Experience Rating

Experience rating - making ACC work levies fairer for individual businesses

ACC experience rating is a system of modifying a business’s ACC work levy based on its claims history. Historically, the work levy has been based on injury rates across industry categories. A business has paid the same work levy as others operating in the same industry, despite differences in their safety record. Experience rating rewards those business owners with safer workplaces, and encourages a focus on improving workplace safety and making New Zealand businesses better places to work.

How does experience rating work?

Experience rating takes into account a business’s ACC claims history when setting its levies. Under the experience rating framework, employers who have lower-than-average injury rates, with better-than-average rehabilitation or return to work rates, may receive a discount on their ACC work levy. Those with worse-than-average claims experience may receive a loading on their levy.

Experience rating helps make levies fairer because what a business pays will more accurately reflect the safety performance in the workplace. It also encourages a focus on:

  • injury prevention in the workplace
  • helping injured employees return to work as safely and quickly as possible.

Experience rating calculation

Experience rating is applied in two different methods based on your levies:

  • experience rating programme
  • no-claims discount programme.

This table explains each method at a glance:

 

Experience rating programme

No-claims discount programme

Annual Work levy

$10,000 or more per annum for each of the three years in the experience period.

Less than $10,000 per annum for all or any of the three years in the experience period

Experience period (based on a three year period of claims history, eg 1 April 2010 to 31 March 2013)

3 years

Qualifying claims

  • number of weekly compensation days paid
  • number of claims with medical costs greater than $500
  • any fatal claim
  • number of weekly compensation days paid
  • any fatal claim

Maximum possible loading/discount

The maximum modification will be up to +75%/-50% of the business’s standard industry levy rate.

The maximum discount or loading will be +/- 10% of the business’s standard industry levy rate.

Based on your individual performance comparative to your industry peers

Yes

No

Formula

Modification comprises:

  • Industry size modification
  • experience rating modification (weekly compensation days paid, and number of claims with medical costs greater than $500, and fatal claims).
  • ‘no claims discount’ of 10% if no weekly compensation or fatal injury claims were made over the experience period.
  • no change to levy if your business has generated between one and 70 weekly compensation days paid
  • a 10% loading will be applied if your business has generated more than 70 weekly compensation days paid or any fatal claim.

No-Claims Discount Programme – for businesses who have paid an annual levy of less than $10,000

Businesses (including self-employed people) who have paid less than $10,000 for all, or part, of the experience period receive a no claims discount or an increase of up to 10 percent on the current portion of their work account levy.

The levy adjustments for these businesses are:

  • a 10% discount if no weekly compensation days paid during the experience period
  • a 10% loading (increase) if the business has generated more than 70 weekly compensation days paid, or any fatal claim
  • no change for a business generating between one and 70 weekly compensation days paid.

Example

The following shows the effect of the no-claims discount programme on levies for three small businesses from the same industry that pay less than $10,000.

Business X has generated 46 weekly compensation days paid over the experience period with ACC.

Business Y has generated no claims during over the experience period.

Business Z has generated 93 weekly compensation days paid over the experience period with ACC.

Employer

Standard Industry Work levy rate

Employer’s claims history

ER adjustment

Adjusted individual employer Work levy rate

Employer X

$1.22

Between 1 and 70 weekly compensation days paid

No adjustment

$1.22

Employer Y

$1.22

No weekly compensation days paid

Discount -10%

$1.09

Employer Z

$1.22

More than 70 weekly compensation days paid, or any fatal claim

Loading +10%

$1.34

Experience Rating Programme – for businesses who have paid an annual levy of $10,000 or more

Businesses who paid $10,000 or more in levies for each of the three years in the experience period could receive a discount of up to 50% or an increase of up to 75% on the current portion of their work account levy.

The total discount or increase has two components:

  • a business’ own workplace safety record which depends on the duration of weekly compensation claims; the number of claims with medical costs over $500; and any fatal claims in the experience period. This component accounts for the majority with up to 60% increase or up to 35% discount.
  • a business’ performance compared to that of its peers, ie the claim histories during the experience period of businesses of a similar size in similar industries are compared against each other. This accounts for up to 15% of the increase or discount.
Example

Business A has made 10 claims with medical spend over $500, and over the experience period workplace accidents have accounted for 530 compensation days with ACC.

