Bike Beneficiaries
My little amphibian friend over at FrogBlog is having a whine (or would that be a croak?) at ACC proposed increase in motorcycle levies. He dismisses this ACC explanation as “spin”. As usual with the motorcycle debate, there is much heat and misinformation, but I thought ACC’s new release was remarkably non-spin, considering the amount of media coverage on the issue. I found it interesting that motorcyclists will still only be meeting 21% of their costs and that motor vehicle owners will be contributing $77 each to cross-subsidized their costs. If that is accurate (and I know as well as anyone that ACC have peculiar ways of working things out!) then most motorists are paying a third extra for the privilege of occasionally running over a motorcyclist. That’s a pretty stiff penalty for a supposed “no-fault” insurance scheme.
And therein lies the rub. Sir Owen Woodhouse was wrong when he claimed that the proposed changes flew in the face of the “no-fault” intent of the ACC system. But then Sir Owen saw ACC as “part of the social welfare system”, so his inability to tell the difference between “no-fault” and “fair recovery” is understandable. A no-fault system does not affix blame to an accident but the costs of the accident still have to be recovered. You can recover these in a uniform fashion from everyone equally, but this is manifestly unfair. People pursuing more dangerous practices are subsidized by people acting in a safe fashion. This is a disincentive to those acting in a safe manner and encourages reckless and expensive behaviour.
A much fairer system is to make people pay in accordance with their likely risk. This is how insurance companies do things. Note that this is not ascribing blame, it is ascribing costs. This is what the motorcyclists object to. They (rightly) point out that most accidents involving motorcyclists are the fault of another vehicle, not the biker. But that is irrelevant. Blame is not assigned here, only costs. Actually, even that is not true, because car drivers are still picking up 80% of the tab.
ACC now needs to extend this practice of apportioning costs into the workplace account. Employers with good safety records need to be rewarded with lower premiums while those with poor records need to absorb a high portion of the costs. Otherwise no-one has any incentive to improve workplace safety. Which probably explains New Zealand’s notoriously poor workplace safety record.
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Nov 9 09 4:57 pm
I saw ACC did an estimate that motorcyclists are responsible for around 60% of accidents (probably from the insurance council), so they are getting away pretty lightly still.
Nov 9 09 9:38 pm
First time poster – great posts generally!
>They (rightly) point out that most accidents involving motorcyclists are the fault of another vehicle,
>not the biker. But that is irrelevant. Blame is not assigned here, only costs.
Actually, I'd argue that it is really very important. If ACC is not a 'levy' but a risk-based insurance scheme, then I'd like to take out private insurance AND have the right to sue (or have my insurers sue) the people who injured me.
Having lived in the UK and experienced their litigation-averse society I have concluded that there is no free ride either way – you either pay through ACC, or you pay through insurance premiums. On balance I prefer ACC as a concept, but they could do with some better oversight.
I've thought about this and finally concluded that partially opening up the system to competition isn't a great move – it should be all or nothing.
Nov 9 09 10:21 pm
The problem with an unaltered ACC scheme, like any State sponsored institution, is "Mission creep". ACC now functions as a parellel social welfare dept where rape and sexual abuse victims are defined as mentally ill in order to receive better counseling services than available through the general welfare system. Same with spectators at a work accident, they can receive counseling funded by ACC for the trauma they experienced in witnessing an accident.. again they get defined as mentally ill.
You can see why, mental trauma and illness is a runaway train in the general welfare system, and in an arse backwards complement to the partially privatised and more competent ACC the Govt has kicked its problem along to it.
JC
Nov 10 09 6:42 am
Johnnieboy: You only have to read through the comments on the FrogBlog post I linked to to realise exactly how true that is. ACC was envisaged by it's creator to be another form of social security.
Nov 9 09 11:13 pm
ACC does modify workplace premiums based on accident history of both the company and the industry. Remember their campaign to help construction and forestry reduce premiums by reducing accident rates?.
I would suggest that the ACC role in improving accident prevention in some industries has been far more effective than insurance companies, who tend to just hike the premiums across industries.
Nov 10 09 6:44 am
Bruce Hamilton: ACC does modify workplace premiums based on accident history of both the company and the industry.
Not exactly, Bruce. ACC modifies premiums for entire industries and parts of industries, rather than one particular company or another.
Nov 9 09 11:48 pm
I was a bit puzzled about Sir Owen Woodhouse's comments until this post. His ACC principles are in fact excellent I think, but the strange thing is that they can be interpreted in one of two very different ways- his way is typical Labour speak in that money is apportioned on the basis of what people should be given by ACC, in order to address social inequality. The other way is to apportion costs according to who actually incurs them by their actions! (which led to prudent cost management up until Labour took over). The balance is swinging back to the latter now at least in part.
