Information about the Final 2013/14 ACC levy rates for Levy Risk Group 943: Repair and

maintenance (medium-risk group)

Automotive body, paint, and interior repair and maintenance Automotive electrical services Automotive repair and maintenance (not elsewhere classified) Domestic appliance repair and maintenance Machinery and equipment repair and maintenance (not elsewhere classified)

Contents

Introduction......................................................................................... 4
ACC Work levy rates for 2013/14 ................................................................. 4 How is the ACC Work levy put together? ..................................................... 4 How does ACC estimate the cost of claims? ................................................ 5 How are levy risk groups structured? ........................................................... 5

Levy components ............................................................................... 8

Employers .................................................................................................... 8 Self-employed people ................................................................................... 8

Work levy rates................................................................................... 9

What does my ACC Work levy cover?.......................................................... 9 What are the 2013/14 Work levy rates? ....................................................... 9 Capping the changes to Work levy rates - current portion ............................ 9 Levy for pre-1999 claims - residual levy portion ......................................... 10 Is there anything else I have to pay? .......................................................... 10 What is the total value of my ACC levies for 2013/14? ............................... 11 Why do levy rates change? ........................................................................ 11

Levy risk group experience............................................................... 12

What is the claims trend in this levy risk group? ......................................... 12 What is the earnings trend in this levy risk group? ..................................... 13 How does ACC set fair levy rates? ............................................................. 13 What does this mean for setting the levy rate?........................................... 14 How can I work out my ACC levies for 2013/14? ....................................... 14 What can I do to reduce rates? .................................................................. 14
2

ACC workplace safety incentive programmes and injury management resources .................................................................................................... 15 What is experience rating? ......................................................................... 15 Where do I get more information? .............................................................. 16

Glossary of ACC terms ..................................................................... 17

ACC Partnership Programme ..................................................................... 17 Business industry description code (BIC) ................................................... 17 Classification unit (CU) ............................................................................... 17 Current levy portion .................................................................................... 17 Experience rating ....................................................................................... 17 Levy ............................................................................................................ 18 Levy consultation ........................................................................................ 18 Levy Risk Group (LRG) .............................................................................. 18 No-Claims Discount Programme ................................................................ 18 Residual portion of the ACC Work account levy ......................................... 18

Introduction

This document provides information specifically for the Levy Risk Group 943 (Repair and maintenance (medium-risk group)) including the Work levy rates for 2013/14 and the number of injuries and cost of claims (which is a key driver of your rates) for your industry.

ACC Work levy rates for 2013/14

Your annual Work levies provide no fault cover for work-related personal injuries affecting employees, self-employed people and private domestic workers. This document includes the 2013/14 ACC Work levy rates for employers, self-employed people and private domestic workers in the following groups: Automotive body, paint, and interior repair and maintenance Automotive electrical services Automotive repair and maintenance (not elsewhere classified) Domestic appliance repair and maintenance Machinery and equipment repair and maintenance (not elsewhere classified) The levy rates quoted are per $100 of wages or earnings and are exclusive of GST.

Employers
The levy rate is charged on your payroll for the 2013/14 year, subject to the maximum liable earnings of $116,089 for any one employee.

Self-employed
The levy rate is charged on your earnings from self-employment (excluding earnings from things like investments) for the 2012/13 tax year, subject to the maximum liable earnings of $113,768.

How is the ACC Work levy put together?

The Work levy has two parts: 1. 2. The current levy portion The residual levy portion, which covers employee work injuries before 1 July 1999 and non-work injuries before 1 July 1992. This component of the levy will terminate on 31 March 2019, at which time the estimated unfunded outstanding liability associated with residual claims will have reached fully funded status.

How does ACC estimate the cost of claims?

We forecast the likely weekly compensation costs, medical and elective surgery and rehabilitation costs based on trends from the past and make an allowance for expected investment returns. The cost of claims is the lifetime cost of claims that occur in the levy year.

How are levy risk groups structured?

