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$3.4 billion ACC deficit won't affect customers

#1 User is offline   hukildaspida 

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Posted 07 October 2016 - 03:35 PM


$3.4 billion ACC deficit won't affect customers

By Isobel Ewing

Tuesday 4 Oct 2016 3:56 p.m.

http://www.newshub.c...mers-2016100415



The Accident Compensation Corporation (ACC) has revealed a $3.4 billion deficit in its annual financial report but says it won't hit customers in the pocket.

The state-owned accident insurance provider says falling interest rates and the impact on global financial markets in the wake of Brexit are to blame.

The result compares with a budgeted surplus of $129 million and comes despite another strong result from its investments which earned 10.22 percent during the year.

It's also against a backdrop of a record volume of claims in the 2015/2016 year - 1.93 million - that's nearly one in three Kiwis a day making a claim.

Chief executive Scott Pickering says the scheme is in strong financial shape.

He says despite the deficit, ACC is still pushing ahead with plans to reduce levies for employers and motorists.

He says there's a proposed slight increase in levies for the earners account.

Newshub.
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#2 User is offline   hukildaspida 

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Posted 07 October 2016 - 03:37 PM

http://www.radionz.c...int-4bn-deficit

ACC confident despite $3.4bn deficit
4:36 pm on 4 October 2016
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The Accident Compensation Corporation has paid out on more claims than it expected in the past year, but says it is still in a strong financial position.
Paula Rebstock

ACC chair Dame Paula Rebstock Photo: Supplied

In its annual report for 2015/16 - released today - the corporation had a net deficit of $3.4 billion.

It said the deficit was largely driven by a sharp decline in interest rates, and volatility in global financial markets, including the impact of Britain's exit from the European Union.

ACC also accepted nearly two million new claims during the year - an increase of 5 percent.

ACC chair Dame Paula Rebstock said, despite the deficit, the financial position of the scheme remained very strong, with the levied accounts fully funded.

"A deficit of this size does not have the same impact it would have had in the past. That's because the gap between the scheme's assets and liabilities is smaller and the government's new funding policy allows ACC to now look over a 10-year horizon, smoothing any short-term volatility that arises."

Dame Paula said privacy remained a focus, and breaches had reduced from 68 per month to 20 over the past four years.



http://www.acc.co.nz/news/WPC139411

04 October 2016

ACC made significant progress in 2015/16, delivering improved services to New Zealanders despite the impact of falling interest rates and higher than anticipated claim numbers, says ACC Board Chair Dame Paula Rebstock.

ACC’s annual report, released today, shows a net deficit of $3.4 billion, against a budgeted surplus of $129 million. This was driven by a sharp decline in interest rates, and volatility in global financial markets, including the impact of Brexit.

The result was despite a 10.22% return on ACC’s investments, which saw investment income grow to $3.3 billion, $1.6 billion higher than budget, growing net investment assets to $34.8 billion.

The decline in interest rates had a significant impact on ACC’s outstanding claims liability (OCL), which measures the future cost of all existing ACC claims, discounted to present day dollars (see explanation below). The single effective discount rate ACC uses to value the OCL fell by more than 1.2% during the year, increasing the OCL by $6.4 billion.

“Despite the deficit, the financial position of the ACC scheme remains very strong with the levied accounts fully-funded. New Zealanders can have confidence in the financial sustainability of the Scheme,” Dame Paula says.

“A deficit of this size does not have the same impact it would have had in the past. That’s because the gap between the Scheme’s assets and liabilities is smaller and the Government’s new funding policy allows ACC to now look over a 10-year horizon, smoothing any short-term volatility that arises.

“The solvency of the levied accounts remains above the new funding policy’s target levels of between 100-110%. This allows ACC to propose levy reductions for employers and motorists in our current levy consultation.”

The year also saw higher than forecast claim volumes with ACC accepting 1.93 million new claims – an increase of 5.2% – and paid out $3.5 billion. Nearly one in three Kiwis made an ACC claim in 2015/16.

The growth in claims was highest in the Motor Vehicle (11.2%) and Earners (6.2%) accounts. Economic Growth, higher migration, and an ageing population, contributed to the growth in claims.

Dame Paula says ACC’s performance was helped by the return on investments – which were 0.55% above benchmark.

