Experience Rating

Experience rating

ACC experience rating is a system of modifying a business’s ACC work levy based on its claims history. Experience rating rewards those business owners with good claims histories, 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 calculating 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.

Historically, the work levy has been based on injury rates across industry categories. This meant a business paid the same work levy as others operating in the same industry, regardless of whether their safety record was good or bad.

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% 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

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 2015

If your business is part of a group as defined by the Accident Compensation (Experience Rating) Regulations 2015, 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

Experience Rating and the Accident Compensation (Experience Rating) Regulations were introduced in 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.

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.

Some examples of adverse events are the Christchurch earthquake and the Hobsonville tornado.

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.

Updated: 5 May 2015
Reviewed: 28 April 2015