by Sue Bradford
ACC has been hitting the headlines all week, starting with the sacking of Board chair Ross Wilson on Monday and culminating with a total shambles at the Select Committee financial review of ACC yesterday.
Amidst all the verbiage it is a mission trying to work out the true state of ACC, whether there really is the kind of huge problem the Government makes out, and what National actually plan to do about it.
I was looking forward to the two hour Transport & Industrial Relations Committee review yesterday as this is the chance MPs get to ask questions of the Chair and CEO. I had hoped that more light might be shed on a number of key issues.
However, in an unprecedented move ACC Minister Dr Nick Smith turned up unannounced, giving the new Chair John Judge’s apologies as he was away on a cycling trip.
Personally I think it’s great to have the opportunity to quiz Ministers – the problem was that there was no warning of Dr Smith’s intention to appear, and it was most unusual to have no Chair – or any Board member for that matter – present to answer questions.
Nor do I have a problem with Board Chairs getting on their bikes – but that this should take precedence over his work commitments at a time like this does seem a trifle odd.
The meeting turned into a procedural farce, with only a short time left at the end for us to ask questions of anybody.
So – what is the Government really up to?
At this stage, I believe National’s characterization of ACC as being in an almost irretrievably hopeless financial situation is simply very effective political spin.
When the exact detail of ‘ballooning liabilities’ is taken apart (eg see Kris Hall DomPost article 12/3 ‘Govt got it wrong on ACC: actuaries’ and Herald article 12/3 ‘Brian Fallow: ACC hostage to a changing world’ one can see that at the nub of National’s attack is the increase in liability in the nonearners account.
Much of the ‘blowout’ is due to accounting practices and paper losses – as actuary Jonathan Erikson said yesterday:
So on paper the losses have ballooned, when in reality there’s nothing wrong with it.
It is a game of smoke and mirrors.
The next big question is – what is National softening us up for?
Privatisation? Full or partial? A roll back of services? Which? When? Who will be left uncovered? How much will we have to pay for physio treatment?
Nick Smith continues to deny any move to privatise, flying in the face of National’s own pre election policy, and of PM John Key’s contradictory comment that:
ACC would not be privatised, but private companies may have the opportunity to get involved.
I hope more and more people will see through the current PR blitzkrieg on ACC.
Meanwhile, a lot of us here will be doing what we can to defend our public no fault ACC system. While it does have plenty of faults of its own, we cannot afford to lose it.
Published in Health & Wellbeing | Justice & Democracy | THE ISSUES by Sue Bradford on Fri, March 13th, 2009
Tags: ACC, Nick Smith, privatisation
More posts by Sue Bradford | more about Sue Bradford
on the trolls and those who are unable to keep on topic
Sue,
Are you actually denying that ACC is in serious trouble? That it’s costs have not ballooned, but skyrocketed? That, as a nation, we can hardly afford this – especially in view of major costs to be incurred in the future as your colleague Kennedy Graham is advocating re: a 30% decrease in our carbon emissions by 2020?
XChequer
http://thenzhomeoffice.blogspot.com/
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The question here is not of privatization of ACC but rather getting ACC (an organisation and a principle that I very support) back on it’s feet.
XChequer
http://thenzhomeoffice.blogspot.com/
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Several commentators have presented cases demonstrating ACC has actually performed better in its investments than comparable insurance funds in NZ and overseas. Anyone with big money in equity markets has taken a hammering and most much worse than ACC.
But because the National party has an anti-ACC agenda, instead of a pat on the back for doing well (by comparison) in tough conditions, they use the fact of the losses as an excuse for making changes that could see (yet more) NZ business pass into the hands of multinationals.
Why National is so keen to place NZ business in foreign hands, one can only speculate, but that IS the thrust of most of their “pro-business” policies as far as they affect insurance, health and Corrections.
ACC has also seen higher payouts for reasons well documented and over which they have little control and can only respond to.
Sure they could do a better job. The point is, they have already done a better job than most in their class of organisation.
National isn’t interested in the truth – as usual – so I remain uninterested in National as a political choice.
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Outinfront,
“Several commentators have presented cases demonstrating ACC has actually performed better in its investments than comparable insurance funds in NZ and overseas. Anyone with big money in equity markets has taken a hammering and most much worse than ACC.”
