ACC posts strong financial performance

ACC remains in a strong financial position to cover the cost of injuries now and in the future, ACC Board Chair Dame Paula Rebstock says.

ACC’s annual report, released today, shows a net surplus of $607 million for the year ended 30 June 2017, driven by increasing interest rates and higher inflation.

Investment income grew by $2.1 billion, taking net investment assets to $36.6 billion, with a return on investment of 5.7%, the 22nd consecutive year ACC has outperformed its benchmark.

ACC’s outstanding claims liability (OCL), which measures the future cost of all existing ACC claims, discounted to present day dollars (see Q&A below), rose by $1 billion to $37.7 billion.

“The ACC scheme remains very strong with the levied accounts fully-funded. New Zealanders can have confidence in the financial sustainability of the Scheme,” Dame Paula says.

“Any surplus ACC makes is not a profit. It’s reinvested back into the Scheme to cover the cost of injuries and ensure New Zealanders pay less in levies.

“The solvency of the levied accounts remains above our funding policy’s targets which allowed us to lower levies for motor vehicle, work and earners’ levy payers.

“In the past year, there was a total reduction in levies of $162 million, and we project a further $126 million in the coming year. In the past five years, there have been levy cuts of more than $2 billion.”

The year saw ACC accept 1.95 million new claims, up 0.9%. The $3.7 billion paid in claims was slightly below budget, but the cost per claim rose 3.5%, hence an increase of $200 million paid in claims. Economic growth, higher migration, and an ageing population contributed to the claims growth.

ACC’s client satisfaction has gone from 68% in June 2013 to 78% at 30 June 2017. Dame Paula noted the increase in client satisfaction and an improved performance in the 10-week and nine-month return-to-work rates were signs ACC employees had maintained a strong customer service focus on matters that have a direct impact on people dealing with ACC.

“We know the best way to increase the public’s trust and confidence in us is by providing an enhanced customer service and experience in everything we do. This demonstrates our commitment to working in partnership with our customers – injured people, levy payers and treatment providers – to deliver better results to them. This is the focus of the transformation that ACC is undergoing.

“Privacy remained a priority, and it was pleasing there was a drop of 21% in privacy breaches, although we need to continue to decrease this figure even further.

“We continued to increase our investment in injury prevention, and we now have 20 generic workplace programmes for health and safety, with 13 targeting specific industries which all support the joint Harm Reduction Action Plan with WorkSafe. We also entered into partnerships with specialist organisations in areas as diverse as forestry, the elderly, sports and reducing the impact of sexual violence.

“In April, for the first time, we published data on treatment injuries (injuries that occur during or as a result of health care) from all district health boards (DHBs). This was part of another, broader, collaboration with the DHBs and other clinical providers, and the Ministry of Health and the Health Quality & Safety Commission. The aim is to help reduce the number and the impact of injuries that occur as a result of treatment.”

ACC remains in a strong financial position to cover the cost of injuries now and in the future, ACC Board Chair Dame Paula Rebstock says.

ACC’s annual report, released today, shows a net surplus of $607 million for the year ended 30 June 2017, driven by increasing interest rates and higher inflation.

Investment income grew by $2.1 billion, taking net investment assets to $36.6 billion, with a return on investment of 5.7%, the 22nd consecutive year ACC has outperformed its benchmark.

ACC’s outstanding claims liability (OCL), which measures the future cost of all existing ACC claims, discounted to present day dollars (see Q&A below), rose by $1 billion to $37.7 billion.

“The ACC scheme remains very strong with the levied accounts fully-funded. New Zealanders can have confidence in the financial sustainability of the Scheme,” Dame Paula says.

“Any surplus ACC makes is not a profit. It’s reinvested back into the Scheme to cover the cost of injuries and ensure New Zealanders pay less in levies.

“The solvency of the levied accounts remains above our funding policy’s targets which allowed us to lower levies for motor vehicle, work and earners’ levy payers.

“In the past year, there was a total reduction in levies of $162 million, and we project a further $126 million in the coming year. In the past five years, there have been levy cuts of more than $2 billion.”

The year saw ACC accept 1.95 million new claims, up 0.9%. The $3.7 billion paid in claims was slightly below budget, but the cost per claim rose 3.5%, hence an increase of $200 million paid in claims. Economic growth, higher migration, and an ageing population contributed to the claims growth.

ACC’s client satisfaction has gone from 68% in June 2013 to 78% at 30 June 2017. Dame Paula noted the increase in client satisfaction and an improved performance in the 10-week and nine-month return-to-work rates were signs ACC employees had maintained a strong customer service focus on matters that have a direct impact on people dealing with ACC.

“We know the best way to increase the public’s trust and confidence in us is by providing an enhanced customer service and experience in everything we do. This demonstrates our commitment to working in partnership with our customers – injured people, levy payers and treatment providers – to deliver better results to them. This is the focus of the transformation that ACC is undergoing.

“Privacy remained a priority, and it was pleasing there was a drop of 21% in privacy breaches, although we need to continue to decrease this figure even further.

“We continued to increase our investment in injury prevention, and we now have 20 generic workplace programmes for health and safety, with 13 targeting specific industries which all support the joint Harm Reduction Action Plan with WorkSafe. We also entered into partnerships with specialist organisations in areas as diverse as forestry, the elderly, sports and reducing the impact of sexual violence.

“In April, for the first time, we published data on treatment injuries (injuries that occur during or as a result of health care) from all district health boards (DHBs). This was part of another, broader, collaboration with the DHBs and other clinical providers, and the Ministry of Health and the Health Quality & Safety Commission. The aim is to help reduce the number and the impact of injuries that occur as a result of treatment.”

Motor Vehicle is per vehicle. Workers and Earners’ is per $100

In the past year alone, there was total reduction in levies of $162 million, and more than $2 billion in the past five years.

Where increased claims are linked to improved economic conditions, we tend to receive additional extra levy income (e.g. because more people are in work, buying cars) which helps balance extra claims costs, without the need to increase levy rates.

Are levy cuts only possible because more people are being refused cover for ACC?

They aren’t – we’re assisting more Kiwis than ever before. Levy cuts reflect the improved solvency of the ACC Scheme and the fact that the three levied accounts (Workers, Earners’ and Motor Vehicle) are all fully-funded.

Is it acceptable that privacy breaches are still occurring?

This year we changed how we measure privacy breaches to align with guidance provided by the

Government Chief Privacy Officer. The new method gives us a better insight into the impact that breaches have on clients and customers.

Our breaches were down 21% on last year which is positive. There were no category 4 or 5 breaches and only one at category 3 (see page 30 of the Annual Report for more details).

But at the end of the day, a breach is a breach, and we’re trying our best to eliminate them.

Other facts and figures from the past year

• On average, nearly one in three Kiwis made an ACC claim in 2016/17
• More than one million claimants visited their GP
• More than half-a-million received physiotherapy treatment
• Our public trust and confidence was on target at 62%, up from 54% three year ago
• Our customer satisfaction rose 2% to 78%
• Every $100 that ACC invested 25 years ago has grown to be worth $1,091 today
• Our investment team outperformed the market benchmark for the 22^nd year in row.

You can view the full Annual Report here, and the media release can be found here.

ACC 2017 Annual Report – by the numbers

Finance and investments

• All three levied accounts (Work, Earners’, Motor Vehicle) remain fully-funded.
• Investment returns exceeded market benchmark for the 22^nd consecutive year.

Claims management and rehabilitation

Customer satisfaction, trust and confidence and privacy