09/88241

Executive summary

Cabinet has decided that a provision will be included in the Injury Prevention, Rehabilitation, and Compensation Amendment (IPRC) Bill 2009 to require ACC to prepare an actuarial report for the Minister for ACC to table annually in Parliament.

You are asked to decide the nature of this financial condition report so that the relevant provision can be drafted in time for inclusion in the Bill.

Recommended action

1. Note that on 17 August 2009 Cabinet agreed [CAB Min (09) 29/8] that a provision be included in the Injury Prevention, Rehabilitation, and Compensation Amendment Bill 2009 to require ACC to table their actuarial report or financial statements annually in the House, with details to be decided by the Minister of Finance and the Minister for ACC
2. Note that because ACC's financial statements are already presented to Parliament as part of ACC's annual report, officials have interpreted the Cabinet decision to mean ACC would table a financial condition report similar to that required as part of proposed legislative requirements for New Zealand insurance companies
3. Agree that ACC's financial condition report is the responsibility of the ACC Board, including the responsibility for ensuring that appropriate levels of assurance have been undertaken before presenting the signed report to the Minister for ACC annually, for the Minister to table in Parliament

   AGREE / DISAGREE

4. Agree that the Minister for ACC will provide a copy of each financial condition report to the Minister of Finance

   AGREE / DISAGREE

5. Agree that the IPRC Bill should set out that:
   1. 5.1 ACC must prepare a report that sets out the financial condition of the Corporation and provide this report to its responsible Minister each year

      AGREE / DISAGREE

   2. 5.2 the timing of the provision of ACC's financial condition report be consistent with, and no later than, the requirements for presenting annual reports under the Crown Entities Act 2004

      AGREE / DISAGREE

   3. 5.3 the Minister for ACC shall present ACC's financial condition report to Parliament annually

      AGREE / DISAGREE

   4. 5.4 the purpose of ACC's financial condition report is to provide impartial advice in relation to the Corporation's operations, financial condition, and liabilities, discussing the implications of material risks identified, and where these implications are adverse make recommendations for operational and management responses to address these risks

      AGREE / DISAGREE

   5. 5.5 the financial condition report shall:

      either: [Department of Labour and Treasury preference]

      1. 5.5.1 be prepared according to accepted practice in the NZ insurance sector and contain the information required to achieve the purpose (set out in recommendation 5.4)

         AGREE / DISAGREE

      or:

      1. 5.5.2 contain the following, where applicable and taking account of materiality, with the inclusion of matters that are material for the Corporation but are not listed:
         • Scheme overview, including recent experience
         • insurance liability valuation
         • adequacy of past estimates of insurance liabilities
         • asset and liability management
         • capital management and capital adequacy
         • risk management.

         AGREE / DISAGREE

   6. Once you have made your decision, forward this paper to the Minister of Finance for his approval of the recommendations

      AGREE / DISAGREE

Craig Armitage
Deputy Secretary - Workplace
for Secretary of Labour

 

Hon Dr Nick Smith
Minister for ACC

 

Hon Bill English
Minister of Finance

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