Growth in sensitive claims ‘significant risk’ to ACC, Treasury warns
Wednesday, 6 May 2026
Documents released by the Treasury reveal frank conversations over the credibility of financial targets being discussed for ACC ahead of it announcing an ambitious “turnaround plan” in January.
They also show Treasury has been voicing concern — even after the plan was unveiled — that growth in so-called sensitive claims for mental injuries lodged by victims of sexual abuse presents a “significant risk” to the financial sustainability of the state-run insurance scheme.
In its Half Year Economic and Fiscal Update (Hyefu), published in December, the Treasury forecast the difference between ACC’s assets and its liabilities would blow out from an accumulated deficit of nearly $14 billion, to $23b in the year ending June 2030, without action.
But ACC chairperson Jan Dawson indicated when she announced the turnaround plan that she was confident it could turn that into a $2b surplus. Stewart McRobie described the surplus as “a scenario it had modelled”.
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ACC is counting on a $14b paper improvement to its accounts from a new international accounting standard, IFRS17, and other technical changes that will allow it to be less conservative about the financial risks that it currently needs to account for.
But McRobie made clear its hoped-for surplus assumed it could also make real savings of $14b over the period up to 2030. Only about $3b of that has been built into the Treasury’s forecasts to date.
The documents released by Treasury reveal ACC’s top accountant, chief actuary Nina Herries, raised concerns over ACC achieving what Treasury described as some of “the stretch targets” being modelled by ACC last year.
The documents show ACC was modelling a 2030 surplus of $2.3b at the time Treasury mentioned her concerns to ministers.
But chief executive Megan Main said the advice Herries provided referred to “an earlier set of proposed targets” to those associated with its subsequently released turnaround plan.
The $2b figure referred to by Dawson showed what ACC’s balance sheet position “could be” if the targets outlined in ACC’s current service agreement with the Government and Statement of Intent were met, she said.
The Treasury told ACC Minister Scott Simpson in December that agreeing to the stretch targets then being discussed “presents risks for you as the minister”.
A month earlier it reminded him that forecasts “must be credible and reflect a ‘best estimate’ of performance”.
The Post revealed last year that the Government considered cancelling sexual abuse victims’ entitlements to more than $3b of compensation by narrowing the scope of ACC cover in order to help bring ACC’s books back into balance.
It got as far as drafting legislation, before deciding to shelve that plan.
However, it is understood that there is a view within the Beehive that only kicked a can down the road and that changes will still need to be made to eligibility rules down the track to ensure ACC can operate within its current funding arrangements.
The Treasury told Simpson in a March report that ACC’s performance on a range of measures had been improving, but that achieving some of its targets for the year to June would be “challenging”.
ACC was managing about 30,000 active sensitive claims, with between 50 and 100 new claims received every day, it said.
The growth in those claims presented a “significant risk” to the financial sustainability of the scheme, it said.
A landmark court ruling in 2024 that meant abuse victims were entitled to compensation for lost earnings from the time abuse occurred, rather than when they first came forward for treatment, has been expected to cost ACC $3.3b.
“ACC estimates that the average delay between when people suffer a mental injury and when they come forward to ACC is 16 years,” Treasury said.
“The scale of back-payments for sensitive claims is significantly exceeding the level anticipated and is on track to be double what was budgeted for in the year to June.”
Simpson said ACC’s turnaround plan asked it to be “ambitious” while ensuring clients would be appropriately supported.
“I’m pleased to see progress on many targets to date. March’s progress report shows more New Zealanders are returning to work sooner, with a 92% one-year return-to-work rate and long-term claim growth down to 0.3% — the lowest in over a decade.”
Labour ACC spokesperson Priyanca Radhakrishnan said she would be looking closely at some of the concerns raised around the stretch targets.
“It’s crucial that the scheme remains fair and sustainable, and the Government must ensure any changes do not negatively affect people getting access to support they need,” she said.