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Workers Compensation is Back 20 Dec 1998
There are going to be some changes to the way New Zealand businesses cover
their employees against injuries in the workplace, in 1999. These changes have been
promoted by the Government since budget night 1998. The legislation that was passed by the
Government on 12 December 1998 will impact on all business operations including the self
employed.
This page contains information about how the future of Workplace
Insurance will effect business operations and the best methods of ensuring you choose the
correct provider, along with potential pitfalls which businesses may encounter.
.
A few
facts to consider
 | All 3.7 million NZers still have accident cover |
| A New Zealander is injured every 20 seconds |
| There are 1.47 million ACC claims a year |
| ACC expenditure was $1.64 billion in 1997/98 |
| ACC receives 18,000 claims enquires per week |
| ACC issues 60,500 payments every week |
| Minor claims make up 92% of the total claims |
| There are about 173 workplace deaths per annum |
| ACC registers 88,000 workplace injuries p.a. |
Why
change is needed
| A huge monopoly and bureaucracy can lead to mediocre service |
| The ACC system only offered limited rewards for taking care and avoiding injury |
| Risky industries were subsidised by low risk industries |
| Almost no incentives for rehabilitating people |
| 12.7% of injured workers spend 12 months on ACC and this is not an acceptable
level |
| Injured people - especially Maori - not well informed |
| The end result was too many accidents & too many injuries and we had to
change our ways |
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Changes
to Legislation
| The "Accredited Employer Programme" will discontinue |
| Employers may "risk-share" using excesses or deductibles |
| Employers may self-insure but they must be very large (e.g. 1000 staff) to take
on this huge risk - and may need underwriting |
| Insurance will be compulsory for employers, self-employed and private domestic
workers |
| Compliance will be monitored, with penalties for employers and insurers |
The Employers Opportunity
| There will be a choice of insurers including risk sharing
options for employers |
| Employers will have ability to negotiate terms and scope but
basic requirements must be met |
| There will be choice of insurer based on the range of
services and cover provided |
| The employer will have increased involvement in claims and
case management |
| There will be major incentives for loss prevention programmes
and proper management systems |
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Compensation
Entitlements
| Employer responsible to pay wages for first week/s, then Insurer required to pay
rate of 80% of earnings |
| People injured in first 13 weeks of permanent employment should be better off |
| Temporary, seasonal, part time & casual workers continue to be based on
previous 12 months earnings |
| Independent allowance of $60 per week for each claim of 10% or more impairment |
| No cap on the number of independent allowances |
| The independent allowances can be capitalised |
| Health funding authority will purchase acute care |
Legislation - still covers
| 24-hour cover for accidents (employers - work related
scheme and earners for non-work accidents scheme) |
| The no fault philosophy will continue |
| Medical costs and rehabilitation continue |
| Death and funeral benefits will continue |
| Tax deductibility of premiums will continue |
| Subsequent injury & gradual process to be paid by the
current insurer, & claim against previous employer |
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No
change to Other Schemes
| There will be No change to the following schemes |
| Motor Vehicle Account |
| Earners Account (this may change later) |
| Non-Earners Account - for non-earners |
| Medical Misadventure |
Insurers
Obligations
| Must be registered and be a NZ incorporated company |
| Must have financial rating and meet prudential standards |
| Must have a dispute resolution process |
| Must appoint a trustee/prudential supervisor |
| Must provide terms on request within 10 working days |
| Must issue a policy upon acceptance of offer & payment |
| Must issue insurance certificate within 5 working days |
| Must notify the Regulator of the contract |
| May face penalties of up to $50,000 for failure |
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Insurance
Contracts
| May be terminated by the insurer (with statutory notice) |
| Must provide minimum statutory entitlements |
| May be bundled with top-ups or additional benefits |
| Cannot be voided for mis-representation or non-disclosure |
| Cannot be made retrospective |
Employers
Obligations
| Must provide their insurance number to insurer |
| Must have a single insurance contract |
| Must disclose to employees, without charge, a written
statement including: |
| name of insurer |