Business B has made 1 claim with medical spend over $500, and over the experience period workplace accidents have accounted for 10 compensation days with ACC.

The following table shows the effect of experience rating on levies for two large employers in the same Levy Risk Group paying $10,000 or more in levies annually.

Employer

Standard Industry Work levy rate

Employer’s claims history

ER adjustment

Adjusted individual employer’s Work levy rate

Business A

$1.26

Worse-than-average

Loading +20%

$1.51

Business B

$1.26

Better-than-average

Discount -19%

$1.02

Changes to your invoice

As a result of the introduction of experience rating your ACC levy invoice has changed. Under experience rating, employers and self-employed people who have lower-than-average injury rates, with better-than-average return to work rates, may receive a discount on the current portion of their ACC Work levy. Those with worse-than-average claims experience may incur an increase on the current portion of their ACC Work levy.

Our invoices page has further information about experience rating and the resulting changes to ACC Work levy invoices.

Who does Experience Rating apply to?

Experience rating applies to all employers, self employed persons and non-PAYE shareholder employees who pay levies to cover work related injuries, except those employers who participate in the ACC Accredited Employer Programme.

Businesses and self-employed people that have less than the minimum liable earnings, in any year in the experience period, and those that have not been invoiced for an ACC levy for each year of the experience period will not be impacted. The levies of these entities will continue to be calculated as previously. The minimum liable earnings that apply to all levy payers for each of the years of the experience period are outlined in the Accident Compensation (Experience Rating) Regulations 2011, for example, the threshold is $19,760 for the year commencing 1 April 2010 and ending 31 March 2011.

If your business is part of a group as defined by the Accident Compensation (Experience Rating) Regulations 2011, the above applies to the group not the individual businesses that form that group.

Even if experience rating doesn’t currently apply to you, improving the safety and wellbeing of the people in your workplace will be reflected in your levy when you become eligible for experience rating.

Adverse events and experience rating

The Accident Compensation (Experience Rating) Regulations 2011 were enacted on 28 February 2011 and came into force on 1 April 2011.

The regulations give ACC the ability to establish an experience rating system to modify a business’s ACC Work levy based on its claims experience.

Accident Compensation (Experience Rating) Regulations 2011 (PDF 695K).

Importantly, these regulations provide the ability to exclude claims resulting from an ‘adverse event’ from a business’s claims record for experience rating purposes.

This means that, unless the employer materially contributed to the injury, an employer’s experience rating will not be affected by claims resulting from injuries resulting from the adverse event.

The Minister for ACC must declare an ‘adverse event’ by publishing a notice in the New Zealand Gazette.

Work-related personal injury claims resulting from the adverse event will still be counted as work-related claims but they will be exempt from counting towards experience rating.

Christchurch earthquake of 22 February 2011 declared and adverse event

The Minister for ACC has formally declared the Christchurch earthquake of 22 February 2011 as an adverse event.

No claims resulting from the earthquake will affect an employers experience rating for the levy year starting on 1 April 2011. Claims resulting from the earthquake will be excluded from experience rating for the levy year starting on 1 April 2012 (and the years that follow).

Chch earthquake excluded from ACC experience rating – beehive.govt.nz (external link)

Accident Compensation (Experience Rating – Canterbury Adverse Event) Notice 2011 (PDF 212K).

Support to improve your experience rating – Health & Safety in the Workplace

As well as making levies fairer, experience rating is really all about providing incentives for preventing injuries in the workplace and where accidents do happen helping injured employees return to work as safely and quickly as possible.

Whether you are a self-employed person, small business, or very large corporate organisation there are always steps you can take to improve your workplace safety. You might be surprised at the difference simple actions can make.

We have a range of resources to support you in achieving these goals and the work levy savings that could come with them. Visit our Preventing injuries at work section to find out how.

Helping injured employees return to work is beneficial for your business and for your employees. We have great return to work programmes and resources to assist making their return to work as safe and quick as possible. Visit our Return to Work section for more information.

Background to experience rating

The Minister for ACC and the Board has set a strategic direction for ACC to be more business-like. This includes increased product options and focus on the individual customer.

ACC publicly consulted on the proposal to introduce experience rating into the Work Account from 1 October to 29 October 2010. Our Experience Rating consultation page has further information about the consultation.

Last updated: 1 April 2014

Last reviewed: 28 March 2014