It’s not their job to invest money, there are other depts to handle that. And they don’t deserve a pat on the back because the costs of ACC have risen so much, we are in a position where ACC is getting perilously close to not being able to fulfill their core job.
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>>Meanwhile, a lot of us here will be doing what we can to defend our public no fault ACC system.
Well please stop it.
Or whatever. You have no political power now. Thankfully.
Personally, I look forward to covering my own risk, and not supporting the a tragedy of the commons that is ACC.
Guess the rugby-playin’-mountain-bikin-boy-racin’eXXXtreme-sportin-RSI-fakin Nu Zulanders will just have to cover their own risk without me.
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BluePeter, and the 50-200% premium you’ll pay for that is worth is because you know you’re paying extra to punish people you disapprove of?
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I won’t be paying more. I’ll be paying a lot less. I’m very low risk, and any insurance company would be happy to have my business. This will be reflected in the premiums I pay.
>>to punish people you disapprove of?
Is expecting people to have motor insurance “punishing people I don’t approve of”, or is expecting they behave like responsible adults?
People can do whatever they like. Good on ‘em. Just don’t expect me to pay for their misadventures.
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exactly
the the scheme is one giant rip off, open to abuse by those who pay nothing into it
Serious Question- do beneficiaries pay a portion of their benefit to cover their ACC costs ?
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@BluePeter
You wish to change from an insurance system which was rated as one of the best? Seems odd that you would want to downgrade your coverage.
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this all has echoes of the bullsh*t slung to justify privatising electricity..
http://whoar.co.nz/2009/the-government-seems-to-be-preparing-the-ground-to-privatise-acc/
phil(whoar.co.nz)
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Xchequer said: “It’s not their job to invest money, there are other depts to handle that.”
Insurance companies invest money every day. Please don’t talk out your mouth hole if you don’t know what you’re talking about.
“And they don’t deserve a pat on the back because the costs of ACC have risen so much, we are in a position where ACC is getting perilously close to not being able to fulfill their core job.”
Which costs?
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>>You wish to change from an insurance system which was rated as one of the best?
Well, if you say it’s the “bestest eva”, then that’s all the data I need!
Could you come up with an argument that’s…well, a lot less stupid?
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The NZCTU have just publsihed a fact sheet on the ACC controversy, exposing the lies and spin being put forward by Nick Smith to soften up public opinion for the Nats’ privatisation plans.
You can download it here (thanks to Tane at The Standard) as a pdf.
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@BluePeter-
The irony is quite rich when someone who lacks the intellect to differentiate between “ACC is THE best” and “ACC is one of the best” is attempting to call other people stupid.
It was the Price Waterhouse Coopers report which found ACC to be one of the best and recommended against privatization.
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Firstly OutinFront, Insurance companies don’t have taxpayer money. they are commercial enterprises.
Secondly, the costs that have been rising by 12% every year for the past 6 years and
Thirdly, do you need to resort to insults to try and win an argument or shall we just put it down to you having a bad day?
XChequer
http://thenzhomeoffice.blogspot.com/
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And why are people repeatedly quoting a bloke from a company that failed to get the contract i.e Erikson Actuaries? One would have thought that the guys who did the work and have all the data would know – not the guy that failed.
XChequer
http://thenzhomeoffice.blogspot.com/
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So its okay for you XChequer to quote a Minister on defence as an argument, but when people in here speculate that there may be some white washing going on, you feel your in the superior position?
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>>Price Waterhouse Coopers report
The very same report that found the budget blowout.
“One of the best” for whom? At what price?
If it is one of the best, then it will have no problems competing in the open market. Personally, I’d rather have a choice, because my premiums are way too high for the risk I present. There is also no incentive for workplaces to implement better safety and care because they pay the same premium regardless.
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If you recall New Zealand already tried and failed at opening it up to competition and it was a failure. Employees found themselves getting shafted when they tried to make claims, as the companies did everything they could to maximize their profits.
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>>it was a failure.
Quite the reverse. It was working well. Lower premiums and better service through competition and greater efficiency.
>>Employees found themselves getting shafted when they tried to make claims
No more so than get shafted now.
