Minutes of a meeting of the Board of the Accident Compensation Corporation held at
ACC Boardroom, Level 11, PwC Tower, 188 Quay Street, Auckland on Thursday, 25 July
2019 at 9.00 am.
Present
Dame Paula Rebstock
Chair
Ms Anita Mazzoleni
Member
Mr James Miller
Temporary Deputy Chair
Mr David May
Member
Ms Leona Murphy
Member
Dr Tracey Batten
Member
Mr John Brabazon
Member
In attendance
Mr Scott Pickering
Chief Executive
Mr Peter Fletcher
Chief Technology & Transformation Officer
Mr Mike Tully
Chief Operating Officer
Ms Deborah Roche
Chief Governance Officer
Mr Herwig Raubal**
Chief Actuarial and Risk Officer
Mr John Healy
Chief Financial Officer
Ms Emma Powell
Chief Customer Officer
Ms Sharon Champness
Chief Talent Officer
9(2)(a)
**
Russell McVeagh
Board only session
9(2)(a)
**
Head of Actuarial Services
Item 6.2
9(2)(a)
**
Taylor Fry
Item 6.2
Ms Gabrielle O’Connor**
Head of Client Service Delivery
Items 4.1
9(2)(a)
**
Head of Provider Service Delivery
Item 6.5
9(2)(a)
Executive Advisor
Items 4.2, 6.4
9(2)(a)
General Counsel and Company Secretary
Item 7.2
9(2)(a)
Manager Corporate Secretariat
9(2)(a)
Senior Associate Company Secretary
9(2)(a)
Associate Company Secretary
Items 2.1 – 6.1
** Attended via telephone / videoconference
Page 1 of 21
Procedural Business
Apologies
An apology was received for Ms McDonald QC.
Register of Members’ Conflicts of Interest Arising
CONFIRMED: The Board reviewed the Register of Members’ Conflicts of Interest Arising and
confirmed that it was not aware of any other matters (including matters reported to, and decisions
made by, the Board at this Meeting) which would require disclosure.
Committee Updates
Governance and Remuneration Committee
The Board Chair updated the Board on the key matters considered at the Governance and
Remuneration Committee meeting of 24 July 2019:
• Chief Executive performance and remuneration had been considered. The changes would
be brought to the next Board meeting.
• Executive performance and remuneration had been considered.
• The direct market incentives scheme had been approved. Ms Champness would consult
Mr May and Mr Brabazon to look at the recommendations for the team for the current year.
• The Collective Bargaining Strategy had been discussed. The main issue for ACC was to
hold the line on the link to performance.
• A draft Health Services Strategy (HSS) Committee Terms of Reference (TOR) had been
considered. The Committee had clarified that the HSS Committee would be an advisory
committee.
Risk Assurance and Audit Committee
Ms Mazzoleni updated the Board on the key matters from the Risk Assurance and Audit
Committee (RAAC) meeting held on the morning of 25 July 2019:
Page 2 of 21
• New insurance disclosures had been discussed, which extended previous years’ sensitivity
analysis on the interest rate and inflation rate impact on the surplus/deficit.
• A Funding of Accounts note had been added to the notes.
9(2)(h)
•
• The representation letter that Management makes to the Board and the Board makes to the
auditors stil needed some minor amendments. This would be approved by the Board via email.
The Board Chair thanked the RAAC Chair for the Committee’s important work.
Board Only Session
The Board
RESOLVED, in accordance with clause 14 of Schedule 5 of the Crown Entities Act
2004, to
appoint a committee to advise it in relation to the Health Services Strategy. The Board
would consider Terms of Reference for the establishment of the Committee via email.
Chief Executive’s Report
Items raised by Mr Pickering were:
• General performance and focus areas
• ICIP update including NGCM
• Branch visitation programme August and September
• Property update
• Performance adviser role discussion
• Select Committee update.
Operational Reporting
4.1 (a) ICIP Reporting
Mr Fletcher highlighted the following:
Page 3 of 21
• Analytics—A key milestone had been achieved with moving Eos data into the platform. This
was a key component to broader use of advanced analytics. The remediation of
Warehouses continued to be tight, and would continue to be so for Next Generation Case
Management (Next Gen), however sufficient testing would be achieved to ensure there was
no significant disruption.
