ACC’s outstanding claims liability dropped $355 million in six months

The numbers are moving in the right direction

For the first time in years, ACC has something to boast about. The number of clients on long-term weekly compensation has stopped growing, and the Outstanding Claims Liability, the actuarial estimate of every future claim cost, fell by $355 million in the six months to December. One-to-one case management, quietly abandoned in the lean years, has been restored.

The Second Quarterly Performance Report for 2025-26 fills in the detail. Claims costs are running 4% below budget, the long-term claims pool grew by just 19 net claims in the December quarter, and the pool sits at 24,772 claimants with a growth rate down to 2.3%. These are real improvements against a scheme that was projected to run a $26 billion deficit on its old trajectory.

More staff, not fewer

Here is the part that does not fit the usual government efficiency story. ACC delivered these gains by hiring aggressively. In 2023 the Crown entity employed 4,000 full-time-equivalent staff. By June 2026 that had reached 5,000, a 25% increase across roughly three years of coalition government.

The coalition’s general instinct is to do more with less. ACC was explicitly authorised to do more with more, and the logic holds up. The problem was never garden-variety bloat. Through years of decline, ACC kept people on income replacement but did a poor job of treating them and returning them to work. The extra 1,000 staff are largely claims managers, and ACC’s external actuary estimates that getting recovery right could strip $500 million to $800 million off the cost of existing claims within two years. If that arithmetic proves out, the wage bill is a bargain.

The dispute surge is the warning light

The uncomfortable underside of the turnaround is a sharp rise in legal challenges from claimants disputing ACC’s refusals for cover or care, flagged in the NZ Herald’s reporting. When an agency cuts or declines support more often, the people affected push back.

The question is whether people are leaving long-term support because they have genuinely recovered, or because they have been squeezed out to hit cost targets. Back in January 2025, lawyer and ACC advocate Warren Forster warned that the plan risked shifting cost rather than removing it. “It’s not only going to cost ACC more, it’s going to cost taxpayers more,” he told RNZ, arguing the burden simply relocates to the wider welfare system. His figures at the time showed only 10% of people taken off long-term claims returned to work over the previous five years. That is the tell to watch. A claimant who exits ACC but cannot work has not been saved, just moved to a different budget line.

The structural math is still brutal

Strip out the good quarter and the scheme remains deep underwater. The Annual Report 2024-25 recorded a $1.5 billion net deficit, with the OCL rising $3.3 billion to $63.6 billion. The Financial Condition Report 2025 forecasts underwriting deficits of $2.0 billion to $2.6 billion a year for the next four years, with the funding position eroding by up to $2.1 billion annually. Combined new-year costs for 2025/26 are pegged at $2,556 million.

The plan is to reach a $2 billion surplus by 2030. That is a $28 billion swing from the old trajectory, and it now rests entirely on operational improvement. After considering it, the government chose not to narrow the scheme’s remit following a landmark court decision, abandoning the most direct structural lever available. Staying the course puts all the weight on the case managers delivering.

Why employers should be paying attention

Businesses fund the Work Account, and higher-risk sectors such as construction, manufacturing and agriculture carry the heaviest load. BusinessNZ’s May 2026 submission on the ACC Funding Policy Statement technical update shows organised business is already fighting over the funding framework, and for good reason. Today’s operational fix becomes tomorrow’s levy argument.

If the rehabilitation gains are genuine and durable, the investment in staff pays for itself and the levy pressure eases. If the exit numbers are being flattered by declined claims that simply resurface elsewhere, employers will end up paying for the same injuries twice, once through ACC and again through the wider tax base. The early indicators are encouraging. The next two years of dispute data will tell you which story is true.

Sources

• ACC turnaround: Cost growth slows but hiring and client disputes surge (2026-07-23)
• ACC Second Quarterly Performance Report 2025-26 (2025-12)
• ACC Annual Report 2024-25 (2025)
• ACC Financial Condition Report 2025 (2025)
• ACC’s plan to avoid $26 billion deficit may cost taxpayers more, lawyer claims (2025-01-24)
• ACC measuring wrong figure when it comes to getting people back to work – Oliver Hartwich
• BusinessNZ Submission – ACC Funding Policy Statement Technical Update (2026-05)