ACC vows tougher line on claims as it seeks to plug funding hole

Thursday, 22 January 2026

ACC is putting its foot down in the face of financial strife, promising to crack down on costs by focusing on claimants who shouldn't be receiving payments, getting people back to work quicker and putting a magnifying glass over its long terms claims pool.

ACC is attempting to turnaround its financial, operational and organisational woes, but the question stands whether the changes in its plan are enough to plug the major financial holes.

“If we don’t act now, the scheme will become unaffordable, challenging its ability to support future generations,“ the turnaround plan states.

ACC, which runs the country's accident compensation scheme has acknowledged it faces tough calls on injury prevention, with “ballooning” costs rising significantly faster than the rate of economic inflation in recent years, ACC Minister Scott Simpson said previously.

The turnaround plan aims to reset and tighten up ACC to focus on getting people off the scheme faster - especially for non-serious injuries, standardising decisions and being more strict in what it covers.

A major concern of ACC was the amount it spent on rehabilitation and treatment.

“Analysis highlights that ACC is over-servicing some clients, providing more expensive support for longer than required, or funding unnecessary services that aren’t directly related to injury needs,” the turnaround plan said.

Part of the change will mean ACC will actively review existing claims “which may be over serviced”.

There also will be a harder line on surgeries. Part of improving elective surgery decisions include ensuring surgeries are “directly related to injury, evidence-based and appropriate”.

It says while a number of clients go on to receive weekly compensation, and ACC must support people recovering, “decisions need to be consistent with legislation, this means ensuring support is necessary and appropriate, cost-effective, and directly related to injury needs”.

ACC will put more pressure on claimants to return to work, introducing an intervention point at 28 days for clients receiving weekly compensation, “who are more at risk of delayed recovery”.

It will be easier for ACC case managers to suspend weekly payments when a client doesn’t follow rehabilitation plans or attend appointments without good reason.

ACC also wants to explore being able to contract “external clinical capability” to crack down on long term clients who are no longer eligible for support.

For the workforce, it is promising to bring in almost 300 more case managers, with a large focus on getting non-serious clients in the long terms claims pool back to work.

ACC board chairperson Jan Dawson was confident the changes would turn around ACC’s financial position from a projected $26 billion deficit to a $2b surplus by mid 2030.

That was without drastically changing the way New Zealanders are covered by the scheme.

ACC said the $26b figure was a cumulation of each year’s overall surplus/deficit, if trends continued.

“It might look like small tweaks, but it's actually quite significant, and they're designed to improve our support of New Zealanders to get them back to work and independence on a much more timely basis,” Dawson said.

“When people get to 365 days on weekly compensation, that has a big impact on what the … future liabilities are.”

ACC’s total deficit stood at $13.8b at the end of June 2025, and had been forecast to climb to $17.1b for the 2025/26 year at the Budget. In the September forecast, this was down to $16b.

The Post reported in December the Government considered cancelling sexual abuse victims’ entitlements to more than $3 billion of compensation by narrowing the scope of ACC cover, before deciding to shelve that plan. Documents released under the Official Information Act make clear the proposal stemmed from concerns about the financial impact on ACC of a landmark ruling.

ACC last year began reviewing its injury prevention funding - that review resulted funding halts to the likes of WaterSafetyNZ (from March this year) and Safekids, the injury prevention service of Starship Hospital (from 2027), as ACC said they had not had a measurable impact on injury claims.

Alongside the turnaround plan, ACC Minister Scott Simpson and Finance Minister Nicola Willis’ letter of expectation was released, laying down the expectation ACC gets “back-to-basics by restoring rehabilitation as its core purpose, and securing the scheme’s long term fiscal sustainability”.

“The task ahead is demanding, but it is vital.”

Also released on Thursday was a lengthy review - one of many recent reviews of ACC - commissioned by the Government to look at if ACC would be able to turn around its “declining rehabilitation performance” with its current approach.

The report by Finity Consulting stated: “Until recently, efforts have been fragmented, slow to be embedded, and undercut by a lack of focus on core claims management. Without urgent and disciplined action, the trajectory will not improve meaningfully, and claimants, levy payers, and taxpayers will continue to bear the cost”.

The main recommendation was to get back to basics of claims management. It recommended pausing non-core transformational projects and focus on remediating claims management.

It also recommended addressing internal fiction, pausing or delaying “initiatives that draw resources away from rehabilitation performance” and to sharpen Treasury’s oversight role.

Simpson said the turnaround plan “builds on positive changes already underway, including ensuring every long-term client has their own case manager as a single point-of-contact”.

“ACC has made meaningful improvements to its performance, but there is much more work to do.”