It has been reported that ACC has paid out over $1 billion to people who experienced injury after medical treatments errors between January 2010 and October 2019. Click here to read more.
Apparently falling over is the most common way Kiwi's injure themselves. In 2018 ACC spent $1.1 billion on fall-related claims. The number is claims increased to 785,063 up from the 781,122 received the previous year. Click here to read more. Any kind of information like this reminds me that while avoiding the risk is a great place to start (wear sensible shoes, think safety first, use a grab rail, get fitter) there is no way I would want that as my only strategy. Some mitigation and then financial risk transfer is definitely in the picture.
Darrin Franks has written this article on Stuff.co.nz questioning why the recent FMA/RBNZ report on life insurers didn't give ACC a mention.
Of course, it depends. The main factors are whether you fly on commercial airlines, or military transports, or choose a wingsuit and jump off a cliff. If you chose the first option, it's pretty safe:
I still remember the "passenger accidental death benefit" rider that used to be offered by some insurers. In fact, flying on a commercial airline is one of the safest things you can do. Riding your own motorbike one of the more dangerous.
In this Newstalk ZB report Winston Peters, Deputy Prime Minister, has called for a new government-owned, New Zealand Insurer. Peters is talking about a general insurance company, but before you consider the wider question - life insurance - Gerry Brownlee has points out that, in effect, NZ already has one: AMI, as a result of the bailout required after the Christchurch earthquakes.
If you apply the same logic to life insurance, the state already owns at least one of those: Kiwi Insurance Limited, part of the Kiwibank group of companies, is already state owned. Plus, the New Zealand Superannuation Fund owns a substantial stake in Fidelity Life Assurance Company.
There could be many directions of argument on the idea of a new general insurer, owned by the state. Although there strong strand of economic nationalism behind what Peters has said he might find that there are others that worry about the high levels of concentration of insurance brands under two large Australian-owned insurers. Those voices might welcome a new insurer joining the field. Still others might reflect that like-it-or-not government is always, kind of, the insurer of last resort, (for example - supporting AMI, running ACC and EQC) so acquiring still more risk might not be such a bright idea. The first step is to be clear about whether there really is a problem with general insurancee in New Zealand - what evidence of actual market failure is there?
Meanwhile, since we're on the subject of general insurance, the New Zealand Initiative has an excellent report on the insurance system following the Christchurch and Kaikoura earthquakes. You can find the report at this link, but here are three summary recommendations as they apply to private insurers:
- Government should follow through with proposed changes to insurance that make private insurers the first port of call for claimants in major events, but strengthen audit procedures appropriately;
- Government should quickly seek declaratory judgments in key test cases arising after a major disaster; and
- Government should consider mechanisms like the Reserve Bank’s OBR for failed insurers.
Jo Spod has lost his jobs and contemplated suicide after excruciating pain from a surgical mesh complication after a hernia repair procedure. "No-one disputes that Mr Spod is in pain, but ACC cannot cover pain without an identified physical injury and the external opinions provided to ACC could not identify any injury causing his pain." said an ACC spokesperson.
This article from NZ Herald states that in the last year alone, the decline rate of mesh injury claims jumped from 17 per cent to 28 per cent – with 43 of 152 claims turned down.
In three years ACC has paid more than 600 claims for injuries from people walking while using their smartphone. Most were minor, but some were serious, and there has been one death. The NZ Herald has this report - including quite a good video - to cover the problem.
A teenage boy with cerebral palsy has lost a decade-long court case against ACC to cover the cost of his treatment. Jeremy was deprived of oxygen to the brain during his premature birth by emergency caesarean section and as a consequence has suffered from cerebral palsy all his life. This from the article by Mike Watson, on Stuff:
"The High Court was correct to find that a failure to treat cannot occur in circumstances where there are no indications for a different treatment course.
"In Mr Adlam's circumstances there was no suggestion prior to the emergency caesarean section that there should have been medical intervention of any kind."
As a result there was no entitlement to cover treatment under the Act and the appeal was dismissed.
In essence, they are saying that this wasn't an 'accident' and therefore does not qualify. Although the limitations of ACC may appear horribly cruel, unless the scheme covered everything, there will always be borderline cases being tackled in the courts. Click here to read more.
Most people don't prepare - take a look at these, my favourite income protection stats:
- In the last five years about 18% of households have had a period of between 3 and 6 months when someone was unable to work
- Most people thought they might get ACC, but, they were more than twice as likely (2.2 times more likely) to to be as a result of a serious illness than a serious accident. As many as one in five people think that ACC covers illness - it doesn't.
- Two thirds thought they might be entitled to the jobseeker benefit, but about half of them were unaware that their partner's income would affect their eligibility
So with benefits not being very helpful, what about savings?
- 54% of people would be unable to maintain their spending rate just four weeks after their sick leave and annual leave had run out. 47% said they would be unable to pay their rent or their mortgage.
- Apparently the average household (in 2015) needed $683 each week to cope with loss of income due to illness.
According to a study done by Horizon Research for the New Zealand Financial Services Council in 2015.
Southern Cross set up a team of specialists ten years ago because they believed that ACC was wrongly turning down legitimate claims by policyholders, leaving the Southern Cross to pay the cost of treating them. 'The insurer said it scrutinised around 200 cases a month where policyholders had had claims declined, usually older people whose injuries ACC concluded were wholly or substantially caused not by their accidents, but by underlying medical conditions. Usually age-related degenerative conditions.' Click here to read more from Rob Stock. The emphasis was added by me, that is a very large number of claims - something like 24,000 claims since the team was set up by Southern Cross.
You should read the whole article. There is a wealth of claims data on the number of claims that were subject to some sort of dispute, the number of decisions changed, and the amount of money that is at stake. $4.95 million in payments made by ACC to Southern Cross in the year to June 2016. More than that, is the extent of the process Southern Cross engages in.