• Client Payments (CP1)—This continued to track well; 11,000 payments had been made
through the platform which was being tested at scale.
Mr Healy reported on an area of benefits realisation for CP1: ACC was paying IRD a fee of
$21 million per year. Mr Healy had reached agreement with IRD’s CFO to separate out the
elements of that figure. It was agreed that the CP1 go-live amount was
c.$6.5 mil ion which would
go down to $0 by the end of this financial year. Additional fee reductions were being negotiated for
the remaining
c.$14 mil ion, which would be built into the budget going forward. This represented
c.$40 mil ion NPV in new ICIP benefits. In response to a Board query, Mr Healy explained that the
true costs of IRD’s work was likely around $10 mil ion per annum.
Ms O’Connor provided an update on Next Gen go-live readiness:
• There were the typical bugs, but they were being managed. There had been change
requests for the early life support (ELS) release. The team had reported only 13 defects,
which was a good indicator of readiness for the August release.
• There were staff items flagging as ‘High’. One of these was recruitment for the transitional
claims support team. This had not been easy and would need to be monitored.
• There was continued general attrition, as staff were looking at career options. Management
was monitoring this and had mitigations in place.
• The Expressions of Interest process was progressing well, with 170 leaders having been
appointed, 1500 frontline staff assessed, and the appointment of 352 people having been
made on 24 July. The scale was huge, and was being managed well.
• Training materials were completed and training was underway at the sites ahead of their
go-live on 16 September.
Page 4 of 21
• Go-live readiness assurance activity was occurring. Al the Management responses to
TA29 had been closed out. There were two Amber recommendations in TA23 regarding
post go-live activities. Management responses for TA23 had been drafted.
• Management had completed an internal risk and control matrix, with an internal assurance
review for go-live underway.
The Board’s discussion and questions focused on the following:
• Whether any of the 13 defects were of concern, and whether the Management responses
to TA23 would take the two recommendations from Amber to Green—Ms O’Connor
explained that none of the defects was of great concern; five related to issues with the CP1
and Next Gen codes coming together, another five related to the Next Gen testing, and the
other three related to the change requests. Al the defects were at Sev 3 or below. And the
Management responses would shift the TA23 recommendations from Amber to Green.
• Whether June’s CP1 double payments could have been stopped at the bank—Mr Fletcher
explained that the issue had not been discovered until after the payments had cleared.
• The atmosphere in the offices in line for Next Gen implementation—Ms O’Conner
explained that there was a blend of excitement and anxiety. Staff were enthusiastic about
the changes, and these early rollouts would build confidence for the full-scale rollout.
• The Next Gen rollout needing to be seamless in terms of impact to clients—Ms O’Connor
explained how the Heartbeat programme and leaders’ and ELS meetings would provide
feedback on all elements of customer experience, which would be measured and tracked.
• When Analytics was due to finish—Mr Fletcher explained that the project was due to finish
at the end of August 2019. Staff were already using the platform.
• The work on the Investments Team’s technology issues—Mr Fletcher clarified that the
Dashboard provided with the ICIP Report only related to the items which had been flagged
Red, and progress was being made.
• The role of the Board sub-group overseeing the Next Gen go-live—Mr Fletcher explained
that, due to having been unable to find meeting times when everybody was available, he
would send out written updates regularly over the next 10 days. The key decision making
session would be on 8 August.
Page 5 of 21
RESOLVED: The ACC Board resolved to:
(a)
Note the ICIP June 2019 Report.
(b)
Note the Investments Technology Issues Report.
(b) Fourth Quarterly Report
Mr Healy highlighted that the year end results, both financial and non-financial, showed mixed
performance. On the one hand, the Injury Prevention Return on Investment was its best yet, and
reviews performance was excellent. On the other hand, rehabilitation performance had missed its
targets, and NTS had also dipped.
Regarding Short-Term Claims Centres (STCC) staff turnover, Ms Champness explained that the
external turnover rate had been 21% for last year, higher than the 17% average of ACC. The 40%
internal turnover related mostly to moving to other roles in Client Service Delivery, and had been at
that level for the last two to three years.
