NEW ZEALAND GAZETTE, No. 35 — 22 APRIL 2016

GOVERNMENT NOTICES

Authorities/Other Agencies of State

Report in Relation to Rates of Levies Prescribed in the Accident Compensation (Motor Vehicle Account Levies) Regulations 2016

Sections 331(5A) and 331(5B) of the Accident Compensation Act 2001 ("Act") require the Accident Compensation Corporation (ACC) to prepare a report in relation to the rates of levies prescribed in regulations in accordance with generally accepted practice within the insurance sector in New Zealand.

This report relates to the Motor Vehicle Account and its levies for the year from 1 July 2016 as prescribed in the Accident Compensation (Motor Vehicle Account Levies) Regulations 2016 ("Regulations"). It provides information about the expected long-term impacts of the 2016/17 levy rates for that Account and describes long-term projections of its finances along with key assumptions on which the projections are based. Appendix A provides more information about the projections and assumptions. Additional information can be found in the Motor Vehicle Account 2016/17 Pricing Report for Consultation, which is available on request from ACC.

Unless otherwise stated, all rates in this report are expressed exclusive of GST.

The Accident Compensation Scheme

ACC is a Crown agent providing comprehensive, no-fault personal injury cover to all New Zealand residents and visitors to New Zealand.

ACC cover is managed under five separate Accounts, and ACC collects levies to fund three of these: the Motor Vehicle, Work and Earners’ Accounts.

The Motor Vehicle Account

The Motor Vehicle Account covers claims for all injuries that happen on public roads involving moving motor vehicles.

The average Motor Vehicle levy is the rate that all vehicle owners would pay if ACC charged a flat levy rate. The actual rate a vehicle owner pays differs from the average rate depending on their vehicle’s type.

For petrol-driven vehicles, vehicle owners pay their levy through:

• a levy collected as part of the motor vehicle licensing fee (or "registration"); and
• a levy on the petrol they buy.

For non-petrol-driven vehicles, owners pay their whole levy through their registration. The levy component of the vehicle licence fee is higher for non-petrol-driven vehicles by an amount equivalent to the average petrol levy. The Regulations also prescribe a Motorcycle Safety Levy (MSL) payable in respect of motorcycles and mopeds. The Motorcycle Safety Advisory Council oversees the MSL fund, which is used to fund initiatives to improve the safety of motorcyclists.

The Levy-setting Process

Motor Vehicle Account levies are set by regulation under the authority of sections 213, 244, 329 and 333 of the Act.

ACC reviews the expected costs of the levied Accounts to determine the levy rates required to meet the lifetime cost of claims in the upcoming period, along with funding adjustments to move each Account towards its funding target. The ACC Board ("Board") undertakes public consultation before recommending levy rates to the Minister for ACC. Cabinet sets the levy rates for the forthcoming levy period after considering the Board’s recommendations, along with the public interest as required by section 300 of the Act.

ACC’s levy consultation website is www.shapeyouracc.co.nz

Consultation relating to the 2016/17 levy period took place between 1 and 30 October 2015. Further public

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