ACC best, cheapest option for victims

Alex Knewstubb, of Port Chalmers, defends the ACC system.

David More (12.11.12) suggests that we should go back to using litigation to compensate accident victims.

But every argument he makes is false, and there are many good reasons not to revert.

His case rests on employers being insured, but - unlike ACC - insurance is an entirely avoidable cost for any business.

An uninsured company can simply fold, and thus avoid paying any damages. Insurance against directors' and managers' personal liability means there is little deterrent factor in that, which is no doubt why, under ACC, it's not possible to insure against penalties imposed under the Health and Safety in Employment Act. The cost of mounting a defence, though, if charges are laid, is insurable.

Those whose accidents are not work-related cannot sue their employer, so would need their own insurance - if they can afford it in New Zealand's low-wage economy.

Even where insurance is in place, insurers make huge efforts to avoid paying out. So victims often need to take legal action to get any payout. After the lawyers on both sides - who get paid regardless of whether they win or lose - take their cut, claimants are lucky to get anything at all even if they win.

If they lose, they'll have legal fees on top of the medical costs.

I don't know what the injured, or the families of the dead (in the Pike River Coal mine tragedy), received from ACC, but - despite ACC's notorious penny-pinching - I'll bet they didn't need to go to court to get it. It's possible they may have received more through litigation. It's equally possible, and arguably more likely, that they would have received much less. Possibly nothing. Whatever the amount, they'd have got nothing without paying a lawyer.

ACC is by no means perfect, but its universal no-fault basis is quite simply the best and cheapest option for ensuring that victims are compensated, at least to some degree.

Many things contributed to the Pike River disaster. Greed, laziness, ignorance and more were involved at a variety of levels. But it's ridiculous to suggest that the ACC system was a contributory cause. Fear of litigation costs is no different whether a company is being sued for compensation or prosecuted for breach of regulations. Fear of financial penalty is less when employers are insured against civil action than under ACC where such insurance is not available. It's unlikely that the Department of Labour would have been liable for damages pre-ACC. Being the regulator would mean either the department would have had to prosecute itself, or the victims would have had to bring a civil suit.

To take a pre-ACC example, I never heard of the Board of Trade being held responsible for the lack of lifeboats on Titanic. Nor is there much sign of American regulators being held liable for the Deepwater Horizon oil spill.