The Board focused on the following in relation to staff turnover:
• The value ACC places on the STCC positions; it was not ideal if people had to move to get
a better position. Ms Champness explained that this was part of the work LEK was doing,
and a lot was already being done to manage turnover. Ms Champness explained the
improvement in job grades that would occur with Next Gen, which Management hoped
would stem turnover.
• The impact of this ‘posting turbulence’, which could accelerate and create an unhealthy
dynamic. Ms Champness explained that turnover had increased in the last few years, as
staff moved into projects such as Launch Pad. The Board suggested that a view be formed
as to what would give ACC a workforce that would deliver ACC’s needs; incentives needed
to be aligned to that.
• While the monthly reporting on turnover statistics was valuable, the information on internal
STCC turnover had been news to the Board. This raised a question as to the Board’s
information needs. It was a case of understanding the data in order to problem-solve. It was
also a question of transparency. Ms Champness reported that the Contact Centres had a
high combined internal/external turnover: 25% external, 20-25% internal. There were
processes in place for Contact Centres to manage that turnover. In response to Board
Page 6 of 21
queries, Ms Champness explained that it was expected that Contact Centre staff would
move on. Ms O’Connor explained that ACC hired people who were ambitious and
intelligent and who would use those attributes to move on.
• Whether exit interviews were conducted to find out why staff were leaving—They were.
Ms Champness explained that the engagement survey results from the STCC had scored
very high, higher than the ACC average. There were few stress reports, and the main driver
for internal turnover was career progression. In response to Board queries, Ms O’Connor
confirmed that the level of stress reporting was accurate; STCCs handled lower complexity
claims, and the staff who worked there were comfortable with fast paced work. Also, work
was moved around the national team, and this helped managing any stress.
• Regarding Management’s expectations as to the extent to which the Next Gen job re-sizing
(which would remove the internal incentives to change jobs) would reduce turnover, and
Management’s strategies to get back to a steady state—Ms Champness explained that
Management did not have a specific target.
9(2)(a)
and Ms Powel presented on media issues management, highlighting the following:
• Media coverage recently was testing out the notion of wellbeing and fairness. Many
agencies had been pulled into this, including ACC, as people felt empowered to raise in the
media issues where they felt they had been wronged.
• The specific client stories in the media were being tracked and monitored by Ms Powell’s
team. On average there were twelve such stories per quarter.
• Ms Powell and Mr Tully were working closely together on the customer issues at the root of
the stories. Communication with customers was the key factor in their satisfaction. People
report to media that something did not happen until the media became involved, but often
the thing has been in train but ACC had not communicated it.
• Ms Powell and Mr Tully were scoping a review of the client experience in treatment injury,
which can take up to nine months for a decision to be made by the time medical advice is
obtained.
The Board queried whether Management monitored the time taken to communicate decisions to
clients, and whether clear expectations were being set with staff. Mr Tully explained that this did
occur for written decisions. In the tour around the branches he was doing with Mr Pickering, one of
the key messages to staff was on communication with clients. Ms Powell explained how Heartbeat
Page 7 of 21
and advanced analytics provided opportunities to get ahead of complaints, by predicting the
customers from whom a complaint was highly likely to come.
The Board suggested that staff attitude appeared to be key to complaints, and that complaints be
probed more deeply for insight as to whether the problems stemmed from particular areas, or
teams, or from the customer.
In terms of managing client expectations, the Board noted that providers gave clients the first
message that ACC would pay; later, ACC communicated decisions on the cases that are not
covered. The Board suggested that medical professionals be encouraged to nuance their
messaging to clients.
Mr Healy continued with the Quarterly Report, highlighting the year end audit process which was
running smoothly. The KiwiBank valuation was also going quickly and smoothly.
Board discussion focused on the following.
• Whether the investment performance figure included private markets—it did. Mr Healy
explained that June had been a poor performance month.
• Whether Management had set the wrong targets or whether the problem was operational
performance—Mr Healy explained that rehab performance had been worse than expected,
and lower targets had been set for 2019/20. ACC’s ability to manage the increased
volumes had been underestimated.
