Lobby for compulsory insurance

Press, 11 September 1987, Page 3

Lobby for compulsory insurance

By

PETER LUKE

in Wellington

Compulsory private insurance is the Business Roundtable’s answer to the escalating costs and inequities of the present accident compensation scheme. The Roundtable favours a drastic pruning of Government involvement in

accident compensation to allow a range of private insurers to offer competitive contracts for accident insurance. The Accident Compensation Corporation would

be revamped and required to participate in this market as a successful business. The Government’s role would be limited to prescribing a minimum level of accident insurance coverage equal to the social security level for income, health, and medical loss. This radical proposal was presented to the Law Commission a fortnight ago but was released to the news media only this morning. The Government asked

the Law Commission to review A.C.C. in the wake of employer criticism of increased levies and concern about its financial position.

More recently, the A.C.C. more than doubled its motor-vehicle levy, arousing the ire of motoring interest groups.

In its submission, the Roundtable calls for a radical rethink of accident compensation, arguing that the arguments for extensive Government intervention to promote more efficient insurance

and safety arrangements are not compelling. “In general, safety and insurance decisions should be left to those participating in risky activities (and benefiting from them). “It is proposed, that all New Zealanders, apart from superannuitants, should be legally required to insure themselves against all accidents. "Employees would be required to insure themselves for workplace acci--dents, either individually or through workplace arrangements/’

The Roundtable proposes that car-owners be required to insure themselves, their passengers, and pedestrians for all road accidents except those employment-related. Organised sports associations would be required to negotiate group cover, and individual sportspeople would have to buy insurance cover to cover sports accidents.

A minimum level of compulsory coverage is needed because social security provided a base level of insurance, the submission says.

“In the absence of compulsion some people would not buy insurance, even though able to afford it, and would ‘free-ride’ on social security benefits.” Central to the Roundtable argument is the < principle that the costs of participating in risky ac- i tivies should be generally borne by those who en- i gage in them, not the i general community. i Because the present 1 system levies “average in- < dustry premiums,” safe i firms are effectively sub- i sidising unsafe firms. The I

Roundtable argues also that the costs of the current scheme are borne not by but by their woffers, as the employer levies are part of labour costs. Again, those in safe industries are effectively subsidisng those in unsafe industries, it says. The present A.C.C. system has not led to cost savings because more generous benefits tend to lead to greater use of the scheme and give fewer incentives to take adequate safety precautions, the Roundtable says.