In any case, if you want to stay with ACC once it is opened up to competition, that’s your call.
I will be going elsewhere.
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I still don’t see why ACC needs a fund.
Sure, they have known liabilities going into the future, but they also have an income stream to cover those liabilities. (Unlike private insurers, who need to allow for a drop off in premium-paying business).
They should be able to set charges each year at the level needed to cover payments.
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My limited experience of insurance companys is that they try and SCREW you.
Now maybe it was just misfortune that I was treated in such a way that I had to go to the insurance ombudsman to get satisfaction ……..
I certainly would not want my future income dependent on the insurance company shysters …………. especially as the reason for it seems to be that the nats receive a lot of money from the insurance industry.
Seems to be a bit of a trend with their policys ………
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So, the objections so far is that insurance companies won’t pay out?
Yes, we simply must not have private car/home/contents/business/health/accident insurance because insurance companies never pay out.
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BluePeter, take a look at the US insurance system, and watch Sicko, and then come back here.
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That said, Micheal Moore has a history of tackling US insurance companies over a range of issues, in previous movies as well. So might pay to watch those while your at it.
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>>take a look at the US insurance system,
We don’t have the US health system, so it’s not applicable. What we’re talking about here is the way you insure for accidents.
One way is to be assessed on your own risk and pay for that. Another way is to have ever increasing amounts taken from you, regardless of how careful you are, in order to pay for every eXTREmE sport lunatic who thinks riding a bike down a cliff is a good idea.
PS: I’ve seen Sicko. Having lived in England myself, Moore is spinning a fantasy. The reality is you can wait weeks to see a GP in London. Cheery picking.
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# naturalhighNZ Says:
March 15th, 2009 at 12:08 pm
BluePeter, take a look at the US insurance system, and watch Sicko, and then come back here.”
You’ll enjoy it Blue…its a great fictional comedy farce that praises Canadas and Britians State health systems while bagging the Us’s as “inferior”..you can imagine the laughs you;ll be having.
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I’ve seen Sicko.
Good rant.
But he cherry picks the facts he likes, and ignores those he doesn’t.
Besides, the US health system is a straw man. What we’re talkign about here is opening up accident insurance to competition.
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I’ve been at the Green Party’s policy conference all weekend and have only just found the time to respond. XChequer, you ask me in the first comment on the thread if I am denying that ACC is in serious trouble.
Well yes, I am, and it seems that a number of reputable economic commentators agree with me. Have a look at this opinion piece by Rod Oram in yesterday’s Sunday Star-Times.
He points out:
I remain convinced that, while ACC has its failings, they require some tinkering around the edges, rather than the slash and burn approach that Nick Smith’s spin seems to be trying to prepare the public for.
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As well as being economical with the truth to pave the way for his privatisation programme, Smith also appears to be just plain incompetent. He doesn’t even seem to be able to sack the ACC Board Chair properly.
Surely, if a Minister wants to sack a Board Chair, he or his advisors would read the relevant legislation first to make sure they get the procedure right. Seems that Brownlee is not the only bumbler in the Cabinet.
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>>while ACC has its failings, they require some tinkering around the edges
Then they’ll be able to compete, so what’s your problem?
You will be free to insure with ACC, or another company.
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BluePeter said: Then they’ll be able to compete, so what’s your problem?
The problem, BP, is that every employer will be required to have a workplace injury insurer. The private insurers will cream off the ones where it is easiest to reduce accident risk by attracting them with lower levies. ACC will be left with the ones that none of the private insurers want. So ACC’s levies will go up, while the private insurers’ levies go down. So ACC won’t actually be able to compete at all, because they will be required to be the insurer of last resort.
So ACC will be portrayed as under-performing and inefficient and then we’ll see the Animal Farm response from right-wing politicians – private good, public bad – and the call to privatise the lot.
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Just like home/motor insurance.
Competition will encourage those in risky areas to clean up their act, or pay higher premiums.
Why should low-risk businesses be subsidising high risk, irresponsible businesses? Why should I be subsidising eXTreMe “sport” masochists and weekend rugby heads who make a point of “goin’ in hard”? They’re wearing physio as a badge of honor, but expect everyone else to foot the bill.
