Motorcycle levy changes

We charge different levies by vehicle type (which are grouped into classes). The vehicle classes are chosen to strike a balance between identifying vehicles with different levels of risk; and consistency with existing government vehicle classifications, and the ability to collect levy efficiently without incurring excessive cost.

To use the risk posed to determine the total levy rate for a given vehicle class (for example, Class X), the following steps are taken:

• a “relativity” is determined for Class X, representing its level of risk relative to Class 2 vehicles (petrol-powered motor cars). For example, if Class X vehicles pose double the cost of injury of Class 2 vehicles, then the Class X relativity would be 200%
• once relativities have been determined for each class, the total levy rate for Class 2 vehicles is calculated
• the total levy rate for Class X is determined by multiplying the Class 2 total levy rate by the Class X relativity
• the licence fee for Class X is the difference between the total levy rate for Class X and the expected amount of petrol levy collected.

In some cases, the rates are adjusted to take other factors into account, such as affordability and the remaining costs are cross-subsidised by other classes. 

Adopted relativities

In some cases, the rates are adjusted to take other factors into account. In particular, we need to ensure that our levies:

• Are appropriate when other factors are taken into consideration
• Are reasonable
• Do not fluctuate unduly
• Reflect the appropriate level of cross-subsidisation between vehicle classes. There may be other external reasons to justify a certain level of cross-subsidisation

The 2024 consultation proposed each class pay their true cost with the exception of motorcycles where the true cost would be prohibitive to owning a motor cycle.

Exposure

Past and projected exposure is based on the licence data received from NZTA. For the 2024 consultation, this data was as at 31 December 2023. The exposure is calculated per year of registered exposure. For example, one vehicle registered for a full year is one unit of exposure, while one vehicle registered for only half a year is half a unit of exposure.

Distance based levies are allowed for through the petrol portion of the levy. The petrol portion of the levy is relatively low for motorcycles due to their low petrol usage. There is no other reliable, and operationally efficient, way to levy motor vehicle users available at this time, and therefore a levy per registration is used. This is not unique to motorcyclists; it is the same method used across all vehicles. 

We do not collect information on the precise vehicle class associated with each Motor Vehicle Account claim. However, ongoing collaboration with NZ Transport Agency Waka Kotahi (NZTA) has allowed us to integrate our claims database with records from the Crash Analysis System (CAS), a computer system containing road crash and related data. For the linked claims, this allows us to obtain the type of vehicle for many claims, including statistics such as the engine capacity and the year of manufacture.
 
To assess the total claim cost for each class, the CAS data is combined with our statistical case estimate (SCE) model, in which lifetime costs are estimated on a claim by claim basis. Inferences can then be made about the relative risk of each class.

Not all ACC claims are able to be linked to CAS data, and not all crashes recorded in the CAS data can be linked to an ACC claim. Reasons why linking may not be possible in some cases include:

• CAS data is only recorded for accidents where police attend. Crashes resulting in claims to ACC are not always officially attended, and do not appear in the CAS system. Such crashes are typically more minor than crashes that are officially attended
• some road crashes will not result in injuries or ACC claims, or will require bulk-billed public health acute services only
• not all crashes are covered under the Motor Vehicle Account. For example, non-moving motor vehicle crashes (such as between a bicycle and parked car) and accidents off public roads are not covered by the Motor Vehicle Account

Each motorcycle is assigned to a risk group based on its engine size. When you buy or renew a vehicle licence (rego), your motorcycle’s engine size determines which risk group it sits in and the ACC levy you pay.

Levy rates differ between groups to reflect their relative contribution to the long-term cost of motorcycle injuries. This helps spread costs more fairly across levy payers. This approach is known as risk rating.  

To apply risk rating, we need reliable data on the number of registered motorcycles (exposure) and the lifetime cost of injury claims within each group. The data must show a correlation between the grouping used and the average cost of claims per registered motorcycle. Correlation does not imply causation.

Using engine size does not mean engine size causes higher injury risk. It means cc rating is associated with higher average claim costs across the fleet. Across the motorcycle population, ACC data shows a correlation between cc rating and average claim cost. This makes it an appropriate way to distinguish risk at a population level.

Risk groups reflect population-level claim costs, not assumptions about how any individual rider behaves.

More information about levy rates for each risk group and the affects to licensing costs can be found on the NZ Transport Agency website.

Visit | Licensing (rego) fees - NZ Transport Agency Waka Kotahi