Risk Insurance

ACC: You could be paying too much

22 March 2019
3 min read

The work of the Accident Compensation Corporation is essential in maintaining social security in New Zealand, with the contributions of all employers and employees ensuring prevention, care and recovery from injuries. However, many businesses could be paying more than their fair share of contributions.

That’s emerged from the results of over 1000 reviews conducted by professional services company Crowe Horwath. In over half of all new cases, issues were detected, with a third of those paying too much, says the company’s Hawkes Bay-based adviser Ivanka Rosandich.

“In the period since 2012, we have reviewed the ACC payments of some 1090 clients and discovered that 52 per cent of them have some sort of error requiring attention, including the wrong level of cover being selected. In addition, 30 per cent were found to be paying too much,” Rosandich explains.

Pointing out that if ACC isn’t regularly updated with accurate information, levies can easily be wrong.

There are numerous reasons for inaccurate levies, including classification errors, paying too much for the year ahead as payroll has reduced in size or changes in employment status (business owners classified as full-time when they are part time, or classified as active when they are passive).

A further issue to which Rosandich draws attention is the selection of the wrong type of cover. “ACC offers two options for business owners; within that choice, naturally, one option will be preferential for your business,” she points out. From the reviews her office has done, it has emerged that some 18 per cent of clients benefited from switching to CoverPlus Extra. “This is a reflection of how easy it is to fall behind with ACC; CoverPlus Extra was introduced over a decade ago, but some businesses have yet to take advantage of it,” Rosandich adds.

“ACC only provides cover for injuries and for business owners, there are many other reasons that could potentially stop them from being able to work and affect their business and overall cashflow. I work with the client’s Risk Advisor to ensure that CoverPlus Extra works in with the overall Risk Plan for that client.

Optimising ACC relationships isn’t just about getting the best cover for your situation, it is also about saving money. The 257 reviews conducted by Crowe Horwath in the Hawkes Bay in 2015 resulted in a combined reduction of payments totaling nearly $150,000.

Rosandich says that with over 500 ACC classifications, engaging an expert is advisable. “Ensuring you are being levied appropriately can be tricky. Business Owners can find the levies confusing to decipher and often don’t have the time to fully engage with their ACC contributions. Furthermore, depending on the business or policy type, levies may be made in advance, in arrears or a bit of both.”

She says the findings of Crowe Horwath’s work demonstrate the necessity to routinely review ACC contributions and the cover selected for any given business. “The circumstances of most organisations change over time and the classifications and associated levy rates change constantly, too. A regular review will ensure not only that you are paying the appropriate amount and take advantage of any discounts available, but also that you have the best ACC cover for your business, your employees and yourself.”

Crowe Horwath wants to ensure clients have the correct ACC levy in place and that they understand their policies and payments. If you need assistance in this area contact Ivanka Rosandich.