What can be done about public liability insurance premiums

While governments and the insurance industry have a clear role to play, consumers and small businesses experiencing difficulties finding affordable insurance might also have more options than they realise. They might consider shopping around different insurers and brokers and re-evaluating their insurance needs to make sure they only buy what they need.

Some organisations might also consider different ways of buying insurance, such as bundling their insurance needs together or pooling their insurance with other similar organisations, possibly through a peak industry body. Many organisations could also adopt formal risk management practices, so the incidence of accidents is reduced and, in time, claims against insurers are also reduced.

The Government will continue to explore whether there are other ways that it can provide practical assistance to affected organisations. For example, the Government is working with local councils to identify options for managing their liabilities arising from the HIH collapse. There is a need to consider how councils might arrange their insurance and risk management in a more effective and consistent way across the State.

We are also holding discussions with the insurance and building industries to ensure the home building warranty scheme is not adversely affected by these developments. The Government is cooperating closely with Victoria, which has a similar scheme, to develop a coordinated response to this issue.

The NSW Government has asked that the issue of public liability insurance be placed on the agenda for upcoming meetings of the Council of Australian Governments and the Standing Committee of Attorneys General.

In December 2001, Cabinet directed The Cabinet Office, Treasury and the Attorney General’s Department to coordinate a review of potential reform measures, such as reforms to the tort law system and the statutory requirements to hold public liability insurance. The Government intends to put on the table for discussion at the national meetings some of the options for reform being considered by the review. The options include capping damages for some types of compensation, such as compensation for lost future earnings.

Another option is to set thresholds for claims so that trivial claims do not waste valuable court time or increase costs for the community and insurers.

Another reform worth considering is allowing provisional damages awards and encouraging, or requiring, the use of structured settlements. The success of these reforms, however, depends on the Commonwealth fulfilling its commitment to change the taxation treatment of structured settlements.

Other reform options include requiring parties in personal injury cases to undertake conciliation, and introducing shorter limitation periods for claims. The impact of lawyers’ fee arrangements on the growing litigiousness of our society will also be considered.

Limiting the liability of organisers of events that have a particularly high value to the community might also be considered, as might limiting the liability of organisers of inherently dangerous activities.

The Government recognises that there are advantages and disadvantages to all these options. This is why they should be discussed in national forums.

If we could be certain that reforms to New South Wales laws would help reduce insurance costs, the Government would not hesitate to introduce the necessary amendments now. But this issue has national and international implications. The findings of the HIH Royal Commission will also need to be considered. We need to be certain that any reforms to NSW legislation will address the underlying causes of the problem.

We need a consistent, nation-wide response. Our new rules on lawyers’ advertising are an important step in stemming the rise in insurance costs. My Government will bring additional serious reform proposals to the national meetings.

Our rich diversity of cultural, social, business and sporting opportunities is under threat. We’ve got to fix public liability. We’ve got to do it nationally, cooperatively, and, above all, quickly. My Government wants solutions. We’ll do anything we can to get them.