• The high growth numbers— Mr Healy explained that, from his perspective, the overall
claims volumes historically, at 2-3%, aligned with population growth; the aging population,
at 3% growth, aligned with the higher growth now in WC volumes. In 2014 it spiked at 12-
13%, which coincided with ACC’s service needs assessments, when it had proactively
gone out to clients to ensure correct WC coverage. Since then, the correlation of 5-6%
growth was in line with real GDP movement. WC growth was tailing off, and in July has
fallen below 5%, correlating with economic growth which was dampening. Mr Healy
explained that he was now comfortable with understanding why the volume was 5-6%. LEK
would help with how to manage that volume.
• Whether Management was setting stretch targets or real targets— Mr Healy explained that
rehab performance targets had now been set lower; they had previously been set at
stretch, as Treasury had pushed for higher targets.
Page 8 of 21
• That these insights should be included in the Report, to explain the data and
Management’s responses.
• Whether the data around levies should go to the Minister. The Board agreed that it was
good for Treasury and the Minister to see this information.
Mr Healy then reported on the deficit ACC was facing. He reported on discussions he had had with
the Australian Transport Accident Commission (TAC) which was expecting a similar proportionate
increase in deficit as ACC had experienced. TAC presented two funding ratios: an accounting
funding ratio and economic funding ratio. The accounting funding ratio used the risk free rate to
value liability, while economic funding used expected investment rate of return. The Board
suggested that ACC not muddy the waters by reporting on two funding ratios, as this would add to
the myth that the low discount rate environment was not a problem.
Mr Healy reported on ACC’s investment in the government’s gun buyback scheme: $10 million was
recorded in 2018/19 as a prepayment. This corresponded to how the Police had accounted for
receiving the $10 million. In response to a Board a query, Mr Healy confirmed that the auditors had
not indicated any concerns with the gun buyback funding. Mr Raubal explained the process that
had been undertaken to determine the ROI.
The Board requested that the additional unbudgeted expenditure that the Board had approved
after the June 2019 Board meeting, be recorded in the notes to the Annual Report.
RESOLVED: The ACC Board resolved to:
Approve, subject to any final changes, the presentation of the fourth quarterly report 2018/19 to
the Minister by 31 July 2019.
External Speaker
Michael Barnett, Chief Executive of the Auckland Business Chamber of
Commerce
The Board Chair welcomed Mr Barnett, who focused his presentation on the following:
• The Chamber and ACC shared the same constituency (businesses).
• Mr Barnett had recently focused on humanising the Chamber’s brand through community
engagements and empathising with businesses.
Page 9 of 21
• The Chamber’s work was now mostly focused on the community. Mr Barnett worked with
MSD on youth unemployment. Under this partnership, around 1,000 youth a year are
placed into employment. A joint Chamber and MSD programme was also underway for
helping young people to pass their driver’s licence before leaving school. This helped
develop their independence.
• The Chamber provided a powerful, independent voice for business to central and local
government.
• Reflecting on his and Jock Hobb’s concurrent cancer diagnoses and the close relationship
they developed through their treatment processes, Mr Barnett shared their key to a positive
focus on life: change the things you can, and don’t talk about the things you’ve done, talk
about where you’re going.
In response to Board queries and comments Mr Barnett explained that:
• He was constantly alerted by business to things that are wrong, and ACC had not been
mentioned to him. However, ACC could do more to communicate with businesses. ACC
could humanise its brand, and have purposeful community engagements.
• The way to improve businesses’ trust and confidence in ACC was through storytelling. ACC
could talk about the consequences of ACC’s ‘being there’, and choose the language. By
way of example, Mr Barnett reflected on a recent meeting of Chambers in Paris.
Participants were talking about certifications for exporters, and he had proposed talking
about trade facilitation instead.
• ACC should find a champion to tell the outcome story. Having the story come from a third
party was very powerful. He referred to ‘anchor bias’: whatever people have first heard is
overwhelmingly the way they will think of ACC. It wil take effort for ACC to shift that
perception.
• ACC should sift its own data to find who would be a suitable third party to champion ACC.
The Board agreed that there was a need for ACC to personalise its message, as people
don’t remember statistics but they remember stories.
The Board Chair thanked Mr Barnett and asked him to let her know if ACC came onto his radar.
That kind of critical friendship would help ACC to achieve its transformation.