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who is the third person standing for co-leadership..?
phil(whoar.co.nz)
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oh..!..catherine delahunty was on tv3 breakfast telly..
..(fwiw..she did ok..)
..phil(whoar.co.nz)
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“catherine delahunty was on tv3 breakfast telly.”
So nobody watched it then?
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.
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stepen’s good today..
..isn’t he..?
phil(whoar.co.nz)
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lol i just want notifications of what else transpires in this thread, didn’t have anything to say.
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BluePeter Says:
March 16th, 2009 at 9:55 am
> Why should low-risk businesses be subsidising high risk, irresponsible businesses? Why should I be subsidising eXTreMe “sport” masochists and weekend rugby heads who make a point of “goin’ in hard”?
Of course businesses should not be subsidising the treatment of sports injuries. But, how would having a range of providers make it easier to avoid these costs being charged to employers? How does having one insurer make it harder to deal with this problem?
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In other news…..
Car battery problem no longer a problem:
http://www.economist.com/science/displaystory.cfm?story_id=13277371
>>make it easier to avoid these costs being charged to employers?
Charge it to sports clubs.
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# BluePeter Says:
March 16th, 2009 at 11:54 am
>> make it easier to avoid these costs being charged to employers?
> Charge it to sports clubs.
that’s already what’s supposed to happen. Why would it be any harder with a single insurer than with multiple insurers?
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BP,
A large portion of the fees that one must pay to play sports, even at school-level, goes to ACC for just that eventuality.
Toad,
The whole point is that opening it up to competition will result in ACC differentiating its fee struture so that higher risk work places are charged higher fees and lower risk are charged lower. The only reason that ACC would perform more poorly is if they had more dependants or massive beurocracy. If ACC does have more dependants due to a higher rate of pay outs then their fees will reflect this and with competition an indidivual will have a choice as to iff they want the lower fees and tighter payout conditions of a private insurance company or the higher fees and more loose payout of ACC.
Alternativly, we could impliment a court system like I mentioned before based on a contental style court, without even the need for lawyers, to insure payouts are made when they should be made. Make employeers directly responsible for all the costs incurred in treating an individual harms whilst working on their premises and they will have a motive to choose the option that best covers their own hides.
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No Sapient, ACC would perform more poorly because it would be lumbered with the employers that the private insurers don’t want. When employers are permitted to pick their insurer, but one insurer is forced to insure the employers the others don’t want, that insurer (ACC) is at a disadvantage competitively. It is not the level playing field those on the right talk of so often.
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Toad,
An insurance company will likley take any company given sufficent fees, ACC mearly has to do the same.
Anyway, what are these industries that have such high risk that insurance companies would not insure them? Must have absolutly massive profits and pay rates to justify such risk!
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“Quite the reverse. It was working well. Lower premiums and better service through competition and greater efficiency.”
Employees found it quite difficult to get their claims. Insurance companies tried to resist covering medical costs as much as possible. It also created an environment where employees were actively encouraged to not make claims in order to keep said premiums down.
“No more so than get shafted now.”
Agreed on this point. with recent moves by the National led government to cut back on employees ACC rights, it is starting to look quite bad. Although I must admit I am surprised to see you make such a point.
“In any case, if you want to stay with ACC once it is opened up to competition, that’s your call.
I will be going elsewhere.”
The problems I mentioned would be enhanced by ACC. Once again I remind you that the pricewaterhouse cooper review was against opening it up to competition.
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Toad’s comment hit the nail on the head at 9:27.
My 2c… In my experience, the problem is that it is sometimes hard to get treatment and pay for it.
There are times when I have not had an ‘accident’ and have been prompted repeatedly to establish that it was an accident, and put it on ACC. It seems that there must be advantages to the provider over and above getting me on a course of subsidised treatments that makes them so zealous to persuade me even when I offer to pay off my own labour.
Those times it was an accident, and I have claimed, the cover has been most welcome and the support excellent. It is a national asset.
The abuse however is no different from that in direct insurance really. Just yesterday my mechanic suggested I lob a cricket ball through my windscreen so as to claim on my insurance for a new one.
