Report

ACC's claims liability is $66 billion, about $32,000 per household, and inflation is outrunning the turnaround two to one

Source: ACC, Quarter Three Performance Report 2025/26 (March 2026)

ACC now expects to pay $66.0 billion on injury claims it has already accepted. Its turnaround plan cut $652 million off that bill in nine months. Inflation added $1,457 million back, more than twice as much.

By Henry Smith · ACC · 2026-07-08

What this means for you The levy taken out of your wages funds the ACC account in the worst shape, and that levy is already set in law to rise each April through 2027. This report is the starting position for whatever rate gets set after that. ACC is also approving fewer planned operations, which pushes more treatment toward the private system.

ACC expects to pay out $66.0 billion on injuries that have already happened. That is not a guess about future accidents. It is the lifetime cost of every claim already on ACC's books, a figure ACC calls its outstanding claims liability. The bill grew $2.4 billion in the nine months to 31 March 2026 (ACC, 8 July 2026, retrieved 20 August 2026).

Spread across the country's 2,064,700 households, that is just under $32,000 a household (Stats NZ households, 7 April 2026, retrieved 20 August 2026). Split across the 2.89 million people in work, it is about $22,800 each (Stats NZ labour market, retrieved 20 August 2026).

ACC's report tells the story of a turnaround that is working. The numbers inside tell a second story. Inflation is adding to the bill more than twice as fast as the turnaround takes it off.

What did ACC report?

ACC published its third quarterly report for 2025/26 on 8 July 2026. The headline is good: ACC is losing far less money than planned. The deficit so far is $62 million, against a budgeted $627 million (ACC, retrieved 20 August 2026).

The full year looks better too. ACC now expects to lose $2,158 million, which is $726 million less than the $2,884 million it budgeted (ACC, retrieved 20 August 2026).

Two things drive the good news. Claims payments are $380 million under budget. ACC credits faster returns to work, plus "a pull back of elective surgery levels", meaning fewer planned operations. Investment income is $574 million above budget (ACC, retrieved 20 August 2026).

Levy income is the sour note. ACC funds itself with levies on wages, on employers and on vehicles. That money is coming in $259 million short of budget, a 7% miss, which ACC blames on "weaker labour market conditions" (ACC, retrieved 20 August 2026).

The claims bill is the sore point. The report says it "has increased $2.4 billion to $66.0 billion year to date, largely due to the impact of economic factors" (ACC, retrieved 20 August 2026).

Two forces pulled against each other inside that number. ACC's Turnaround Plan took $652 million off the bill. That plan is its programme for getting injured people back to work sooner. Then inflation put $1,457 million back on, because ACC now expects higher wage and price rises on the claims it already holds (ACC, retrieved 20 August 2026).

How can the bill grow while the plan is working?

For every dollar the turnaround took out, inflation put back $2.23

Two lines in the report's breakdown need translating. The "expected increase" is growth baked into the bill every year, the way interest builds on a mortgage. It happens even when everything goes to plan. The "discount rate" is the interest rate ACC uses to put future payments in today's dollars. When it rises, the bill shrinks on paper.

Inflation added $1,457 million over those nine months, while the turnaround took off $652 million (ACC, retrieved 20 August 2026). That is $2.23 back on the bill for every dollar the plan got off it.

The discount rate moved ACC's way and it still was not enough. The bill closed $339 million above the $65,625 million ACC budgeted (ACC, retrieved 20 August 2026).

What moved the claims liability, nine months to 31 March 2026	$m
Expected increase (growth built in every year, the way interest builds on a mortgage)	+1,901
Inflation assumptions (higher future wage and price growth)	+1,457
Cost growth ACC cannot control (mostly Sensitive Claims, its cover for mental injury caused by sexual violence)	+214
Discount rate rising to 5.34% from 5.15%	-513
Turnaround Plan savings (ACC's "influenceable release")	-652
Net increase ($63,556m to $65,964m)	+2,408

Components sum to +$2,407m; ACC's printed figures carry $1m of rounding. All figures from ACC's Quarter Three Performance Report 2025/26, pages 5 and 21, retrieved 20 August 2026. The division and the 2.23-to-1 ratio are ours.

That $652 million is a net figure, and the gross tells you more. ACC saved roughly $1,110 million, most of it on weekly compensation, the income it pays you while an injury keeps you off work. Then Sensitive Claims took $441 million of that straight back (ACC, pages 6 to 8, retrieved 20 August 2026).

Four dollars in every ten ACC saved were gone before inflation was counted.

Is $32,000 per household a real bill?