Page 10 of 21
Board Papers
ACC Responses to Emerging Transport Technologies
Ms Powell introduced the paper, noting some of the key pieces of work underway, including
drafting a comprehensive e-scooter risk framework with Auckland Transport to assess where the
greatest harm occurs. The Board Chair declared her interest in Auckland Transport.
The Board’s discussion focused on the following:
• The Board’s disagreement with the paper’s comment on e-scooter use reducing the
number of motor vehicle injuries and that care had to be taken to not discourage the uptake
of new technologies. The Board indicated that ACC did want to encourage the uptake of e-
scooters and other alternative modes of transport, so long as they were safe. If they were
not safe, then ACC should be able to sheet home the cost to the operators, as owners of
the risk.
• Injury statistics from the United States showed that 40% of e-scooter injuries were head
injuries, with 50% of those being traumatic brain injuries. Only one out of 190 persons
injured was wearing a helmet, 39% of the injuries happened at night, and speed was a
factor in almost all of the injuries. The Board suggested that ACC be proactive—the
statistics indicated the solutions to make e-scooters dramatically safer.
• ACC should manage the problem before it became too serious. There were new industries
forming all the time, and ACC should act quickly. For e-scooters there was already plenty of
evidence of the problems; ACC should get ahead of them, and advocate for setting the
rules early and applying ownership of risk. Risk rated levies should be used wherever there
was a viable charging mechanism. ACC could also make e-scooters safer by ensuring
helmets were worn, there was no night-riding, and the scooters operated at a lower speed.
• The injury data related to e-scooters could be published, including the impact of e-scooter
injuries on the various accounts. This would create public pressure about ACC having to
pay the costs.
Mr Raubal noted that levies would not influence helmet-wearing, and that there were currently no
legal mechanisms for levying e-scooters. The Board suggested that even asking for a law change
would send a strong signal to the e-scooter companies.
ACTION: Management to bring a refined e-scooter levying paper to a future Board meeting.
Page 11 of 21
RESOLVED: The ACC Board resolved to:
(a)
Note that e-scooter injuries to date have been low in number and cost relative to other forms
of transport, though some injuries have been serious.
(b)
Note that Management has investigated a range of options for levying e-scooters, and that
the changes required to achieve this are unlikely to be applicable to e-scooters in isolation
from other devices or activities.
(c)
Note that changing patterns of transport use and safety risks raise questions about whether
ACC’s levying framework and/or Accounts remain fit for purpose.
(d)
Note that Management is undertaking a range of injury prevention activities in partnership
with Auckland Transport, the Australasian Injury Prevention Network, and transport
regulatory agencies to influence decision-making on e-scooter and pedestrian safety.
OCL Valuation Report
Mr Raubal introduced 9(2)(a)
of Taylor Fry to the Board, and together they took the Board
through the presentation. Board discussion focused on the following:
• The movement in Non-serious injury Social rehabilitation. Mr Raubal explained that the
drivers were a combination of capital and care costs.
• Sensitive claims. Mr Raubal explained that the volume of sensitive claims towards the end
of 2018 had flattened, resulting in a small increase in sensitive claims volumes being
assumed, and this had turned out to be a poor assumption. The integrated services
strategy review for sensitive claims was underway now, and the contract was to be
renewed next year. The Board asked that the OCL impacts be highlighted in the paper to
the Board.
• Medical inflation for elective surgery. The Board noted that medical inflation was higher
than 2% for the DHBs. Mr Raubal explained that, although it was unclear why, medical
inflation was not higher than 2% for ACC; he had initially resisted reducing superimposed
inflation, but it had been at lower levels for a consistent period.
• Physiotherapists. 9(2)(a)
explained that physio was quite small, from a liability
perspective, as most treatment occurs in the first few months after an accident.
RESOLVED: The ACC Board resolved to:
Page 12 of 21
Note the Report from Taylor Fry.
Annual Legislative Compliance Report
Mr Raubal introduced the paper noting that ACC’s compliance processes were improving. The
number of compliance exceptions was low for an organisation of ACC’s size and complexity. The
main concern was that there were nine Acts where compliance could not be verified, including two
with a Very High inherent risk. Mr Raubal confirmed that these would be prioritised over the
coming period.
