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The Human Resources Institute of New Zealand

Human Resources Institute of New Zealand (HRINZ) is the professional body for those involved in Human Resource Management and the development of people.

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SUBMISSION TO THE ACCIDENT COMPENSATION COMMISSION on 2004/05 Levy Rates for Employers

September 2003

1. Submitted by Peter Marshall, Human Resources Institute of New Zealand, Level 7, 35 Victoria Street, Wellington,

Business : 04 – 499 2964
E-mail : peter.marshall@hrinz.org.nz

The Human Resources Institute of New Zealand [HRINZ] is an association of people who are interested or involved in the management and development of people at work.

The Institute's objectives are:

to encourage and support the development of professional knowledge and competence and high standards of performance among its members within New Zealand;

to promote within New Zealand understanding of all aspects of human resources management and development and its contribution to the performance of individuals and organisations; and

to provide within New Zealand an authoritative and influential viewpoint on all matters affecting its members and the management and development of people at work.

General Comments

Some respondents did not have a great problem with the increases though others felt that the process was more an information exercise rather than consultation.

Average composite employer levy

There appeared to be concerns by respondents over the reduction to 56 risk groups from 130. Some respondents prefer allowing multi-classifications within an organisation and for levies to be experienced-rated through a no-claims rebate.

One respondent felt that by using accident data collected from the sub industry group, will better reflect what is happening in their industry than by using data for the whole industry group.

Work-related Motor Vehicle injuries into Employer’s account.

Some respondents took the view that this change would have major consequences on employers. For instance, motor vehicle injuries are usually more severe than the work related injuries employers deal with. This in turn would increase costs for the employer account therefore it would be expected that future levies would increase.

Under the Employers account, these particular respondents would have more control over managing the hazards within their workplace. However, they would have less control over their vehicles on the public roads due to the number of hazards created by others. For example they would have no control over other drivers who may hit one of their employees.

Some respondents would not support a change to the current process until further details as to the proposed process are made available. Any change would have to be fair to employers and reflected in the appropriate classification units and the discount structures for members of the Partnership programme.

Some respondents stated that there would also be no support for any cross subsidisation of private non-work motor vehicle injuries or those injuries of a higher risk industry or employer.

Amalgamation of the Employer’s and Self-Employed Work Accounts

Respondents stated that this change would potentially have major consequences on larger employers. Larger employers have structured injury prevention and hazard management processes and procedures in place. This should result in lower premiums payable per $ of employee earnings for employers scheme members than those who are self employed.

The concern from an employer’s perspective is that there are likely to be more internal control mechanisms within larger organisations than those present in the businesses run by the self-employed.

Some respondents did not support a change to the current process until further details as to the proposed new process are made available. Any change would have to be fair to larger employers and reflected in the appropriate classification units and the discount structures for members of the Partnership programme.

A number of respondents did not support any cross subsidisation of self-employed businesses.

Regulation 9

Some respondents criticised the current scheme and the inability of this regulation to provide for an adequate return to partnership programme employers where their industry group experience has resulted in a decreased premium. At present, because of their discount, partnership programme employers only receive a portion of any reduced premium, while non-partnership programme employers receive the full reduction benefit. This provides an incentive for companies to pull out of the programme, and allows cross-subsidisation of a type that was not considered in the sections on risk groups above.

These respondents strongly suggested that ACC should encourage use of its Partnership Programme by providing for increased discount factors where actuarial calculations show that their collective experience (as partnership employers) shows significant reductions. That could then be factored in to the overall premium calculations by adjusting the funding required to meet them before the overall increases are calculated. This way there would be an ongoing financial incentive both to join and stay in the Programme.

Regulation 17

Some respondents were unsure of the potential use of this regulation. Under what circumstances can ACC instigate an “upward audit”?

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