I think ACC need to try harder to stop that kind of buse, and those that go on about extreme sports need to to be disavowed of the idea that that per se is abuse of the system – I am happy that as a country we support people who fail, or who are in need, regardless of their varied (non-criminal) adventures.
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bikemike said: Toad’s comment hit the nail on the head at 9:27.
Actually, bikemike, my 9:27 comment outlines only one of the problems (that the playing field isn’t level so ACC cannot effectively compete).
Another, and possibly more serious, problem is the potential for corruption. Under the private competitive model it is the employer who has the choice of insurer. The injured employee does not – the funder of their treatment and rehabilitation is an insurer chosen not by them but by their employer.
This provides a perverse incentive for employers and insurers to collude to deny that there was a personal injury or to deny that it was work-related. By doing this, employers get the benefit of lower premiums, while insurers get the benefit of lower payouts. Throw in the “company doctor” who is on the employer’s payroll to do assessments of workplace injury claims and therefore has a vested interest in providing assessments favourable to the employer, and you can see the huge potential for corruption. I was working as an ACC claimant advocate at the time of the short-lived 1999-2000 private competitive model being in place, and I saw first hand this type of corruption starting to emerge.
The person who loses out is the injured employee who, not having private insurance of their own because they assumed they would be covered by ACC, has to pay for their own treatment and rehabilitation, or doesn’t get any because they can’t afford to pay.
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“Much of the ‘blowout’ of the liability in the nonearners account is due to accounting practices and paper losses – as actuary Jonathan Erikson said yesterday”
Is there anyone out there who understands accounting? The paper losses on ACC’s investments are, indeed only accounting entries, required by the adoption in New Zealand of International Accounting Standards. However, these have nothing to do with the “blowout of the liability in the nonearners account” because these are losses in the ASSETS of the corporation, not increases in its liabilities. The liabilities in this account are the amounts it is believed, by the corporation’s actuaries, are required to pay out entitlements for claims already approved under the legislation. This includes, for example, weekly payments to people rendered unable to work through stress acquired at the workplace, historic sexual abuse (only remembered after a free counselling session with a counsellor who – after certifying the ‘injury’ – typically priveds some 200 further counselling sessions now paid for by ACC.
PLease establish clearly, for the sake of good debate, the diference between an asset and a loability, and also accept that the concept of insurance and insolvency both require that an insurer have enough assets at any point in time to cover its known liabilities at the same point in time.
Happy daze
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Strings said: “Much of the ‘blowout’ of the liability in the nonearners account is due to accounting practices and paper losses – as actuary Jonathan Erikson said yesterday”
Is there anyone out there who understands accounting?
Now, that’s a bit naughty Strings. What Sue Bradford actually said was “Much of the ‘blowout’ is due to accounting practices and paper losses – as actuary Jonathan Erikson said yesterday.”
Her reference to liability in the non-earners account as being at the nub of National’s attack was in the previous paragraph and it is claer she is not relating the two. It is actually Nick Smith, not Sue, who is deliberately trying to confuse the public by linking these two separate issues.
The increased liability in the non-earners account, as you say, has nothing to do with the loss of value of ACC’s investments. And in the context of the overall difference between ACC assets and liabilities, the shortfall in the non-earners account is miniscule – the vast bulk of the overall deterioration in financial position has been caused by changes in accounting practices and losses on investments – not by losses on any of ACC’s operational accounts.
What’s more, the liability of unfunded claims stretch out for some 40 years before they all require to be funded. Extending the date by which ACC’s liabilities are required to be to be fully funded, together with some relatively small increases in levies and an (admittedly not so small) increase in the appropriation to fund the non-earners account would see ACC right without the slash and burn approach National seems intent on.
Either Nick Smith himself doesn’t undertand the difference between financial position and financial performance, assets an liabilities, and income and expenditure (which I suspect is unlikely) or he is relying on the fact that much of the public don’t in order to create confusion and manufacture a crisis.
Oh, and Stings, you also make reference to “insolvency”. For those who think privatised accident insurance is a good idea, you might like to take a look at the collapse of HIH Insurance, who in 1999-2000 held a significant share of NZ’s privatised workplace accident insurance market. Fortunately, workplace accident insurance had been brought back into the public domain before that happened.
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