The RAAC Chair asked that a recommendation be added to note that there was nothing identified
in the Report that warranted disclosure in the accounts, including the note on contingencies.
The Board queried the Acts where compliance was unable to be verified and sought assurance
that Management would be able to do this in 2019/20. This would be added to the RAAC agenda
for follow up in November 2019.
RESOLVED: The ACC Board resolved to:
(a)
Note the FY19 Annual Legislative Compliance Report.
(b)
Note that the Chiefs’ FY20 entity-level risk key performance indicator includes expectations
regarding risk and obligation ownership in addition to the facilitation of effective key control
testing in each Business Group.
(c)
Note that as the tariff for ACC’s non-compliance with the Public Records Act 2005 is
relatively minor and the potential for reputational issues is relatively moderate, the
Executive owner of this excerption should re-assess the risk rating or give focus to
remediation commensurate with the high-risk rating.
(d)
Note no non-compliances required disclosure in the financial accounts or the contingencies
note.
Annual Report
Mr Healy introduced the Annual Report. Regarding the OBEGAL view of the financial statements,
Mr Healy reminded the Board that since 2011 the publicly available monthly performance reporting
had split out economic factors and investment returns. He confirmed to the Board that, from an
accounting perspective, either version was acceptable to the auditors. In response to a Board
query, Mr Healy suggested that presenting the OBEGAL view was appropriate, as it would help the
reader to better understand the drivers of the poor result.
Page 13 of 21
The Board conveyed that the Report was not yet ready to send to external agencies. Mr Healy
explained that the timeline had been brought forward this year because the Crown accounts were
to be released on 9 October, and Management hoped to release the Annual Report before the
Crown accounts. The Board suggested that more polished messaging and accounts in the draft
would make the external agencies’ job easier. The Board expressed the view that it was not
problematic to have the Crown accounts announced first. Board Members would send their
comments on the draft Annual Report directly to Mr Healy.
The Board discussed how best to approach the financials reporting—timing was very important
when changing accounting presentation, and there needed to be a defensible reason. The choice
was to leave the change to another year, or to use this year to transition to the OBEGAL
presentation by including both versions of the income statement this year. The Board decided that
a reconciliation should be included this year from the existing presentation to an OBEGAL
presentation.
RESOLVED: The ACC Board resolved to:
(a)
Provide feedback on the first draft of the Annual Report 2019 (Appendix 3) and the
provisional Financial Statements (Appendix 4).
(b)
Note the proposed timeline for AR19 (Appendix 2).
(c)
Note the new proposed changes to the presentation of the Financial Statement to be
included in AR19 and the alternative presentation, aligning with the Crown’s Financial
Statements (Appendix 1).
Air Ambulance (Helicopter) Update and Funding Request
The Board noted a recently reported incident where only one air ambulance had been available for
the whole of Northland and Auckland. 9(2)(j)
. He explained the arrangements that had been made to help with
coverage, and the issues underlying the incident. He explained that this was the type of issue that
Phase 1 of the Air Ambulance project had been trying to address. The Board noted the
seriousness of the issue, and encouraged 9(2)(a)
to escalate to the Board if necessary.
9(2)(a)
summarised the key points from the paper:
Page 14 of 21
• Phase 1 of the project had focused on moving to a professional service, removing the single
engine helicopters, reducing the number of suppliers, setting up an air desk to coordinate
activity, implementing a national governance framework and data collection.
• Stil outstanding in Phase 1 was completing the negotiation with the South Island providers.
Costs were higher because the providers had brought on extra staff, and the flying hours were
well above the estimates. The costs had now been updated and were comparable with the
providers in other regions. 9(2)(j)
.
The Board congratulated 9(2)(a)
on the good work in consolidating the providers. Standardisation
of equipment and aircraft was the goal.
RESOLVED: The ACC Board resolved to:
(a)
Note that in July 2018 the Board approved entering into agreements with the preferred air
ambulance providers, and delegated to the Chair and Deputy-Chair the authority to approve
the Recommendation to Select.
(b)
Note that the Board Chair and Deputy Chair approved the selection of HEMS as the
preferred provider in the Southern region in December 2018.