| procedure for claims |
| copy of insurance certificate |
| within 5 days of starting work |
| Employers cannot terminate insurance contract unless an
alternative contract is arranged |
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Penalties
are most severe
| Insurers are subject to fines of up to $300,000 for trading insurance in breach
of prudential requirements |
| Failure to disclose information to regulator $10,000 and for obstruction $25,000 |
| Employers who knowingly fail to insure can get a fine of up to 5 times (500%)
the normal premium |
| Simple failure to insure can get a fine of up to 2.5 times (250%) the normal
premium |
| Fines for serious trading breaches up to $50,000 |
| If insurer fails - employer pays remainder of policy period lost with additional
1 year premium penalty |
Benefits of Injury Prevention
| There is reduced injury frequency and severity - by 70% on
average (as estimated by both ACC & SSL) |
| Improved productivity and better work |
| Major savings in Hospitals/Medical costs |
| Huge reductions in ACC/Insurance costs |
| Employers get a significant cost-benefit |
| Families do not suffer hardship |
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Benefits
of return to work
| Accident claims costs are reduced |
| positive impact on premium |
| Workplace disruption is also reduced |
| positive impact on productivity |
| Work forms a recognised part of the treatment & rehabilitation process |
| removes ‘retired to home’ mentality |
| Staff morale & skills base are maintained |
| avoids disruption to staff training |
Benefits of rehabilitation
| Early notification of workplace injury |
| company Doctor and insurer |
| Early intervention follows on |
| within 24 hours - employer, worker, service provider |
| Rehabilitation for injured worker |
| specialised medical and treatment services |
| vocational return to work services |
| functional restoration programmes |
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How
to measure Employers
| Obtain copy of accident claims record from ACC |
| Get accident data from company & do an analysis |
| Complete a safety performance audit (systems) |
| Establish correct ANZSIC (employer category) |
| Employer must have injury prevention system |
| Do site safety assessment & remedial action report |
| Find out extent of risk sharing and loss control |
| Are there any pre-employment checks? |
| Assess level of management commitment to safety |
| Are there any back to work programs & are external safety consultants
involved? |
How to measure an Insurer
| Must have relationships with Injury Prevention experts who
have recognised capability |
| Must have financial security and track record of paying out
claims promptly |
| Must have professional Broker resources |
| Must have adequate service delivery capabilities |
| Should have business philosophy that includes quality and
excellence and customer commitment |
| Must reward employers who improve standards |
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The
Insurers Role
| Injury and case management programs |
| Rehabilitation & return to work programs |
| Approved dispute resolution process |
| Service provider agreements |
| Client information systems |
| Financial incentives for lowered risk |
Key
Service Providers
| Injury Prevention experts |
| Occupational health providers |
| Medical and related service providers |
| Injury management experts |
| Accounting and financial advisors |
| Risk management & loss control |
| Third party administrators |
| Data analysts and systems |
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The
disputes process
| The injured worker on any decision on the claim |
| The employer in relation to work related injury |
| A registered health professional on care issues |
| A premium payer on terms and conditions |
| The application must be in writing within 60 days |
| The Insurer must appoint an independent reviewer |
| hold a hearing and comply with "natural justice" |
| make a decision within 20 working days |
Making
it all work
| Workers Compensation
Brokers & Sales
Basic Safety Audit
Client Relations |
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The Employer
1. Obtain your Safety Performance Audit (small site) or
Rating (large site)
2. Implement an approved Safety Management System
3. Advise your Accountant to schedule the payments
4. Obtain ACC data for your Accident Insurance Cover
5. Sign up policy documents with approved Broker
6. Inform all staff of the procedures to apply |
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Summit
Systems
HSIP
Systems
Site Safety Rating
Safety Training |
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| Insurance Company
Policies & Insurance
Underwrite/Finance
Claims Managers |
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Hospitals/Allied
Medical
care
Case Managers
Rehabilitation |
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