The Accident Compensation Corporation made a paper loss of $5.9 billion as falling interest rates pushed up the cost of future injury claims.
Photo: RNZ / Richard Tindiller
The ACC's just released annual report showed its outstanding claims liability rose $8bn to $61bn, which along with changes in inflation rates contributed $5.7bn to the accounting deficit for the year to 30 June.
That was despite a better-than-expected return on its investment portfolio which rose 7.6 percent to $46.7bn.
"New Zealanders can be assured the net deficit will not impact our ability to cover injury treatment, rehabilitation and compensation costs today," ACC chair Dame Paula Rebstock said.
She said the loss was a paper loss, and the corporation's operating surplus was $414m compared with $570m the year before.
"History has shown the scheme is sustainable and able to be managed on a medium- to long-term basis and we can respond and reduce the impact on ACC's balance sheet over the coming years."
Rebstock said there would be no immediate effect on levies, but in the medium term they needed to rise because of higher medical treatment costs, the growth in weekly compensation claims, and other factors such as legislative and pay rates.
Levies are assessed every two years and the ACC board would make recommendations to the government next year of future levies after it had assessed what had changed.
Rebstock said ACC had moved to control costs where it could, and improve performance through greater emphasis on injury prevention, more efficient health sector spending, and successful rehabilitation.
She said ACC had expected a record number of claims but during the Covid-19 lockdown claims halved, although they had since bounced back.
Rebstock said ACC had been able to maintain a high level of service during the lockdown.
"We worked with doctors and health professionals in providing telehealth services to clients; deferred levy invoicing and debt collection giving businesses breathing space to concentrate on their businesses; and provided practical injury prevention advice to families on staying safe in their home bubble."