ACC grapples with long-term claims

This raises questions about the sustainability of the scheme. Insurers and reinsurers are complaining that the ACC approach to claims management has created the problem and is having a knock-on effect on income protection (IP) claims.

The impact on the IP market might be two-fold. Advisers have two conflicting thoughts. If you’re worried about the sustainability of ACC, buy IP is more important, but if IP is going to become a lot more expensive, sustainability of that product is in question.

At June 2024, 22,593 clients had been on weekly compensation for more than a year. By March 2025, that number had already grown to 24,769. That’s a 30% rise over just three years. In contrast, New Zealand’s population grew by around 3% over the same period.

This growth is not trivial. Long-term claims typically involve complex injuries and require years of support. The impact is felt not just on the balance sheet but also in extended return-to-work times and heavier burdens on clients, families, and employers.

ACC’s 2025/26 Service Agreement has much more detail on the issue. It aims to reduce the growth rate of the long-term claims pool to 6.6% in the current year, down from 13.4% in 2024/25.

The target tightens further in later years, with a forecast drop to -8.9% by 2028/29. To hit those numbers, ACC plans wide-ranging reforms to its claims management approach, including, for example

It also notes that stronger use of “policy, legislation and funding levers” may be needed—hinting at potential law changes to tighten scheme boundaries or introduce new incentives. Whether ACC’s reforms succeed will come down to execution.

Without a shift in how the scheme manages recovery, the upward pressure on costs—and the risks to long-term sustainability—will only increase.

Experienced industry sources with knowledge of previous reform efforts said the current rise mirrors past cycles and did not rate the changes of turnaround happening either on time or being stuck to.

We note that there is a long-run rise in people claiming disablement benefits long-term in similar economies, by comparison with the UK for example, our numbers aren’t that bad. But they are still unsustainable. That trend threatens scheme integrity, levy stability, and service availability.

Maybe it’s time for us all to prepare for a future where ACC may offer less generous, more selective support?

Comments from our readers

On 22 July 2025 at 9:05 am Backstage said:

Fisrtly as a percentage of people of work either through injury or illness I would look at that number as being low. However it is difficult to understand the problem with the details provided, that is, what is $22,593 as a percentage of people covered and all claims. Is an increase of 2,176 lives in a year alarming? I think it does show that anyone selling mortgage repayment cover on the basis that there are no acc offsets is getting carried away and should focus more on real risk. Approximately 63.3% of all claimants return to work within 10 weeks (ACC annual report 2023). A view is that advisers should focus on good quality Loss of Earnings cover and not get caught up on novelties and novelty covers.

Overall, ACC will work hard to have people back to work as soon as they can get them bacl. We expect this.

On 22 July 2025 at 9:21 am Lifer said:

The difference between 22,593 and 24,769 is not 30%. It's more like 9%. Is this a typo ?

The idea of cutting off legitimate claimants who are on claim, to sort out the governments mismanagement of the scheme is just plain wrong.

And the idea of selling TPD for the risk of a long term disability seems a stretch given the hurdles and very high bar most insurers put in the way of getting a TPD claim paid.

On 22 July 2025 at 10:51 am w k said:

My personal view, I think ACC has never been a good idea. Just leave it to the insurers.

On 22 July 2025 at 1:53 pm Snoopdog said:

The challenges with health system (public and private) is hitting ACC and will eventually hit DI premiums. Early intervention can't happen if you can't see a specialist early.

On 22 July 2025 at 4:12 pm Amused said:

ACC previously disclosed publicly in 2024 that they have 930,000 current claims. With a current population of approx. 5.2M as a country we seem to be very accident prone indeed. ACC is clearly being abused by people who someone aptly termed are professional ACC beneficiaries receiving payments for which they shouldn't be. This needs to stop. No wonder ACC has a multi-billion-dollar revenue hole.

There also needs to be a compassionate debate had about what actually constitutes an ACC claim. ACC is supposed to provide cover for "physical injuries" only. Respectfully sexual abuse cases etc. are not what the ACC scheme was originally designed for when first introduced unless the person making the claim was physically injured as a result of sexual violence. Expecting ACC to now fund claims for post-traumatic stress caused by sexual abuse when people were children is unrealistic sorry and unaffordable long-term.

NZ taxpayers already fund a plethora of Government ministries and departments in Wellington supposedly tasked with improving NZ society. Surely some of the hundreds of millions of dollars that these organisations receive annually can be used to assist victims of sexual abuse but who are not physically injured.

On 24 July 2025 at 12:09 pm Lifer said:

The issue with ACC is that it was never implemented properly as envisaged by the Woodhouse report, with only the accident side implemented, and the sickness side left to be implemented later (and 50 years later we are still waiting). Labour nearly added it recently then chickened out. And Nationals idea of having all claims being able to be met out of current reserves was strange to say the least. Which other insurer does this?

ACC is a great idea, that has stopped us ending up with an absolute disaster like America has, and Australia is getting. Private insurers must by necessity put their shareholders interests above all other considerations. America is the example of what the end result looks like.

Speaking with ACC claims managers, there are very few long term professional claimant's like there were in the 70,s and 80s. Those Boomers are all on the largest social welfare spend now - the pension.

