Premium drops - proof in the pudding?

The Australian Competition and Consumer Commission's (ACCC) latest report into public liability (PL) insurance says rates have dropped by 15%. Good news for politicians and organisations wanting cover, but many legal fraternity critics are still dissatisfied.

The report shows the average claims cost decreased by 11% in the first half of 2004.
ACCC's report is the fourth in a series. It was requested by the Federal Government in July 2002 to enable the impact of tort reforms to be assessed.

Tony Goudkamp, President of the Australian Law Alliance - a group that has been one of the most vocal critics of the tort reforms - told Sunrise Exchange News he's pleased to know PL premiums have dropped; but he says the level of reforms implemented across Australia have been unnecessary.

"I welcome the news that premiums have decreased, but I'm not sure that tort reforms are the reason," he said. "I also find it amazing that insurers' profits [from PL insurance] are dropping."

The NSW Government is now working on a no-fault compensation scheme to ensure the needs of catastrophically injured people aren't sidelined by the reforms. No-fault schemes don't have much need for lawyers, but Mr Goudkamp points out the scheme proposed by NSW Premier Bob Carr won't cover pain and suffering or loss of income.

"No-fault schemes sound great but they're nothing but minimalist regimes," he said.

Victorian Finance Minister John Lenders will meet with lawyers in April to discuss whether the tort reforms are working, and Mr Goudkamp says he hopes Mr Lenders will "keep an open mind when considering the ACCC report".

Professional indemnity premiums also fell by 17% in the six months to 30 June last year, even though the average claims cost increased by 21%.

ACCC Chairman Graeme Samuel (pictured) says the data suggests claimants in NSW and Victoria rushed to file claims in court before the reforms were introduced, so "claims that would ordinarily have been filed in 2003 and 2004 were brought forward to 2002".

Insurance Council of Australia (ICA) Executive Director Alan Mason says the net effect of reforms on the number of claims filed in court is something that will only become clear over the next few years.  He believes the ACCC report illustrates how the market has stabilised and enabled insurers to deliver lower premiums.

"Insurers have opened their books to the scrutiny of the ACCC for the past two years and the most recent report confirms anecdotal evidence, and data from various industry surveys that the market has markedly improved, and that availability of cover is no longer an issue," he said.   



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