Levy risk groups for the current portion of the work levy (currently 143) combine the nature of businesses or trades into larger groups to accurately estimate the cost and frequency of future injury claims. Last year minor changes were made to provide more appropriate classification for some activities. There are 41 levy risk groups for the pre-1999 claims (the residual portion of the work levy). The relativities for the residual levies were frozen to ensure that those industries that created this previous liability will fund the liability out to 2019. For 2013/14 we have:

maintained the number of levy risk groups for the current portion at 143 changed the placement of individual classification units between levy risk groups to reflect changes in claim experience in recent years included one new classification unit to cover an employer group not adequately described or accurately levied within the current classification schedule changed the name of a classification unit to permit an appropriate classification of Non-financial assets leasing and investment (including franchisors) changed the name of a classification unit to recognise relevant activities reviewed the classification unit descriptions and the appropriate grouping into relevant Levy Risk Groups maintained the number of levy risk groups for the residual portion at 41.

Name change for a classification unit

We have changed the names of two of the classification units to clarify their coverage of activities.
Classification unit number 77300 Classification unit name Non-financial assets leasing and investment Proposed new name Non-financial assets leasing and investment (including franchisors) Reason for change To clarify that this CU includes franchisors in franchise agreement leasing To provide more precise information so that employers/self employed people can accurately selfselect the appropriate CU 64050 Air operations under Civil Aviation Rules Parts 101, 103, 104, 105 or 106 Air operations under Civil Aviation Rules Parts 101, 103, 104, 105, 106 or 115 To recognise a new CAA rule covering adventure aviation, this is also relevant to the activities in this classification

Following the annual review of CU descriptions we have reallocated Alpine and white water recreation activities to a new CU 93410 (remaining in Levy Risk Group 917). This is a more appropriate classification for these higher risk activities when compared to the others in this group. This means we will increase the 537 classification units by one to 538 in 2013/14.
Current CU number 93400 Current LRG 917 Current CU name Amusement and other recreation activities (not elsewhere classified) Proposed new CU number 93400 Proposed LRG 911 Proposed new CU name Amusement and other recreation activities (not elsewhere classified) Alpine and white water recreation activities Reason for change Removing alpine and white water recreation activities from 93400 takes away two activities with a higher than average claims-toliable earnings ratio compared to others in this group

93410

917

Review of classification
Following the annual review of all CU descriptions and the appropriate grouping into relevant Levy Risk Groups, the table below details the movements:
Classification unit number 93175 Current classification unit name Sport and physical recreation-professional sport (not elsewhere classified) Houseware retailing Non-store retailing Retail commission-based buying and/or selling Electric cable and wire manufacturing Current Levy Risk Group 917 Equine and sporting activities (medium-high risk group) 428 Store and non-store retailing Proposed new Levy Risk Group 919 Equine and sporting activities (high risk group) 426 Retail trade (lowmedium risk group) Estimated Impact on CU Levy

52331 52595 52597 28520

241 Machinery and equipment manufacturing (lowermedium risk group) 243 Machinery and equipment manufacturing (medium risk group)

231 Aviation, electronic and electrical manufacturing 241 Machinery and equipment manufacturing (lowermedium risk group)

29220

Metal furniture manufacturing

Levy components

Employers
Employers pay a Work levy to cover work-related personal injuries affecting your employees. The amount of the Work levy is based on how much you pay in wages (your payroll) and what type of industry your business is in (your classification unit). The employer Work levy is made up of two parts: 1. Levy for 2013/14 work claims - current portion Funds the lifetime cost of work-related injuries that occur between 1 April 2013 and 31 March 2014, plus any adjustment for over or under funding of claims in the period from 1 July 1999 to 31 March 2013. Levy for pre-1999 claims - residual portion Funds the ongoing costs of work-related injury claims that occurred prior to 1 July 1999, when the ACC Scheme changed to a full funding model (this levy will cease after 2019).

2.

Self-employed people
Self-employed people pay a Work levy to cover your own work-related personal injuries. You also pay a non-Work levy to cover your non-work personal injuries (except where you are paid income that is subject to PAYE). The amount is based on your liable earnings and what type of work you do (your classification unit). Your self-employed levies have three parts: 1 & 2. The employer Work levy This is made up of two parts as outlined above. 3. Earners levy for 2013/14 non-work claims Funds the lifetime cost of non-work related injuries that occur between 1 April 2013 and 31 March 2014 plus any adjustment for over or under funding of claims in the period from 1 July 1992 to 31 March 2013. This is known as the Earners levy and is charged at a flat rate. For 2013/14 the rate is proposed to be $1.4782 (excluding GST) per $100 of earnings from self-employment.

Work levy rates

What does my ACC Work levy cover?

The majority of your levy goes to covering the cost of work-related claims. The rest of the levy covers ACC operating and injury prevention expenses.