On 28 July 2025 at 9:31 am Backstage said:

@Lifer, If over 30 years in this business has shown me anything (outside claims statistics). Illness outstrips accident.

Having ACC provide any relief for illness would be a nightmare and wrong. Insurers have far more experience and capability.

It would be very very foolish to endorse a government-sponsored illness model, such as ACC is with accident. ACC has many moving parts and should stick to that and what they can do.

Only Labor or the Greens with their lack of understanding of the illness space would charge into that expensive mine field.

On 29 July 2025 at 11:59 am Lifer said:

@Backstage, the illness cover that Labour proposed was short term cover, 2 years max and based on previous earnings. So manageable. This gives scope for private insurers to provide for longer term solutions. The Europeans seem to have no problem running this type of scheme.
ACC is an insurer - albeit one that suffers from slightly more government intervention than the other operating in NZ.

On 30 July 2025 at 12:48 pm Backstage said:

@Lifer, I see the appeal from an auto acceptance perspective, but imagine the government developing a capability that insurers have.

Also, what happens if 1 year I have a heart condition and I use up my 2 years and 3 years later I have something else? Is it multi-claim up to 2 years? Imagine the media around claims handling and everybody's ideas on what should be covered etc, it would be a nightmare.

If I were a politician, I would run in the other direction. Should the government also do car and house insurance? Pet Insurance?

I would be for less government intervention. I would not have the faith that they could develop a capability like an insurer has with hundreds of years of data, experience and reinsurance arrangements.

I still think the idea is idealistic. I am understanding of the good behind the concept but do not have faith in any development of the idea by a government.

It would be similar to me saying, I know a bit about medical insurance, I know, I will start my own hospital.

On 31 July 2025 at 12:16 pm Lifer said:

@Backstage we only have to look to countries like Germany, Norway, Holland, Denmark, etc. to see systems exactly like I am talking about. These public systems work well in conjunction with private insurance and have done for decades.
The evidence and statistical evidence is readily available for those that want to look.
The question we face as a country is do we want an efficient and affordable first world insurance system like the Europeans have, or an inefficient and expensive third world one like the Americans have?

On 3 August 2025 at 12:46 pm mentat said:

Wishing for the downfall of ACC while being in the life and health insurance sector has to be one of the biggest own goals possible.

If you think DI and medical policies are expensive now, you ain't seen anything yet.

One may debate the execution, but as Lifer is saying, the concept itself is an important one to a viable private insurance industry in a market as small as NZ.

On 4 August 2025 at 4:15 pm Amused said:

@ mentat

I don’t think people here are wishing to see the downfall of ACC. The issue has to do with how ACC has been run. ACC revealed last September a nearly $1 billion hole in revenue that would need to be covered when levies were raised this year. The people in charge at ACC appear to have forgotten that when it comes to them approving and paying claims, they might not be a private insurer responsible to shareholders, but they still need to be financially responsible to the NZ taxpayer. As we all know it’s the taxpayer who primarily funds ACC through levies paid by employees, employers, self-employed individuals, and those who own and drive vehicles.

ACC’s mis-management issues over the years speak to a wider problem across all Government run organisations i.e. no one is ever held accountable. No private insurer in NZ would ever get away with running their business the way that ACC has been allowed to since its introduction over 50 years ago. ACC been extended to cover illness would be a disaster for this country in terms of the scheme's long-term affordability for accident-related claims because until ACC finally starts been run with some financial discipline nothing is going to change in terms of its existing revenue hole.

Whilst there are people who are genuinely entitled to be on ACC there are others who are not. As another adviser said to me recently, we now have an entire segment of NZ society that look for handout from the Government (taxpayer) at every opportunity. You talk to some people who have never been on ACC for anything and yet others seem to be constantly claiming it. As of 2023 almost 3000 cases of potential fraud, waste or abuse of the ACC scheme have been investigated in the past five years, but only seven of them prosecuted. Between 2021 and 2022, the number of fraud cases investigated by ACC's watchdog jumped from 181 to 1160, an increase of 540 percent.

On 5 August 2025 at 1:15 pm JPHale said:

Agree Mentat.

As a country, we have over 2.2 million new accident injuries lodged with ACC every year, which has been reasonably consistent for years. Most are minor, soft tissue physio or other primary health care treatments.

The ones being discussed as long-term are those that are so injured that they are unable to return to work in any occupation. An important distinction to private disability coverage which is own occupation, with the exception of Asteron's Workability.

If ACC was able to return these people to any work, they would have. It's a distinct part of the claim process if you've ever managed people on ACC claims. And ACC can be quite aggressive with this, even when people aren't going back to any occupation.

ACC is an important part of our landscape that removes or reduces significant cost burdens that would otherwise be out of pocket for people, either directly or through significantly higher insurance premiums.

Has anyone had a look at Aussie's car insurance premiums? They are substantially higher than here as they include liability protection for injuries caused, something ACC takes care of for us here.

A case of be careful what you wish for, because the alternatives aren't that pretty.

ACC grapples with long-term claims

ACC is facing mounting pressure as long-term weekly compensation claims climb sharply, well ahead of population growth.

Tuesday, July 22nd 2025, 6:00AM 13 Comments

Comments from our readers

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