(c)
Note that at the time of approval, costs had only been agreed for year 1 of the contract,
while out years (2-4) were subject to continued negotiation.
(d)
Note that verbal agreement on costs has now been reached on years 2-4 of the contract
and these exceed budget amounts.
(e)
9(2)(j)
.
(f)
Note the future work for Phase 2.
Insurance Update
Mr Pickering declared his interest as a director of Chubb Ltd.
Mr Healy reported that the Board would now be updated yearly, at the RAAC Chair’s suggestion.
Mr Healy highlighted the following:
Page 15 of 21
• There were cluster arrangements for cross-government property insurance and business
interruption insurance.
• There would be a refresh of business interruption insurance over the next few months.
• Most of the policies had an additional cost associated, particularly D&O.
• Some terms had changed, but Mr Healy was stil comfortable with the level of cover.
• The overall cost had increased by more than 10% from last year.
The Board asked that annual updates come to the Board before the renewal decision. Mr Healy
would make the level of self-insurance explicit in the updates.
9(2)(h)
The Board discussed whether ACC should fully self-insure. Mr Pickering proposed a ground up
review of ACC’s insurance. The Board agreed, asking that an independent reviewer be used, and
that the review be completed before the next insurance renewal process.
ACTION: Management to implement an independent third-party review of ACC’s insurance needs,
including consideration of self-insurance and level of cover, prior to the next renewal process.
RESOLVED: The ACC Board resolved to:
Insurance Policies
a)
Note ACC’s insurance cover as summarised in
Appendix 1.
b)
Note specific areas of considerations during the renewal process.
Deed of Indemnity
c)
Note a Deed of Indemnity provides protection for a Board Member or independent Board
Committee Member in addition to ACC’s D&O insurance cover and to the statutory
protections and immunity from liability provided under sections 120 and 121 of the Crown
Entities Act 2004.
Page 16 of 21
d)
Note ACC’s Deed relating to Indemnity, Access and Insurance was externally reviewed and
updated in July 2019 to ensure it is fit for purpose.
e) 9(2)(h)
f)
Agree that the Deed be amended to remove clause 2.2.
g)
Agree that all Board Members and independent Board Committee Members sign the
updated Deed relating to Indemnity, Access and Insurance (the updated Deed).
h)
Delegate authority:
i. To the Board Chair and one other Member to sign the updated Deed on behalf of the
Board for each Board Member and independent Board Committee Member, except
themselves;
ii.
To the Temporary Deputy Chair and Chair of the Risk Assurance and Audit
Committee (RAAC) to sign the updated Deed on behalf of the Board for the Board
Chair;
iii. To the Chair of the RAAC and the Temporary Deputy Chair to sign the updated Deed
on behalf of the Board for the other Member referred to in Resolution h) i.
i)
Delegate on-going authority to the Board Chair and the Deputy Chair (or Temporary Deputy
Chair if no Deputy Chair has been appointed) to sign the updated Deed on behalf of the
Board in respect of future Board Members or independent Board Committee Members who
may be appointed to or by the Board.
Performance Reports
Health, Safety and Wellbeing Report
The Board received and noted the Report.
RESOLVED: The ACC Board resolved to:
(a)
Note actions underway to mature our safety system, demonstrate safety leadership and
strengthen our safety culture.
(b)
Note there was one notifiable events in June 2019.
(c)
Note the health and safety performance indicators.
Page 17 of 21
Legal Report and Policy Update
(a)
Legal Report – LEGALLY PRIVILEGED
The General Counsel introduced the report, focusing on the fol owing:
• The wider implications from the
Calver judgment:
o The Board needed to decide whether to seek leave to appeal the decision. 9(2)(h)
The Board agreed that the case was tragic, but noted that ACC needed to
apply the Scheme according to the law. The application should be filed, subject to
Ms McDonald QC also agreeing that this was the right course of action.
o The Board needed to decide how ACC should deal with the claims that may be
received before the appeal decision. 9(2)(h)
The Board agreed,
subject to Ms McDonald QC’s view, that claims received before a decision from the
Court of Appeal were to be treated consistently with the approach in
Ng, and that
impairment assessments should be undertaken as early as possible, including for
current survivors whose claims had previously been declined.
