ACC 'should cover sickness'

• Tweet

If ACC were to cover sickness and disability as well as accidents it would disrupt, but not destroy, the personal insurance market in New Zealand.

Wednesday, September 12th 2018, 12:57PM 3 Comments

Former prime minister Sir Geoffrey Palmer told Victoria University that drawing a line between injuries and other medical issues could be difficult and unfair.

A "single unified system" would end unjust discrimination, he said.

ACC Minister Iain lees-Galloway didn’t discount the idea but said it would require considerable public debate.

Partners Life managing director Naomi Ballantyne said a big problem would be that operation of ACC was up to the whims of the government.

Insurers sign permanent contracts and would pay out no matter what happened to clients' health after the contract was signed.

If the government decided to offer illness cover on ACC, there would be nothing to stop a future government reversing that decision.

People who had since developed health conditions then might not be able to get cover for them.

That was a different scenario to accidents, she said, because people could get accident cover later, no matter what their health was like.

“Unless the government guarantees cover for the rest of their lives irrespective of what happens to their health, the worst-case scenario happens, insurance companies miss out, people pay premiums anyway- what people pay may not have anything to do with the underlying risk and may have more to do with what the government needs in its coffer, and if there’s a change of government they could change the scheme.”

She said such a suggestion needed to be carefully thought through. “The government would have to build huge infrastructure to manage that.”

Adviser Jon-Paul Hale said it would be beneficial to the New Zealand public but could increase some under-insurance.

“There is already a misconception about what ACC currently does, adding sickness and illness would make this more significant for a good part of the population. Self-employed already struggle with ACC claims, and business turn over isn't covered by this presently either. Then there's the question of public health, does that remain or does ACC take that over too?”

Anand Srinivasan said it would mean ACC levies increased.

“Insurance advisers can focus on people with income over the ACC current  threshold of $126, 286 per annum.  A person with income over $180,000 per annum will still have to rely on private income protection as top up. ACC levies will potentially  shoot up and people will have to pay higher levies than at present level. Good luck asking people to pay higher  levies a strong political will and backing will be required.”

Tags: health insurance Life insurance

Comments from our readers

Sign In to add your comment