The issue of public liability

Increasing insurance costs have been attributed by many in the community, including business groups and insurers, and by politicians, to our increasing willingness to sue for damages for injuries suffered outside the home. There is a perception that new rules allowing greater advertising by the legal profession have encouraged litigation, and that some ‘high-flying’ legal firms have used the media to encourage class actions and to tout ‘no-win-no-fee’ services.

The legal profession has hit back and has argued that solicitors do not accept cases that lack any merit. They have stated that there is no evidence of a significant rise in the number or size of personal injury claims and that the increase in premiums is more likely to be the result of the consequences of terrorist attacks and the collapse of HIH Insurance.

The Queensland Attorney-General has commented that compensation awarded by Queensland courts was generally less than in southern states and rarely exceeded $100,000. That was because claims were usually determined by a judge rather than by a jury.

In January Joe Hockey MP, suggested that reform of the present common law compensation framework and replacing it with a national scheme may reduce pressure on public liability insurers of large, often unpredictable, court-awarded damages. At that time, he suggested consideration of a scheme similar to that operating in New Zealand. However, it should be noted that this scheme has resulted in the New Zealand Government facing an unfunded liability of $4.9 billion.

The Queensland Government has put a task force together to look at this insurance crisis. The result of the report was released last week. The main recommendation was that further investigation of the feasibility of introducing a group purchasing arrangement for the not-for-profit community sector be undertaken and a call for the government to immediately call for expressions of interest from community groups who wished to participate.

I would encourage community groups to at least investigate this option to see if the bulk purchase as a group, for insurance cover, could be done cheaper than by trying as individual groups.

However much more needs to be done and quickly. Daily some small community group is stopping its activities for fear of liability because they can’t afford insurance. It is imperative that governments state and federal look at the justification for insurance companies to increase premiums often by 700% for covering groups who have never made a claim. A proper risk assessment needs to be done for each group, not a blanket insurance hike for all groups whether they have claimed or not.

Secondly an immediate stop must be put in place for ad hoc advertising by legal firms specialising in personal injury claims. I have spoken with representatives from the Plaintiff Lawyers Association some of whom do agree with a much reduced form of advertising such as yellow pages only.

Thirdly it may be necessary to cap payments as is done in Workers Compensation payments.

A good starting point for a model for a National Compensation Sheme could be the Queensland Workers Compensation scheme. However, such a scheme needs diligent supervision and auditing procedures.

In 1996 when the Coalition came to power the debt on the scheme was 400 million. The government totally revamped the scheme and had to reduce a considerable portion of the debt by an injection of funds from consolidated revenue. The fund is now however continuing to operate in the black.

If these matters are not pursued immediately then many of our volunteer community groups will cease to function and the community will be the poorer for it.

While some of the issues are complex, action does need to be taken now, not some indeterminate date in the future.