Maximum adjustment in levy increases for businesses in the ER Programme
Any experience rating adjustment is based on an assessment of the claims history for each year in a business’s three-year levy period.
|The current maximum levy increase from experience rating is 75%. We’re proposing that should be raised to 100%. This means we would more fully recognise a business which has a claims history that is significantly worse than the average for similar businesses.|
These changes complement the current incentives for businesses to focus on building a safety culture and reflect our commitment to reducing workplace injuries.
The additional levy received will be used to reduce the average Work levy we charge businesses (from just under 3 cents to 2 cents per $100 liable earnings).
How it would work
We propose that from 1 April 2022, the following two changes take effect:
- The maximum levy increase in the Experience Rating Programme calculation is raised from 75% to 100%.
- The current 75% levy increase band is replaced with four new bands from 70%. These new bands would increase the levy in 10% increments up to 100% (i.e. 70%, 80%, 90% and 100%).
What it would mean for businesses
For most businesses, our proposal would mean they’d contribute less towards Experience Rating discounts. This is because the added cost to the average Work levy would decrease from just under 3 cents to 2 cents per $100 liable earnings.
We estimate 14% of 15,000 total businesses in the Experience Rating Programme (usually medium-sized or large businesses) would pay a higher levy as a result of this proposal. However, only 1% would move up by more than one band (i.e. have a greater than 10% levy increase).
What you told us in 2018
We first consulted on this proposal in 2018.
Most people (93%) supported the proposed improvements to experience rating. The former Minister for ACC requested further work be done to better understand the impact of the proposed change to the maximum levy increase on individual businesses (as described further in this proposal). This has required further consultation to be undertaken.