What are the 2013/14 Work levy rates?

The table below shows the final 2013/14 Work levy rates (current portion) for employers and self-employed people compared to last years rates. The levy rates shown are the dollar amounts you would pay for each $100 of wages or earnings from self-employment. All rates shown exclude GST.

Work levy rates (current portion) Classification unit Rate for 2012/13
Change due to previous years capping Average rate change impact

Rate for 2013/14

Impact of change in relativity Base rate for 2013/14 Capping impact 1 Rate for 2013/14

Number

Description

28680

Machinery and equipment repair and maintenance (not elsewhere classified) Domestic appliance repair and maintenance Automotive electrical services Automotive body, paint, and interior repair and maintenance Automotive repair and maintenance (not elsewhere classified)

$1.00

$0.00

$0.00

-$0.02

$0.98

$0.00

$0.98

52610 53220

$1.00 $1.00

$0.00 $0.00

$0.00 $0.00

-$0.02 -$0.02

$0.98 $0.98

$0.00 $0.00

$0.98 $0.98

53230

$1.00

$0.00

$0.00

-$0.02

$0.98

$0.00

$0.98

53290

$1.00

$0.00

$0.00

-$0.02

$0.98

$0.00

$0.98

Capping the changes to Work levy rates - current portion

To smooth the financial impacts of annual levy changes, we cap the current portion of the Work levy for each individual classification unit. In the 2012/13 year the cap meant that levies didnt change by more than 15% in addition to any increase in the average work levy.

Where classification rate changes have not been limited by capping, the impact on the rate will be to cover the net funding shortfall or surplus caused by capping levy rate changes

For the 2013/14 levy year the capping rules will be changed as follows:

increases will be capped at +25% or 4 cents (whichever is the greater) decreases will be capped at -25% in addition to the change in the average rate.

However, we still have to make sure that the ACC Scheme continues to fund the overall expected costs, so any net shortfall caused by the cap is funded by all other Work Account levy payers.

Levy for pre-1999 claims - residual levy portion

The Accident Compensation Amendment Act 2010 changed the way the residual portion of the Work Account levy was calculated:
31 March 2019 was set as the final date for paying off the estimated unfunded

outstanding liability associated with residual claims

the final amount to be funded by the residual levy portion as at 30 June 2009

was calculated and has been locked in. It is not recalculated each year, as was done previously. The residual levy portion for 2013/14 remains at $0.31 per $100 of liable earnings, as this is the rate required to collect the remaining residual amount by 2019. The table below shows the final levy rates for pre-1999 claims to be charged in 2013/14 compared to this years rate. The levy rates shown are the dollar amounts employers and self-employed people pay for each $100 of wages or earnings. All rates shown exclude GST.

Classification Unit number and description 28680 52610 53220 53230 53290 Machinery and equipment repair and maintenance (not elsewhere classified) Domestic appliance repair and maintenance Automotive electrical services Automotive body, paint, and interior repair and maintenance Automotive repair and maintenance (not elsewhere classified)

Actual rate for 2012/13 $0.49 $0.32 $0.25 $0.52 $0.25

Rate for 2013/14 $0.49 $0.32 $0.25 $0.52 $0.25

Is there anything else I have to pay?

Employers and self-employed people also pay a Health and Safety in Employment (HSE) levy. This levy is collected by ACC on behalf of the Ministry of Business, Innovation & Employment (formerly Department of Labour) and pays for the operation of occupational safety and health services.
10

The HSE levy is charged at a flat rate. For 2013/14 the rate is to remain at $0.05 (excluding GST) per $100 of wages or earnings from self-employment. All rates shown exclude the HSE levy.

What is the total value of my ACC levies for 2013/14?

If you want to work out how much your ACC levies for 2013/14 are likely to be, go to www.acc.co.nz/Calculator and use our online levy calculators.

Why do levy rates change?

The 2013/14 levy assessment is not done in isolation. To work out what we need to collect, we look back at the claims weve received in the past from each levy payer group. Using this information we predict how many claims well get in the next year and what theyll cost (not just in the next year but until each claim is closed). We can also include a funding adjustment to allow for any surplus or shortfall in our previous estimates of the ongoing costs of claims for injuries that happened after 1999. The overall aim is to ensure the ACC Scheme continues to be funded adequately and to manage levy stability and smoothing over time. ACC also takes into account changes in: the number of employers and self-employed people in each levy risk group (including any classification units moving into and out of the group) the wages paid by employers and earnings of self-employed people in each levy risk group (referred to as simply earnings below) the expected number of claims the expected cost of claims.

