover only applies if the premium is paid and runs for the period covered by the premium.

The ACC has a statutory duty to determine cover and deliver entitlements to accident victims. That duty should not be delegated to insurance companies or any other third party exposed to the business vicissitudes of the private sector. One need only look at recent experience in Australia with the Palmdale, Bishopsgate and HIH Insurance company failures and of AMI in New Zealand to see what can happen to claimants.

There can be no advantage to accident victims for whom the ACC scheme was established to allow the statutory cover and entitlements to be determined and delivered by private-sector organisations that are vulnerable to failure for commercial reasons, are in business for the purpose of making a profit and are not answerable to Parliament.

Mr Rennie makes an extremely valid point.

We Kiwis did indeed contract out of our right to sue in the case of accidents. We did so because companies with deep pockets could afford to keep claimants tied up in litigation until the claimants ran out of money to pursue matters, and were forced to give up. It so deeply offended our Kiwi sense of fair play that we determined to institute a government-run comprehensive accident and illness cover which would ensure all New Zealanders would be looked after from the cradle to the grave.

Unfortunately, when we rolled the accident portion of the scheme out, it proved so costly that we couldn't afford the illness part; and indeed still can't. Which does not alter the fact that by privatising the system yet again, we are going to end up with claims that are neither flesh nor fowl... and insurance at present is extremely pricey.

Something to keep firmly in mind coming up to election time.

Reference: Editor (6 August 2011). Letters to the Editor: Privatising ACC. NZ: The Listener (pp. 8-9).


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