New Zealand: Toward more choice in workplace insurance

Last Updated: 3 June 2011
Article by Geof Shirtcliffe, John McKay and Geoff Carter

Most Read Contributor in New Zealand, September 2016

Although the Government's proposed reforms to workplace accident compensation will not create the level playing field that the insurance industry might like, they may offer employers the opportunity to develop arrangements which better reflect the particular circumstances of their business.

This Brief Counsel summarises the main reform proposals. Submissions on the discussion document are due by 15 July 2011.

Proposals in brief

The key reform directions are to:

  • make the Accredited Employers Programme (AEP) more attractive and more flexible
  • develop options for risk-sharing outside the AEP, and
  • open workplace insurance to private sector competition from 1 October 2012.

Changes to the AEP

The AEP is an ACC-provided scheme which allows accredited employers (there are currently 136 of them) to accept some of the risk and responsibility of managing workplace claims in return for lower levies.

There are two AEP options.

  • The Partnership Discount Plan (PDP): this is available for periods of up to three years after which claims management and costs are handed back to ACC. Employers can reduce their exposure while in the AEP by buying stop loss cover from ACC.
  • Full Self Cover (FSC): the timeframe is between three and five years during which the employer assumes full financial responsibility for claims for the life of the claim. Ongoing claims at the expiry of the term are handed back to ACC at an actuarially determined price. This attracts a greater levy discount than PDP and stop loss cover is mandatory. In addition, employers can buy high cost claims cover to limit the cost of any individual event. The minimum level of cover is $250,000.

Proposals for change are to:

  • allow longer and shorter claims management periods - up to four years for PDP and up to ten for FSC, with the further option for FSC employers of retaining liability for the duration of a claim
  • provide more flexible risk containment options (e.g. allowing PDP employers to buy high cost claims cover and allowing all AEP employers to choose how much cover they want and to buy it from either ACC or from an approved private sector provider)
  • introduce experience rating into the AEP (it was introduced for other employers on 1 April 2011)
  • require the ACC to take over the management of a claim (while the employer continues to meet the cost). ACC can now refuse. Removing this discretion would allow employers to limit their involvement to those claims they feel comfortable handling, and
  • allow access to groups such as franchises or co-operatives.

Entry criteria to the AEP would remain high but the Government is proposing a number of changes to reduce the compliance burden. These include:

  • allowing employers to use a bank guarantee or other form of security to demonstrate financial robustness
  • reducing the frequency of audits for firms that consistently achieve a high standard of injury management and/or use other assurance mechanisms
  • making health and safety audits voluntary
  • amending the annual injury management audit so that:

    • standards are aligned with the requirements that ACC itself is required to meet (rather than more stringent, as now), and
    • the focus is on results rather than processes.

Options for risk-sharing outside the AEP

The main objective of these changes would be to provide risk-sharing opportunities to smaller employers who cannot meet the criteria for AEP accreditation.

Currently all employers must pay weekly compensation for the first week of any work-related injury. One proposal is for employers to accept the risk of this cost for periods of four, eight or 12 weeks or to a set dollar value in return for reduced levies. Other proposals are for an all costs excess or for a medical only excess (again for a set time or to a set limit).

All of the above changes, if proceeded with, would apply from 1 April 2012. The opening of workplace compensation to private providers would not take effect until 1 October 2012.

A competitive market?

The Government's plans for a competitive market are more cautious this time round than they were in 1999 when the Crown participated as an SOE (@work), which was independent of ACC.

This time ACC will continue to be a player, as a Crown agent. This will make life difficult for the private insurance companies, given that ACC does not have to turn a profit or pay tax or dividends.

On the other hand, the timing early in the electoral cycle should put these reforms on to a firmer foundation than in 1999 when they were instituted within months of a general election – and were immediately bulldozed by the incoming Labour Government.

Institutional arrangements

ACC will have to separate out its Work Account from its other business and will need to manage this account in a transparent way, with independent oversight and requirements for disclosure of some financial information.

ACC will set its own premiums, rather than having them set by Ministers through an inevitably political process.

ACC and private insurers will be required to provide data to a central pool so that they all have the same information on which to base risk assessment and pricing (with due protections for individual privacy). ACC will be limited to accident insurance.

A central register will be established to keep track of which private insurers are covering which workers.

Employers who have not actively contracted with a private insurer will continue to be covered by ACC and, in the absence of alternative arrangements, will revert to ACC when their private insurance contract expires.

Private insurers will be required to provide at least the minimum level of cover set out in the Accident Compensation Act 2001 and will (together with ACC) be under the oversight of a market regulator with the ability to impose stiff fines for any breach of the law.

A single claims lodgement unit will be set up to direct all initial claims from treatment providers to the relevant insurer.

Feedback has also been invited on whether the private insurance option should also be opened to the self-employed, for both work and non-work related injuries.

Next steps

The Government has a fairly crisp timeline in mind, with submissions due by 15 July and introduction of the necessary legislation before the House rises for Christmas this year. Almost every business in New Zealand stands to be affected by these reforms – insurance companies, members of the AEP and employers who are now on the standard ACC scheme.

We recommend you get involved or at least start thinking about which of the options on offer will best fit your circumstances.

For further information, please contact the lawyers featured as authors.

The information in this article is for informative purposes only and should not be relied on as legal advice. Please contact Chapman Tripp for advice tailored to your situation.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.