11

Levy risk group experience

What is the claims trend in this levy risk group?

The table below shows how claim numbers and costs changed for Levy Risk Group 943 (Repair and maintenance (medium-risk group)) over the past four years. The number of claims includes entitlement claims (claims that had entitlements paid, such as weekly compensation or social rehabilitation costs), and includes an allowance for unallocated claims (claims reported but not assigned to a valid classification unit). The total cost of claims includes all entitlement and non-entitlement costs as well as an allowance for incurred but not reported claims and an allowance for reopened claims. Claim costs for all years have been inflated to values consistent with projected costs for claims occurring during the 2013/14 accident year. This means that changes seen from year to year are not impacted by normal cost inflation and are reflective of real changes in experience for the industry/levy risk group.

For levy setting purposes, where standard employers and self-employed people represent a small proportion of the total workforce in a levy risk group, we include the earnings and claim cost data from Partnership Programme employers.

2008/2009
Number of entitlement claims 499 0.30 $11.11 m * * *

2009/2010
434 0.31 $8.73 m * * *

2010/2011
425 0.31 $10.48 m * * *

2011/2012
389 0.30 $8.18 m * * *

Self-Employed and Standard Employers (ie Number of entitlement claims not in the Partnership per $ million earnings Programme)
Total cost of all claims Number of entitlement claims

Employers in the Number of entitlement claims Partnership Programme per $ million earnings
Total cost of all claims

Note: * indicates that the figures cannot be provided for confidentiality reasons as there are fewer than three levy payers in one of the categories.

Note: ACCs Partnership Programme is a self-management option for organisations with their own injury management and rehabilitation capability and sufficient financial resources to deal with work injuries to their own employees. (For more information about the ACC Partnership Programme see the Glossary of Terms at the end of this document.)

12

What is the earnings trend in this levy risk group?

The table below shows how the total earnings for Levy Risk Group 943 (Repair and maintenance (medium-risk group)) have changed over the past four years. Earnings have been inflated to values consistent with expected earnings paid for the 2013/14 year, which is more reflective of real changes in the industry.
2008/2009 Self-Employed and Employers Standard Employers (ie not in the Partnership Earnings Programme)
Number of Self-Employed and 11,253

2009/2010
11,826

2010/2011
11,656

2011/2012
10,940

$1,659.17 m

$1,384.36 m

$1,387.43 m

$1,296.17 m

Number of Employers

Employers in the Partnership Programme

Earnings * * * *

Note: * indicates that the figures cannot be provided for confidentiality reasons as there are fewer than three levy payers in one of the categories.

How does ACC set fair levy rates?

The 2013/14 levy rates in this document are based on a forecast about what will happen in the future. We look at trends from past years and make a judgement about whether those trends are likely to continue in the future for claims in the Work Account. To allocate the average 2013/14 Work levy rate between levy risk groups, a weighted average of the past seven years of claim costs and earnings is used. These weighted average claim costs and earnings are then converted to a cost per $100 of earnings for your levy risk group (called the claims to earnings ratio). These are credibility adjusted if there is insufficient information in your levy risk group. This translates into a levy rate that will be needed to cover the expected cost of claims in 2013/14.

13

What does this mean for setting the levy rate?

The graph below shows the trend in the ratio of claims to earnings for employers and selfemployed people in this levy risk group, and the weighted average used to set the final 2013/14 levy rate.
Claims Costs per $100 of earnings for Employers and Self-Employed

$1.00 $0.80 $0.60 $0.40 $0.20 $0.00 2007/2008 2008/2009 2009/2010 2010/2011 2011/2012 2013/14 forecast 2013/2014

Actual

We then add allowances for operating and injury prevention expenses plus adjustments for the over or under funding of claims in the period from 1 July 1999 to 31 March 2013.

How can I work out my ACC levies for 2013/14?

To work out your ACC levies for 2013/14 go to www.acc.co.nz/Calculator.

What can I do to reduce rates?

