PM throws crumbs to private insurers

By RICHARD BRADDELL

WELLINGTON - Prime Minister Helen Clark has not ruled out a role for the private sector once workplace accident insurance returns to ACC.

Nevertheless, she did not appear to be holding out great odds, adding that the Government was confident ACC would be able to offer a very good deal and better service than in the past.

"The insurance industry has yet to show us any evidence which suggests that in the medium to longer term, privatised workers' compensation is more cost-effective than the single public fund model," she said.

In fact, in United States and Canadian comparisons, the single public model won every time.

If private insurers had a role, it would be under the accredited employer scheme that was being tried by about 100 employers before the privatisation of workers' compensation last year, said Helen Clark.

Revival of the ACC scheme was part of Labour's election policy. By giving it more private sector-like characteristics, the Government may seek to soothe a chorus of discontent that has resulted in more than 900 submissions to the parliamentary select committee.

Many of the submissions are from companies pleased with the lower premiums they are paying under privatised workplace insurance, and other submissions have come from private-sector insurers seeking some role in a renationalised scheme.

A three-tiered accredited employer arrangement seems likely, with the top layer - employers with more than 250 staff - being allowed to manage their own injury claims for up to five years, at which point ACC would take over.

Mid-sized employers with more than 100 staff could handle claims of one to two years' duration, while smaller employers in the same industry would be able to group together to manage workplace injuries.

Accredited employers will have a big advantage over companies that must revert to using ACC: their premiums will be based on their claim performance. The safer their workplaces, the lower the premiums.

In contrast, ACC will base premiums on the claims performance of industry sectors, giving no credit to an individual company's record.

National's ACC spokesman, Gerry Brownlee, said the likely direction of the accredited employers' scheme amounted to a de facto change for big employers, but would be tough for small employers.

"They will either have to club together or else just stick with ACC and be assessed on a much smaller risk pool, which itself could be inflationary on premium prices."