The Problem of ACC in New Zealand

ACC is a government mandated monopoly insurance company NGO, set up in 1974 by the Norman Kirk led Labour government. I had been in private practice for 2.5 years at the time and remember it well. I have had to deal with ACC ever since 1974.

Here is the cirrent status. This is a copy and paste from a X (Twitter) post today February 11 2026.

Today I received the regular ACC Update email. In it was the ACC Board chair's / CEO message: "The Board is committed to delivering on the Minister’s expectations to turn around performance and will drive ACC to deliver better outcomes for injured New Zealanders.”

Here is the first paragraph from ACC published "Turnaround Plan":

ACC Chief Executive Megan Main says last year the organisation spent $8.1 billion on rehabilitation, treatment, and compensation – a 65 per cent increase on what ACC spent a decade ago ($4.9 billion)."

While that growth in 10 years seems high, it is likely that most of that is simple inflation and the funding of new services. Here is the AI breakdown:

Key Findings on Expenditure Breakdown (2024/25):

*Total Outgoings: ~$8.23 billion (2024/25)

*Rehabilitation/Treatment: ~$4.4 billion (2024)

*Weekly Compensation: ~$2.5 billion - $3 billion (2024)

*Other Costs: The remainder includes lump-sum payments and other administrative costs.

Here is the AI response to the cost of physiotherapy management to ACC:

"Based on recent reports, physiotherapy is the largest rehabilitation provider group for the Accident Compensation Corporation (ACC), with over 25% of all new injury claims in primary care being treated by physiotherapists.

While specific, consolidated 2024/2025 financial year, data for the total proportion of physiotherapy expenditure relative to all rehabilitation services is not explicitly broken down in the provided 2024 summaries, here is the context of recent spending:

Total Rehabilitation Spend (2024): In the 2023/24 financial year, ACC supported over 2 million new claims with over $4 billion in treatment and rehabilitation services.

Physiotherapy Expenditure (Recent): In 2024, ACC paid out approximately $164 million on just over 754,000 physiotherapy claims.

Total Costs & Trends: The total cost of injury support in 2024 was over $7 billion, of which $4.4 billion was for rehabilitation and $2.5 billion for income support.

Funding Challenges: Physiotherapy providers have indicated that for many, ACC funding only covers about 60% of the actual cost, and a significant portion of patients are now paying increased co-payments due to a funding gap.

In summary, while roughly a quarter of all new injury claims (25%) are treated by physiotherapists, the expenditure for this treatment represents a significant, yet not fully disaggregated, portion of the total $4.4 billion+ rehabilitation budget."

Physiotherapy manages 25% of all claims for just under 4% of ACC's total rehab budget by my calculation. Note that patients are still paying 40% of the cost of their physiotherapy assessment & treatment. The true cost of physiotherapy is therefore $229m. That is a cost of about $304 per physiotherapy claim. It is noteworthy that many, if not most physiotherapy claims, are for the lower end of the severity range, I would venture. That said, completely abolishing coverage of physiotherapy expenses will not solve ACC's problems. Physiotherapy is literally a proverbial drop in the ocean. 

I decided to ask Google AI "what is the projected 2025-2026 for ACC?"

Here is the answer:

"Based on reports released in late 2025 and early 2026, the Accident Compensation Corporation (ACC) has been grappling with significant financial challenges, with its total deficit previously forecast to reach $17.1 billion for the 2025/26 year. 

More recent, updated projections in September 2025 revised this figure down to $16 billion for the 2025/26 period. Key context regarding this projected deficit includes: 

Previous Deficits: ACC reported a $1.5 billion net loss for the 2025 financial year, which was a significant improvement on the $7.2 billion deficit in 2024. 

Long-term Outlook: Without intervention, ACC's deficit was projected to balloon to $26 billion by June 2030. 

Turnaround Plan: In response to these, the Board is executing a plan to return to a $2 billion surplus by 2030, largely by focusing on faster rehabilitation, better managing treatment costs, and improving organizational performance. 

Liabilities vs. Assets: As of late 2025, ACC's estimated liability for outstanding claims ($63.6 billion) significantly exceeded its investment fund ($51.1 billion). These figures are subject to change based on updated forecasts and the effectiveness of ACC's ongoing "turnaround" strategies." 

Frankly, ACC is a fiscal and organisational trainwreck, having no hope of getting into the black in the foreseeable future. This "Turnaround Plan" is just performative word salad, showing little grasp of why ACC is such a mess, and shows no grasp of how to reverse its trajectory towards bankruptcy.

A further question to Google AI about current ACC levies and other taxpayer provided Government funding revealed this:

"For the 2025/26 financial year, ACC is projected to collect approximately $4.7 billion in levies from employers, employees, and motor vehicle owners. This amount is intended to fund the three main levy-funded accounts: Work, Motor Vehicle, and Earners' Accounts. In addition to these levies, a significant portion of ACC funding comes from taxpayer revenue (general taxation), which covers the Non-Earners' Account and components of the Treatment Injury Account, although specific total tax funding for the 2025/26 year is not directly stated in the latest projections."

That's $1000 for every individual in NZ. This does not account for the 35% of ACC's revenue for the "non-earner's fund". The taxpayer cannot afford to bail out this monster. Time to open up the market to this government-mandated monopoly. Surely private insurance can deliver better choice & value and make a profit for this "premium".