Does anyone really think that Labour did a good job of managing the ACC account? Let National fix what Labour broke I say.
Nov 10 09 6:47 am
Johnnieboy Does anyone really think that Labour did a good job of managing the ACC account?
It is because Labour sees ACC as a form of social welfare that they made such bad managers of ACC. Social Welfare has no imperative to meet its costs.
Nov 10 09 8:02 am
Mac: "People pursuing more dangerous practices are subsidized by people acting in a safe fashion. This is a disincentive to those acting in a safe manner and encourages reckless and expensive behaviour."
Balderdash. Like people want to end up hurt? Pull the other one.
Too many people think of ACC as an insurance policy. It isn't, and never has been. Private insurance will not be able to replace it.
Nov 10 09 8:24 am
Harpoon:
It is not a case of people wanting to be hurt but people becoming careless, particularly employers, who have no incentive to make their workplace safe and non-professsional sports people who have little incentive to be careful.
This is why NZ has one of the highest accident rates in the world.
And ACC IS an accident insurance and always has been. It was a socialist fantasy that it could be another form of Social Welfare – a fantasy that that pushed ACC into the parlous state it is in.
Nov 11 09 10:17 am
MacDoctor: “It is not a case of people wanting to be hurt but people becoming careless”
It’s also, partly, a case of people choosing to engage in dangerous activities. Case in point: I choose to commute in suburban Wellington by motorcycle. I know riding a motorcycle is more dangerous than driving a car (roughly 15 times for the same distance). I choose to do it and I’m willing to cope with the consequences of my choice. My biker mates wouldn’t like me saying this (so I won’t say it to them) but I think a higher ACC levy for bikes is justified, though I’m sceptical about some of the numbers that have been bandied about.
Mind you, I do find it odd that if I chose to commute by bicycle (which I have done in the past and may do again in the future) I wouldn’t have to pay any vehicle-related levy at all.
Nov 11 09 11:25 am
“Not exactly, Bruce. ACC modifies premiums for entire industries and parts of industries, rather than one particular company or another.”
The ACC partnership programme offers very significant lower levies to individual companies that sign up ( and who also may have the opportunity to assume some of the risk ) compared to the general levies for the risk groups present in the company.
One of my previous employers joined the programme and immediately had ACC levy savings sufficient to pay a new full-time safety officer to help minimise workplace accidents and still have some spare savings.
Nov 11 09 7:02 pm
Bruce: The ACC partnership program does not reward you for lowering your risk, it rewards you for assuming some of the risk. Although you are paying a lower premium, you also have less coverage.
Of course, if you have a good safety record, taking reduced coverage does have advantages. But, at the end of the day, you are still not insured as well as the risk-takers.
Nov 12 09 9:12 am
The ACC must be confused then, as their www site notes that companies can be rewarded for managing their claims, not for assuming risks.
For one scheme…
” The three levels of discount available include:
• 10% (primary level) – programme entry level requirements
• 15% (secondary level) – consolidation of good practice
• 20% (tertiary level) – continuous improvement, best practice framework”
Note the 20% is for “continuous improvement”, which I assume doesn’t mean increased accidents…
They also note that for some partnership schemes, the participant’s levies will be assessed annually – based on a combination of the risk group levies ( the normal Industry base rates ) and the company’s claim history.
My understanding was that the programme is intended for organisations that are actively controlling and reducing accidents/claims. The ACC frequently audit participants to ensure they have active injury prevention and reporting programmes ( to eliminate one obvious method of reducing accident premiums ).
Nov 12 09 7:09 pm
Bruce:
Thanks for that. I wasn’t aware that ACC had a discount scheme.
Good idea though…
Nov 18 09 1:27 pm
Nick Smith misinforms as the statistics presented in the parliament website are only partial and not fully in context to compare against other road users costs (yes pedestrians and cyclists to be included). If these stats were presented in 2008 we would see 38 fatalities 2008 and in 1998 yet bike numbers increased by 50% from 1998 to 2008! Not a politically convenient year to attempt the current circus of excuses. Also, lets take it the true capitalist concept of user pays, why not send sky high the ACC levy of those at fault in an accident (hopefully then keeping them off the road) and see discount levels for set years of safe driving. As we cannot shoot the at fault, barrack room justice as a result of all paying for the few cannot be applied.
I would rather see objective and valid statistics gathered and presented (oxymoron for a politician assisting privatisation?) Yep, privatisation did wonders for Wellington trains service.