COVID-19, rising interest rates, falling financial markets impact ACC results
Today we released our annual report for 2022, highlighting the effects that external forces have had on our performance in the last year.
As ACC marked 50 years since the passage of the Accident Compensation Act, the COVID-19 pandemic, rising interest rates and falling financial markets all had an impact on our performance in 2021/22.
Registered claims fell 14% to 1.8 million in the latest year, having reached a record high 12 months earlier, as lockdown restrictions had an immediate impact on people accessing the Scheme for new injuries.
“As the effects of the pandemic continued this year, our people adapted and worked hard to support customers, ensuring the most vulnerable were safe and clients could access the services they need,” ACC Board Chair Hon Steve Maharey says. “There was much to challenge us in 2021/22 and I’m pleased to be able to report we rose to the challenges.”
“Led by our new Chief Executive Megan Main, ACC has continued to build significant capability to support integration and change across the organisation, enabling us to deliver on our priorities,” Mr Maharey says. “We are committed to improving our performance for New Zealanders.”
"There has been good progress with the Whāia te Tika strategy to create better access, experience and outcomes for Māori through strong customer focus, partnering for excellence and developing capability. This includes the Māori health programme of work, specific injury prevention investment and rollout of rongoā Māori services to employees.”
ACC today released its annual report for 2022 showing a $49 million net accounting deficit. Externally driven economic factors drove the latest result, which follows a $10 billion surplus in the previous year.
Rising interest rates and weakness in equity and bond markets had a significant impact on both the Outstanding Claims Liability (OCL), which fell by $5.1 billion to $50.3 billion, and returns from ACC’s Investment Fund, which fell by a similar amount to $45 billion.
The OCL is the expected future costs of injury claims on ACC’s books and rising interest rates impacted the discount rate used to value these liabilities.
The Investment Fund recorded its lowest ever returns at -9.21% as financial markets fell.
“After some 20 years of low and stable inflation, price pressures are resurging globally, and interest rates have risen sharply,” ACC Chief Investment Officer Paul Dyer says. “Despite the lower investment returns, our investment team’s performance was very good, generating some $500 million in added value by beating their market benchmarks by 1.09%.”
“The Investment Fund is a counterbalance and partial hedge to the financial risks inherent in ACC’s operations and to this extent, the 2022 results reflect the Scheme working as it should,” he says. “This result highlights that the fund is playing the role intended of stabilising the corporation’s overall finances. Our long-term focus means we can look through volatility in the short term.”
Mr Maharey says that although rehabilitation rates did not meet target, 64% of clients returned to work within 10 weeks, an increase on last year, and 5,470 long-term clients returned to independence.
“We also expanded the treatment and rehabilitation services available via telehealth and explored ways to address the administrative burden on providers. These changes freed up time and reduced transactional interactions with providers allowing greater focus for ACC and providers to support clients.”
Other highlights include:
- In 2021/22 ACC funded 8,800 rongoā sessions for clients, and offered rongoā Māori services to its employees
- ACC expanded the treatment and rehabilitation services available via Telehealth
- ACC explored ways to reduce the administrative burden on providers. These changes freed up time and reduced transactional interactions with providers, allowing greater focus for ACC and providers to focus on supporting clients
- ACC invested $78 million into preventing injuries
- ACC reduced the carbon intensity of its listed equity portfolio by 49% and its corporate carbon emissions by 67% compared to the 30 June 2019 baseline.
- Following a privacy incident in 2021 an independent review was commissioned to investigate employee access to, and use of, client information. The review found that employees understood the obligation to protect personal information, but the organisation had been too narrow in its focus on privacy. All 30 of the report’s recommendations were accepted and there is an enterprise-wide plan to address them. ACC is committed to ensuring New Zealanders can have full trust and confidence in how their personal information is managed.
For ACC media inquiries: 021 746 136 or media@acc.co.nz