“This is the 21st year in a row the Investment Team has exceeded the benchmark – a remarkable result. To put that in context, every $100 that ACC invested 24 years ago has grown to be worth $1,031 today, largely through a prudent investment strategy. ACC continues to invest to make sure Kiwis pay less for accident cover.”

ACC also made progress in many aspects of its business, best reflected in the increase in public trust and confidence from 60% to 63%, the highest level in a decade.

“We know the best way to increase the public’s trust and confidence in us is by providing an enhanced customer service and experience in everything we do. That’s the aim of our Shaping Our Future strategy: ensuring our people, processes, technology and information are aligned to the needs of Kiwis.

“We’ve been able to reduce levies to workers, businesses and motorists, and we have made improvements in the average time it takes to make cover decisions, things that have a direct impact on people dealing with ACC.

“These all demonstrate a renewed commitment to working in partnership with our customers – injured people, levy payers and treatment providers – to deliver better results to them.

“We’ve also increased our investment in injury prevention by 68%, and have entered into some rewarding partnerships to deliver broader, more effective injury prevention programmes to more New Zealanders. These include working with at-risk industries in New Zealand, in conjunction with WorkSafe New Zealand, and working with families and communities with the assistance of the Police, Plunket and St John.

“Privacy remains a focus, and while we didn’t meet our target and have more work to do, we have come a long way in the last four years moving from a rolling average of 68 breaches per month at June 2012 to 20 by the end of June 2016.”
What you need to know about ACC’s Outstanding Claims Liability

The Outstanding Claims Liability, or OCL, is a calculation of the money ACC needs today to cover the full future costs of all accepted claims. ACC’s objective is to have a sustainable scheme – the point at which assets are equal to those future costs.

In calculating the OCL, future costs are discounted by a single effective discount rate (derived from interest rates) to get a value in today's money. That means changes in interest rates dictate how much money needs to be set aside today to cover future costs. When interest rates rise, the liability falls. When they fall, it increases.

Due to the duration of the OCL, and its size in financial terms, a small movement in the single effective discount rate has a large impact on the current value. For example, this year, a 1% increase in the discount rate would have increased our reported surplus by $5.2 billion (to a $1.8 billion surplus), while a 1% decrease would negatively impact us by nearly $7 billion, meaning a total deficit of $10.3 billion. There would also be a small opposite impact on assets that would reduce these impacts.

A higher interest rate lowers the liability as we expect to earn more income on the dollars we have today, which means we need fewer dollars today to pay the future costs. The opposite is true if interest rates go down.

Put simply, if you need $100 in a year’s time and the interest rate is 10%, you would need about $90 today. If interest rates change to 1%, you would need about $99 today. The lower the interest rate, the more money you need today to fund future costs.
ACC 2016 Annual Report – by the numbers

Finance and investments

All three levied accounts (Work, Earners’, Motor Vehicle) remain fully-funded.
Investment returns exceeded market benchmark for the 21st consecutive year.



2014


2015


2016


Change

Net assets and investments


$27.6bn


$31.8bn


$34.8bn


+$3.0bn

Investment income


$1.6bn


$4.0bn


$3.3bn


($0.7bn)

Investment return


6.3%


14.6%


10.2%


(4.4%)

Investment return above benchmark


0.10%


0.49%


0.55%


+0.06%

Outstanding claims liability


$27.7bn


$30.3bn


$36.7bn


+$6.4bn

Annual surplus (deficit)


$2.1bn


$1.6bn


($3.4bn)


($5.0bn)

Total levy income


$4.7bn


$4.3bn


$3.9bn


($0.4bn)

Claims payments


$3.0bn


$3.2bn


$3.5bn


$0.3bn – +8.8%

Return on investment – injury prevention


N/a


$1.34


$1.60


$0.26 – +19.4%

Levy income as % of gross domestic product


2.2%


1.8%


1.6%


(0.2%)

Claims management and rehabilitation



2014


2015


2016


Change

New claims accepted


1.79 million


1.84 million


1.93 million


95,000 – +5.2%

% of population receiving compensation or rehabilitation services


30.0%


30.5%


30.8%


+0.3%

Cover decision timeliness


1.2 days


1.2 days


1.1 days


(0.1 days)

Return to work within ten weeks


67.8%


67.3%


67.6%


0.3%

Return to work within nine months


93.3%


93.2%


92.8%


(0.4%)

