1900-1992

The first example of periodic earnings-related payments in New Zealand had its origins in the Worker’s Compensation for Accidents Act in 1900. The Act required employers to take out insurance to cover injuries to employees, gave weekly compensation payments to injured workers, and compensated families of people who were fatally injured at work. However, the Act did not cover non-work injuries, and motor-vehicle accidents were not compensated until 1928, when compulsory motor vehicle insurance was introduced.

The Workers’ Compensation Act was the first in a long line of legislation that eventually prompted the Crown to set up a Royal Commission to report on Worker’s Compensation, as there was frustration amongst workers that their weekly compensation payments were not sufficient to support them while they were unable to work. As a result, Sir Owen Woodhouse’s 1967 Report was published. The Woodhouse Report recommended a new Scheme based on 5 basic principles – community responsibility, comprehensive entitlement, complete rehabilitation, real compensation, and administrative efficiency. In 1972, Parliament passed the Accident Compensation Act, which was expanded in 1973. Under the Act, cover became available on a no-fault basis, for all personal injury in New Zealand, whether occurring at work, the road, home, or any other context. Entitlements included hospital and medical expenses, rehabilitation and transport costs, weekly compensation for injured workers, one-off payments for permanent and mental injuries, and funeral costs and one-off payments to families in cases of accidental death. In 1974, the Accident Compensation Commission (ACC) was established to administer and deliver the Scheme.

The Scheme has an extensive history of legislative changes to both meet the needs of its clients and respond to affordability and sustainability. In the Scheme’s first decade, there was growing concern about the overall cost and some employers were unhappy about paying for employees’ non-work injuries. In response, the Government passed the 1982 Act, which changed the structure of the Scheme, most notably by moving from a ‘full funding’ model (where the Scheme collects enough revenue to meet the lifetime costs of the claims incurred in each period) to a ‘pay-as-you-go’ funding model (where the Scheme receives sufficient revenue each year to fund the expected annual costs of that year’s injuries). The ACC Scheme was reviewed 3 more times before the Accident Rehabilitation and Compensation Insurance Act was introduced in 1992, with substantial amendments that incorporated more insurance-based principles. The Scheme was separated into different accounts, and a new Earners’ levy moved the cost of non-work injuries from employers to employees – this was deducted directly from earners’ wages.

1992-2010

The 1992 Act was later replaced by the Accident Insurance Act 1998, which enabled private insurers to cover work-related injuries, and changed all the Scheme’s accounts back to a fully funded system. This was changed again in 2000, when ACC was restored as the sole provider of accident insurance for all injuries, but with full funding retained. Between 2001-2010, the Scheme has changed to include a stronger focus on injury prevention and rehabilitation. Cover for injuries sustained during health treatment was shifted from ‘medical misadventure’ to the less restrictive concept of ‘treatment injury’, and people who suffered mental injuries from a single traumatic at work could receive cover.

A 2007 legislative amendment to the Injury Prevention, Rehabilitation and Compensation Act 2001 established a new merged Work Account that incorporated the Self-Employed Work Account and Employers’ Account and their respective reserves and liabilities. The Injury Prevention, Rehabilitation and Compensation (Employer Levy) Regulations and the Injury Prevention, Rehabilitation and Compensation (Self-Employed Work Account Levies) Regulations were replaced with a single set of Levy Regulations covering levies for employers and self-employed.

Also in the 2007 Amendment Act, the Medical Misadventure Account was renamed as Treatment Injury to reflect the fact that a 2005 amendment had replaced medical misadventure with the less restrictive concept of ‘treatment injury’.

2010-2022

In 2010, Parliament passed the Accident Compensation Amendment Act 2010 which aimed to improve flexibility, contain costs, and encourage co-operation with government agencies. Key changes included allowing information sharing with Inland Revenue and the creation of a motorcycle safety levy.

In 2015, the Accident Compensation (Financial Responsibility and Transparency) Amendment Act was passed to improve the framework for determining how ACC’s levied Accounts are funded to be clearer, more transparent, have a longer-term focus, and support more stable levies. Its other objective was to ensure that the residual levy is not over-collected. 

In 2016, The Accident Compensation Amendment Act 2016 was passed to require the health practitioner leading the co-ordination of the provision of treatment or rehabilitation to a claimant be given the opportunity to participate in the preparation of a claimant’s individual rehabilitation plan (rather than all medical practitioners providing treatment to the claimant).

In 2019, the Accident Compensation Amendment Act was passed to ensure that the Accident Compensation Act 2001 (the Act) is effective and efficient and accords with best regulatory practice.

The changes in the Bill addressed some issues in ACC coverage and corrected regulatory duplication, errors, and inconsistencies, with the aim of keeping the regulatory system up to date, fair, and relevant. The Amendment Act included the following changes:

• removed the requirement for ACC clients, and their dependants, to choose between weekly compensation and New Zealand Superannuation or the Veteran’s Pension
• addressed the gap in coverage for spouses, partners, and dependants of New Zealand employees posted overseas
• allowed surviving spouses to receive up to 5 years of weekly compensation, regardless of age
• disestablished the Accident Compensation Appeal Authority, as it was no longer cost-effective or efficient.

In 2022, the Accident Compensation (Maternal Birth Injuries and Other Matters) Amendment Act (The Amendment Act) introduced a significant expansion to the AC Scheme. Improving gender balance, fairness, and equity in the AC Scheme was the primary driver for the Bill. 

The Amendment Act’s most significant change was extending the AC Scheme cover to maternal birth injuries, which shared similar features to injuries already covered under the AC Scheme. As the intent was for maternal birth injuries to be treated the same as other injuries in the AC Scheme, this expansion of cover brought this new group of injuries into the AC Scheme’s existing settings. 

The Amendment Act made the following 5 additional policy changes to the Accident Compensation Act 2001 (AC Act): 

1. Clarification of the test for work-related gradual process, disease, or infection cover to restore the more claimant-friendly test that was in place before 2010. 
2. Introduced the requirement that occupational assessors must (rather than may) consider pre-incapacity earnings when undertaking occupational assessments to support certainty and transparency. 
3. Reduced the threshold for injury-related hearing loss cover from 6% hearing loss to 5% hearing loss to ensure greater support for those with low-level hearing loss.
4. Increased the size of the Accident Compensation Board by one to assist the Board in representing a wider range of specialists and stakeholders. 
5. Ensured legislative certainty that dependants of claimants are not disentitled from fatal injury entitlements covered under the AC Scheme following a claimant’s assisted death, in accordance with the End of Life Choice Act 2019. 

The Amendment Act also made the following 7 technical changes to the AC Act:

1. Moved the definition of ‘medical practitioner’ to the Accident Compensation (Definitions) Regulations 2019. This will allow the definition to be more easily updated in future via regulations. 
2. Updated the definitions of the terms ‘child’ and ‘other dependant’ to improve the clarity of the AC Act.
3. Enabled a method to be set in regulations for the rate of interest for levy overpayments on interim assessments, to better and more efficiently enable the rate to reflect changes in economic circumstances. 
4. Enabled ACC to use the most recent employer filing to Inland Revenue when determining a client’s weekly compensation. 
5. Aligned ACC’s penalty rules with Inland Revenue’s rules by charging the 1% monthly interest rate from the day after a levy invoice is due, rather than 30 days after the payment is due. 
6. Excluded weekly compensation top-ups made under the Veterans’ Support Act 2014 from abatement against ACC’s weekly compensation payments to better give effect to the policy intent for abatement.
7. Aligned the definitions of moped and motorcycle in the AC Act with the definitions in the Land Transport Act 1998 to ensure legal clarity.