Everyone can contribute to lowering levy rates. Lower injury rates are the key to reducing your levy rate. ACC can reward you for safe workplace practices by discounting your levies. Programmes have been designed to meet the needs of differing business types. So if you want to pay a lower rate, you can help reduce it by: keeping yourself safe keeping your workers safe assisting injured people back to work more quickly

14

learning from others in your levy risk group to find ways to reduce levies in the group overall establishing and maintaining effective workplace health and safety systems and practices as appropriate to the scale of your business activity and the level of risk evident maintaining proactive and regular contact with ACC.

Find out more about injury prevention by going online to www.acc.co.nz/preventinginjuries

ACC workplace safety incentive programmes and injury management resources

ACC offers incentive programmes that can reduce the levies you pay if your business can demonstrate acceptable workplace safety practices. We also have resources to assist employers to help get injured staff back to work sooner. For more information about these programmes and resources go to:

Employers
www.acc.co.nz/for-business/small-medium-and-large-business/how-to-pay-less www.acc.co.nz/for-business/small-medium-and-large-business/managing-employeeinjuries

Self-employed
www.acc.co.nz/for-business/self-employed/how-to-pay-less

What is experience rating?

Experience rating was introduced on 1 April 2011. Its a system for modifying the current portion of a businesss Work levy based on its claims history. Experience rating means employers that have better-than-average injury and return-to-work rates will receive a discount on the current portion of their Work levy, while those with worse-than-average claims experience will receive a loading on the current portion of their Work levy. Some businesses and self-employed people are exempt and their levies will continue to be calculated as usual. The Experience Rating Programme applies to businesses and business groups whose current portion of the work levy is greater than or equal to $10,000. A discount or loading of up to 50 percent may be applied to their Work levy (current portion) as a result of their claims history. For more information on experience rating, how it works and how it might apply to you, please visit www.acc.co.nz/er.

15

The No-Claims Discount Programme applies to customers (including non-PAYE shareholder employees and self-employed people) that pay an annual Work levy of less than $10,000 (current portion). Under this programme a discount or loading of 10 percent may be applied to their Work levy as a result of their claims history.

Where do I get more information?

If you have any questions about the information in this document, you can talk to your ACC Relationship Manager (if you have one) or contact us at: business@acc.co.nz employers 0800 222 776 self-employed 0508 426 837 agents 0800 222 991

16

Glossary of ACC terms

ACC Partnership Programme

A programme that allows an employer to act on behalf of ACC, managing workplace injuries for their employees and providing entitlements (e.g weekly compensation) under the Accident Compensation (AC) Act 2001. These organisations pay medical treatment and rehabilitation costs as well as entitlements. For more information about the ACC Partnership Programme go to www.acc.co.nz/forbusiness/small-medium-and-large-business/how-to-pay-less.

Business industry description code (BIC)

Description of the nature of business or trade. You must provide the business industry description when registering for GST, and when completing the IR3, IR4 or IR7. Inland Revenue will provide the business industry description to ACC and we will convert the BIC to a classification unit.

Classification unit (CU)

Business activities are classified, or grouped, so that the cost of work injuries is distributed fairly amongst those businesses with similar characteristics. The classification unit is the business activity classification.

Current levy portion

Funds the lifetime cost of work-related injuries that occur between 1 April 2013 and 31 March 2014, plus any adjustment for over or under funding of claims in the period from 1 July 1999 to 31 March 2013.

Experience rating
Experience rating is the method of modifying levy rates for large employers based on an individual employers claim experience. The large employers levy is adjusted depending on whether their experience rating is better or worse than the average of the other employers in their industry group.

17

Levy
Term used to describe amounts charged to cover past, current and future costs of claims for work-related, non work-related and motor vehicle injuries. Previously referred to as premiums.

Levy consultation
The period of public consultation when businesses, communities and individuals throughout New Zealand are invited to provide a submission ie feedback and ideas on our levy recommendations and other plans for the coming year.

Levy Risk Group (LRG)

ACC combines business industry classification units (CUs) into larger levy risk groups to accurately estimate the cost and frequency of future injury claims.

No-Claims Discount Programme

Applies to customers (including non-PAYE shareholder employees and self-employed people) that pay an annual work levy (current portion) less than $10,000. Under this programme a discount or loading of 10% may be applied to their Work levy as a result of their claims history.

Residual portion of the ACC Work account levy

Funds the long-term claims of the ACC scheme and covers the cost of treating and rehabilitating workers who were injured in the workplace before 1 July 1999 or suffered non work-related injuries prior to 1 July 1992.

18