GP visits


954,000


989,000


1,022,000


+33,000

ACC-funded surgery


35,000


37,000


37,500


+500

ACC-funded physiotherapy


445,000


472,000


491,000


+19,000

People receiving vocational rehabilitation services


32,000


41,000


41,000


No change

People receiving rehabilitation services


91,000


103,000


111,000


+8,000

Clients receiving weekly compensation for more than one year


10,763


11,483


12,290


+807

Long-term clients returned to independence


2,272


2,467


2,796


+329

Formal reviews as a % of entitlement claims


3.3%


2.7%


2.5%


(0.2%)

% of reviews upheld


85%


84%


84%


No change

Average time to resolution for claims with reviews


91 days


92 days


88 days


(4 days)

Customer satisfaction, trust and confidence and privacy



2014


2015


2016


Change

Public trust and confidence


54%


60%


63%


+3%

Customer satisfaction – levy payers


59%


69%


69%


No change

Customer satisfaction – clients


75%


76%


76%


No change

Rolling three-month average of privacy breaches


19


13


20


+7
ACC annual result – your questions and our answers

How come ACC posted a deficit of $3.4 billion?

The deficit reflects a change in the valuation of what we call our Outstanding Claims Liability (OCL). This is the expected lifetime cost of supporting all claims already made.

Because the OCL is future-focused, (out to 2096) it is highly sensitive to external economic factors, such as changes to long-term interest rates. As you will know, interest rates have fallen to historical lows in the past couple of years, and put simply, a higher interest rate lowers the OCL liability as we expect to earn more income on the dollars we have today, which means we need fewer dollars today to pay the future costs. The opposite is true if interest rates go down.

For example, if you need $100 in a year’s time and the interest rate was 10%, you would need about $90 today. If the interest rate changed to 1%, you would need about $99 today. The lower the interest rate, the more money you need today to fund future costs.

ACC is sitting on nearly $37 billion, much of which isn’t needed for immediate claims costs. Wouldn’t it be better to give that money back to people, and collect it later when you need it?

The major benefit of our full-funding model (which means the levies paid can cover our expected claims) is that Scheme is fair to future generations. In essence, this generation pays for its injury-related costs and doesn’t pass those costs on to future generations.

It also means we earn investment income which means we are able to reduce levies to employers, employees and motorists.

How many people lodge a claim with ACC last year?

Last year, it was 1.93 million people, up 5.2% on the previous year. In total, we paid out $3.5 billion to help get New Zealanders get back to work or independence (2015: $3.2 billion). The increase was due to higher claim numbers, increases in medical and related costs and a better performing economy.

With claims volumes going up, does this mean levies will go up too?

Levies are in, fact, generally coming down. For example:

Account


2013/14 levies


2016/17 levies

Workers


$1.15


$0.80

Earners’


$1.48


$1.21

Motor Vehicle


$335


$130

Motor Vehicle is per vehicle. Workers and Earners’ is per $100

In the past year alone, there was total reduction in levies of $804 million.

Where increased claims are linked to improved economic conditions, we tend to receive additional extra levy income (e.g. because more people are in work, buying cars) which helps balance extra claims costs, without the need to increase levy rates.

We’ve also just started our consultation on levy rates for the next two years, and the initial proposal is further cuts in the motor vehicle and workers accounts.

Are levy cuts only possible because more people are being refused cover for ACC?

They aren’t – we’re assisting more Kiwis than ever before.

Levy cuts reflect the improved solvency of the ACC Scheme. In 2009, we began a plan to get the three levied accounts (Workers, Earners’ and Motor Vehicle) fully-funded by 2019. We achieved that target last year and so we are now in a position to pass back the benefits to levy payers.

There has been considerable drop in the motor vehicle levy, but not so much for motorcyclists – why the discrepancy?

Motorcycles only make up less than 3% of the total number of motor vehicles on the road, yet they account for 16% of the Motor Vehicle Account’s severe injuries.

The current levy for a motorcycle over 600cc is $422. If we based the licence fee on past claims experience, that would leap to $2,114 – more than five times the amount paid.

Is it acceptable that privacy breaches are still occurring?

The rolling three month average for privacy breaches was of 68 per month in 2012, to 13 per month last year. This year we have tracked up a little to 20.

