Accident insurance covers a wide range of risks of loss or injury due to an accident. Many of these risks were once insured separately, but since the 1960s they have been incorporated into comprehensive general insurance policies.
The need to insure against accidental injury or death caused to others ended in New Zealand in 1973, when the Accident Compensation Commission (Corporation from 1982) began operating. Other types of professional and public liability insurance remained essential for those – such as doctors, lawyers, accountants and company directors – who were at risk of liability for financial loss caused to others due to their work or professional responsibilities. The main type of accident insurance in 2010 was motor vehicle insurance, including third-party cover against damage to other drivers’ vehicles.
Insure it, just don’t drive it
To a South British insurance director in 1913 a car seemed ‘quite a good risk’, but only if it was ‘used for private purposes, and spends a good deal of time in the garage, and has not to stand the congested traffic of town, and is not used for excursions in the country’. 1
When motor vehicles became widely available in New Zealand, a new form of accident insurance emerged. Specialist motoring insurers arrived to compete with the existing general insurance companies. One of these, Wairarapa AA Mutual, offered lower rates for vehicle insurance from 1915, and other motor mutuals soon followed. Fierce competition for customers, and the high number of accidents among novice drivers, meant motor-vehicle insurance was usually unprofitable until the 1930s, when premiums stabilised due to a consensus to minimise competitive rate-cutting.
Insuring against injury or illness was one of the most important functions of the early New Zealand-based friendly societies, based on 19th-century English models. In 1938 the Social Security Act provided for means-tested old age pensions and reduced the need for individuals to insure against illness or depend entirely on savings or charity. Although state-funded health care was available to everyone in New Zealand, private medical insurance became available when the Southern Cross Medical Care Society was incorporated in 1962. A number of other life and general companies later entered the health insurance field.
Workplace accident insurance
From 1882, laws first encouraged, then required, employers to provide some insurance cover for employees who were injured or killed at work. Motor vehicle owners faced a similar legal requirement to insure against death or injury to other people (known as third parties) from 1928. Accident insurance was mainly provided by the accident branches of major general insurance companies, but was also offered by a few specialist accident insurers.
However people still faced great difficulties in receiving adequate compensation for death or injury, whether in the workplace or elsewhere, such as from a motor vehicle accident. The recommendations of the 1967 Woodhouse Commission led to the Accident Compensation Act 1972. Under this act people gave up the right to sue for compensation. The Accident Compensation Commission (ACC) was set up to compensate and rehabilitate accident victims through levies on earners, employers and vehicle owners. A 1973 amendment provided a government contribution to cover non-earners such as children and retired people.
In 1999 the ACC’s state monopoly on accident insurance was briefly opened up to competition from commercial insurance companies – but the legislation was repealed after a change of government the following year. That possibility was raised again after the general election of 2008.