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Insurers beg lawyers to be patient
AS LAWYERS push for less stringent liability reforms, the peak insurance body in Australia is telling them to be patient, arguing that the real impact of the reforms is yet to be fully seen.The…
Lawyers Weekly
AS LAWYERS push for less stringent liability reforms, the peak insurance body in Australia is telling them to be patient, arguing that the real impact of the reforms is yet to be fully seen.
It said late last week that it would be “too soon and too dangerous” to make changes when the legislation reform program is not finished.
“There has not been enough time for the reforms to work their way through the legal system,” ICA executive director Alan Mason said.
According to the ICA, the legal profession is aware of the time it takes for the impact of reforms to become clear. But the profession “seems to be ignoring their experience in this case”, Mason said.
“Any premature move to roll back these changes and the resulting uncertainties would again create doubt in insurers’ minds and lead to disruption in the market,” he said.
Mason acknowledged that market factors, such as the impact of the September 11 attacks on insurers’ capital and the collapse of HIH, both in 2001, had some impact on public liability. The trend for significant increases in claims, however, had started well before those events and was the main reason for the deterioration of the market.
“Not surprisingly, companies responded to these losses by increasing their premium or withdrawing from the market. As a consequence, businesses, community and sporting groups faced significant increases in their premiums or found it difficult to obtain cover at all,” Mason said.
Mason added that it was inaccurate to suggest that recent healthy profits were due to reforms to public liability.
“APRA statistics for September 2003 show public liability represents just 6.7 per cent of insurers’ total revenue. People who are suggesting that insurers have built their profits on the back of tort reform need to look at these figures.”