Total privacy breaches for the year were 215, 13 more than last year. To provide context, ACC reported over 700 breaches in 2012/13, indicating that ACC has driven over a 60% reduction in breaches. We also send out around 750,000 letters and 1 million emails a month.

At the end of the day, a breach is a breach, and we’re trying our best to eliminate them.

Where are things at with the Kiwibank deal? Why has it taken so long?

We have agreed the key commercial terms with them New Zealand Post and the New Zealand Superannuation Fund. The application for approval has been lodged with the Reserve Bank. We have no further comment to make until that process has been completed.

Other facts and figures from the past year

On average, nearly one in three Kiwis made an ACC claim in 2015/16
More than one million claimants visited their GP
Nearly half-a-million received physiotherapy treatment
The time to make cover decisions has dropped by 8%
Our public trust and confidence is 63%, up from 54% two year ago
Our satisfaction with levy payers is 69%
Every $100 that ACC invested 24 years ago has grown to be worth $1,031 today
Our investment team outperformed the market benchmark for the 21st year in row.

You can view the full Annual Report here, or at acc.co.nz then go to ‘About ACC’ then ‘Reports and Strategy’.
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#3 User is offline   Alan Thomas 

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Posted 07 October 2016 - 04:24 PM

View Posthukildaspida, on 07 October 2016 - 03:35 PM, said:


$3.4 billion ACC deficit won't affect customers

By Isobel Ewing

Tuesday 4 Oct 2016 3:56 p.m.

http://www.newshub.c...mers-2016100415



The Accident Compensation Corporation (ACC) has revealed a $3.4 billion deficit in its annual financial report but says it won't hit customers in the pocket.

The state-owned accident insurance provider says falling interest rates and the impact on global financial markets in the wake of Brexit are to blame.

The result compares with a budgeted surplus of $129 million and comes despite another strong result from its investments which earned 10.22 percent during the year.

It's also against a backdrop of a record volume of claims in the 2015/2016 year - 1.93 million - that's nearly one in three Kiwis a day making a claim.

Chief executive Scott Pickering says the scheme is in strong financial shape.

He says despite the deficit, ACC is still pushing ahead with plans to reduce levies for employers and motorists.

He says there's a proposed slight increase in levies for the earners account.

Newshub.


People like me who have accepted claims under the ACC who are waiting for the ACC to comply with court directions to fund rehabilitation treatment are flabbergasted that the ACC is more concerned about reducing levies for uninterested parties rather than increasing levies so it can pay for the surgery that we have paid our levies for yet have not received our entitlements. it seems to me that Scott Pickering and those he manages have lost sight of their primary duties in accordance with the legislation describing how they should be administering the Act and even defying the courts reinforcing those requirements into the bargain.
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#4 User is offline   MINI 

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Posted 08 October 2016 - 08:06 AM

View PostAlan Thomas, on 07 October 2016 - 04:24 PM, said:

People like me who have accepted claims under the ACC who are waiting for the ACC to comply with court directions to fund rehabilitation treatment are flabbergasted that the ACC is more concerned about reducing levies for uninterested parties rather than increasing levies so it can pay for the surgery that we have paid our levies for yet have not received our entitlements. it seems to me that Scott Pickering and those he manages have lost sight of their primary duties in accordance with the legislation describing how they should be administering the Act and even defying the courts reinforcing those requirements into the bargain.


Thomas

ACC wrongful claims not paid catching up on them in 2015/2016 year.

NTV a good example of that.

oh I just love winners.

Mini
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#5 User is offline   Alan Thomas 

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Posted 08 October 2016 - 08:11 AM

View PostMINI, on 08 October 2016 - 08:06 AM, said:

Thomas

ACC wrongful claims not paid catching up on them in 2015/2016 year.

NTV a good example of that.

oh I just love winners.

Mini


You have just argued against yourself
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#6 User is offline   not their victim 

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Posted 08 October 2016 - 10:27 AM

No she hasnt

Mini was denied many things to start with due to the way acc conducted its business

Mini has slowly, steadily and successfully reasserted her entitlements lawfully...

After beind denied all entitlements from acc due to malicious strikeout of my IRD number

Acc are now having to rectify all losses..
With INTEREST.....

TRUTH WINS OUT...ALWAYS.....
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