A few weeks ago I came off my mountain bike. I was having a brilliant afternoon with a couple of good friends. Winter riding is slipping in the mud, flying through lush native forest and encouraging each other down technical descents. “Nek minute” my bike was gone from underneath me, I flew through the air and landed on my shoulder, crunch.
So begins a long period of rehabilitation, hospital visits, surgery, and physiotherapy. However, the first challenge was to get me out of the park. My shoulder was both broken and dislocated. Unable to move my arm I couldn’t sit up, let alone get myself to the road end.
We were just beyond the edge of suburban Wellington, yet my rescue was complicated. Along with my friends and other mountain bikers who were in the area, it involved three paramedic crews, two 4wd ambulances, the local fire brigade, a second team of firefighters with a 4wd vehicle, two Police Search and Rescue teams and the City Council Ranger. Quite the circus.
I alone caused the accident but I have not been asked to pay a single cent for my rescue or subsequent hospital care.
Who then pays for all these heroes who help people right across New Zealand day in and day out? Because my accident occurred in NZ, it’s paid for by the Accident Compensation Corporation. By comparison if I lived in the USA I would be faced with bills in the tens of thousands.
ACC is a beautiful thing, and I argue a key ingredient to the kiwi way of life. By pooling the accident risk for the entire country, including personal liability, we have created a culture where everyday accidents come without financial punishment. Kiwis can consider a risky endeavor on its merits, or have a visitor break an ankle falling down our front steps, free from the threat of litigation. It’s the legal framework which enables development of technical mountain biking tracks on both public and private land. Earlier this year a study by BERL reported that mountain biking created an additional $15.5 million of economic activity in the Nelson-Tasman region alone. Thank you Kirk Government!
Being compulsory and universal, ACC avoids the problem of adverse selection. That is, where those taking the most risks seek the most insurance cover. Private insurance companies attempt to counter this by charging premiums according to a risk profile, and declining cover for those most at risk. Accurately calculating risk profiles is complicated and gets political. A situation can develop where the pool of insured people are all high risk. This leaves the insurer vulnerable, and premiums high.
I’m not pretending that ACC is perfect. Without doubt it is a massive bureaucracy. The rules and policies can be baffling. Those who rely on the scheme long term can find interacting with the organisation frustrating and aggravating.
Others argue that universal insurance creates a problem of moral hazard, where people are encouraged to undertake risks they otherwise would not. In reality hurting oneself and/or others carries significant non-financial implications. By and large health and safety regulations and potential for prosecution ensure workplaces and public spaces are managed appropriately. Notwithstanding some recent high profile exceptions. I believe this freedom to choose our activities, particularly recreation, without worrying that we might be sued is a core strength of the ACC no fault approach.
Without ACC accidents would still happen, and the cost would have to be borne. Car insurance in Australia is approximately twice as expensive[i], predominantly due to the cost of personal liability.
New Zealanders gave up the right to sue for damages arising from personal injury, and long may that last. No fault, no fear of the litigious bogeyman, no ambulance chasing lawyers, lots of good fun and help there when we need it.
Oh and yes, my bike is fine.
[i] Based on a comparison of online quotes for a 2015 Toyota Corolla