No. Nobody is sending you an invoice. That $66.0 billion is the lifetime cost of claims ACC has already accepted, and ACC holds $55.6 billion of investments to pay them with. Count what the scheme owns against what it owes and it is $13.9 billion short (ACC, page 20, retrieved 20 August 2026).

Divide that shortfall by households and you get about $6,700 each. The $32,000 is the size of the promise. The $6,700 is the part nobody has paid for yet, and this year's forecast loss adds roughly another $1,045 per household to it (ACC, retrieved 20 August 2026; the per-household sums are ours).

Whose levies are falling short?

Yours, most likely. ACC keeps a separate pot for each group that pays it: employers, vehicle owners, and wage earners like you. The Earners' Account holds the levy taken out of your wages.

The shortfall is not spread evenly across them. Of the $259 million of missing levy income, $224 million sits in the Earners' Account, or about 87 cents in every shortfall dollar (ACC, page 19, retrieved 20 August 2026; the account split is our arithmetic).

That same account is in the worst shape. Its funding ratio, meaning how much of its future bill it already holds in assets, is 79.1% against a 100% target (ACC, page 21, retrieved 20 August 2026). It was 83.5% in June 2025.

Account	Funding ratio at March 2026 (target 100%)
Earners' (levy on wages)	79.1%
Motor Vehicle	131.5%
Work (employers)	135.1%
Non-Earners' (government-funded, not levied)	49.9%

All ratios from ACC, page 21, retrieved 20 August 2026.

There is a squeeze inside that account the report does not spell out. The wages ACC collects its levy on are barely moving. Unemployment sat at 5.3% in the March 2026 quarter, and pay across the economy rose just 2.0% over the year (Westpac IQ, 6 May 2026, retrieved 20 August 2026).

The wages ACC pays compensation against are doing the opposite. They are climbing at about 6.5%, where ACC had budgeted about 2.5% (ACC, page 7, retrieved 20 August 2026). Its income rides the weak number. Its costs ride the strong one.

The levy on your wages is already set in law to rise twice more. It goes from $1.67 per $100 you earn in 2025/26 to $1.75 in 2026/27, then $1.83 in 2027/28, GST included (Inland Revenue, retrieved 20 August 2026). That published path stops on 31 March 2028.

ACC has to consult on the rate that follows before that date. It goes into that consultation with the wage-earner account below target, levy income short and a bill inflation keeps pushing up. Nothing here points to the next ask being smaller.

What does this mean for my cover?

ACC covers injury and never illness, and this report shows the injury scheme tightening at the edges. New decision tools for planned operations, such as knee and shoulder repairs, are "lowering approval rates from historical baselines". ACC is also going back over home help and care support, "reducing or stopping entitlements where clinical need was no longer evidenced" (ACC, page 6, retrieved 20 August 2026).

If you disagree with a decision, expect to wait. More people are challenging ACC, and the average challenge now takes 121 days to settle, almost 14 days longer than a year earlier (ACC, page 14, retrieved 20 August 2026). The direction is fewer approvals, and longer waits to argue about them. Health insurance covers that gap from the other side.

A scheme cutting back on support for injured people is not about to start covering illness. If your household budget assumes your pay keeps arriving when you cannot work, that assumption only holds for accidents. Income protection extends it to illness. No levy rise buys you that.

What we could not check

The report contradicts itself on one figure: what it saved on home help and care support, which it calls social rehabilitation. Page 5 says about $130 million, page 6 says about $180 million, page 7 nets to $179 million. We used page 7, the one that reconciles (ACC, pages 5 to 7, retrieved 20 August 2026).

The "$574 million higher than budget" investment income is two things added together: $104 million of interest, dividend and rent above budget, plus $470 million of gains on ACC's investments. Both are our sums of the five account columns (ACC, page 19, retrieved 20 August 2026). The report never shows that split.

The report prints no publication date. Our 8 July 2026 date comes from the PDF file's metadata.

Stats NZ's own pages returned only their titles on 20 August 2026. We confirmed the 2,064,700 household figure through Scoop's republication of the Stats NZ release of 7 April 2026. We confirmed the 2.89 million employment level through Trading Economics' copy of the official employment survey, which records 2,892,000 employed in the March 2026 quarter. Both are second-hand copies of Stats NZ data and we cite them as that.

Nothing in the report says what the next levy consultation will propose, or when it will run. The reading that it inherits this arithmetic is ours. The claims bill is an estimate made by actuaries, the people who price future claims, and it moves when their assumptions move. The per-household figures show scale, not a bill.

Sources

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