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 Worker’s 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 five 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 three 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.

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.

Recent Developments (New Zealand)

A 2007 legislative amendment to the IPRC 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’.

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.