• The OCL and new year cost implications of the
Ng ‘ordinary consequences’ case: The impact
had now been assessed and was large. The General Counsel emphasised that it was likely
that the number would be even larger than in the assessment, as claimant behaviour could not
be predicated.
• The
Larkin case, which would be heard in the High Court in August 2019.
RESOLVED: The ACC Board resolved to:
(a)
Note that on 8 July 2019 the High Court in the case of
Calver v ACC issued a decision that
expands on the scheme boundaries of cover for disease by granting cover for
Page 18 of 21
mesothelioma caused by non-work asbestos exposure, creating the potential for cover for
other non-idiopathic diseases and:
i. 9(2)(h)
ii. 9(2)(h)
.
iii. An application for leave to appeal the decision would need to be filed by Friday 2 August
2019.
(b)
Approve that ACC wil seek leave to appeal the decision in
Calver v ACC, subject
to
Ms Mcdonald QC agreeing that approach.
(c)
Note that on 15 August 2019 the High Court wil hear an appeal in the case of
Hoare
(Larkin) v ACC that may set a precedent in relation to the transitional provisions applicable
to the payment of backdated attendant care, with significant financial implications.
(d)
Note in relation to the
ACC v Ng ‘ordinary consequences’ Test Case that:
i. The Outstanding Claims Liability impact is very difficult to assess. Based on the
information currently available, it is estimated to be in a range of $399m to $563m for
claims based on treatment first sought on or before 30 June 2019, and the new year cost
impact for claims based on treatment first sought after 30 June 2019 is assessed as a
range of $548m to $573m per year. However, because of the high level of uncertainty, it
is possible the actual impact is significantly more than indicated by these ranges.
ii. Management has considered exploring legislative change but is not currently
progressing this work because, while a legislative change would contribute to certainty
and cost containment, it is difficult to develop feasible options before the Court of Appeal
has ruled on the matter (unlikely to be before the first quarter of the 2020 calendar year).
iii. Management wil inform Treasury and the Minister for ACC of the financial impact
assessment and the status of Management’s exploration of legislative change.
(b)
Policy Update
The Board received and noted the Report.
Page 19 of 21
RESOLVED: The ACC Board resolved to:
(a)
Note that ACC is working with the Ministry of Health and National Ambulance Sector Office
to provide the Government with four Cabinet papers over the next eight months, on the
funding and future direction of ambulance services.
(b)
Note that the Minister for ACC wil receive a report on exploring ‘machine consumable’
legislation, and ACC wil seek his agreement that the report is made publicly available
alongside other cross-government reports.
(c)
Note that ACC is engaged with cross-government work led by the Ministry of Health in
response to the
He Ara Oranga: Report of the Government Inquiry into Mental Health and
Addiction.
(d)
Note that ACC wil be consulted in August 2019 on a draft national strategy for eliminating
family violence, sexual violence and violence within whānau.
(e)
Note that the Scheme Customer Advisory Panel continues to work with ACC and the
Ministry of Business, Innovation and Employment to progress a work programme for
2019/20 that includes contributing to initiatives already underway or under development by
ACC (including enhancing the Accredited Employers Programme and ACC’s Health
Outcomes Framework).
Board Administration
Minutes of Meeting held on 27 June 2019
APPROVED:
the ACC Board approved the minutes of the meeting held on 27 June 2019.
Schedule of Matters Arising
The Board
noted the Schedule of Matters Arising.
Confirmation of Decisions Made Out of Cycle
RESOLVED: the ACC Board resolved to:
Note that there were no decisions made out of cycle for the period of 20 June 2019 to 17 July
2019.
Annual Work Programme
Page 20 of 21
NOTED: The ACC Board
noted the annual work programme.
General Business
As it was Ms Murphy’s last ACC meeting, the Board Chair formally thanked her for her services to
the ACC Board, noting that she had made a very significant contribution.
Confirmation of Next Meeting
To be held at the ACC Boardroom, Level 11, PwC Tower, 188 Quay Street, Auckland on Thursday,
29 August 2019 at 9.00 am.
Closure
The meeting closed at 3.45 pm.
Approved
Chair ………………………………………………………….
Date ………………………………
Page 21 of 21