by Russell Hutchinson
In over 200 pages of documentation, for example, there is no definition of disability.
Those of us that know people who have made claims of ACC also know that it isn’t that easy.
As a taxpayer we may be glad. As an insured client of ACC, we may not be. Which is why we have a private income protection market worth over $430million in annual premium and counting.
Was the value of that market mentioned in the consultation documents?
No.
The insurance sector is the single largest source of information on disablement insurance in the market. After all we insure hundreds of thousands of people and have paid hundreds of thousands of claims. Most of the insurance people I talk with are surprised that we haven’t been involved in scheme design.
After all, given that income protection is not an unqualified success there may be room for some sort of interaction which could have worked to the benefit of all stakeholders.
That’s an opportunity missed now as it will be hard for government to make major revisions to scheme design or provide much of a role for the sector now the broad strokes have set the overall shape and composition of the piece.
Setting aside the concern for the sector at the possibility of direct impact on the income protection market there is a longer-term impact on buyers through a form of moral hazard.
We already experience some of this – the presence of ACC means that some consumers mistakenly believe that they are covered for sickness-related disability.
This scheme would close that gap but leave another: that long-term disability is covered when it is not.
I am worried at how much to-age 65 cover may be cancelled – or never bought – because of a mistaken belief that eight months cover is enough.
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