Commonwealth, State and Territory Ministers and the President of the Australian Local Government Association (the Ministers) met today to continue to address a range of issues surrounding the availability and affordability of public liability insurance. This meeting has followed two highly successful meetings on this issue held in March and May this year.
Ministers were briefed by The Honourable Justice David Andrew Ipp on the recommendations of the Review of the Law of Negligence. The Review of the Law of Negligence has recommended changes to the law which are designed to impose a reasonable burden of responsibility on individuals to take care of themselves and take care of others. The changes are designed to strike the appropriate balance between the interests of injured people and the community at large.
Ministers agreed in principle to the development of nationally consistent legislation for provisions relating to liability for personal injury or death resulting from negligence.
To this end Ministers agreed they would consider the recommendations of the Ipp report in light of reforms currently being considered by each jurisdiction and that they would circulate the report.
Ministers noted that given the particular problems of New South Wales and its significance in the national insurance market New South Wales would need to proceed quickly with its second tranche of reforms.
Ministers have instructed officials to prepare a report on those recommendations of the Review of the Law of Negligence and related issues including professional and medical liability that should be implemented on a nationally consistent basis.
The officials report is to be delivered to Ministers by the end October 2002. Ministers will consider this report prior to the Fourth Ministerial Meeting on Public Liability Insurance, to be held in November.
At this meeting Ministers will finalise a report to build on achievements to date and identify priorities for a forward program for endorsement by the Council of Australian Governments (COAG) meeting at the end of November.
Ministers will obtain actuarial advice as to the economic impacts of the proposed national reforms to negligence law on the affordability and availability of public liability insurance.
Ministers called on the insurance industry to respond positively and to cooperate with the actuarial assessment.
Ministers noted that each jurisdiction has progressed a number of reforms and that the national approach outlined above would complement these initiatives. Particular note was made of the significant progress by all Governments. Further detail on the reforms implemented so far is at Attachment A.
Ministers agreed it was necessary to keep up the momentum of the reform processes.
ATTACHMENT A
STATE AND TERRITORY REFORMS COMPARED WITH AGREEMENTS REACHED AT PREVIOUS MEETINGS
At the First Ministerial Meeting on Public Liability Insurance on 27 March, Ministers agreed to:
- the use of structured settlements;
- the implementation of waivers and self assumption of risk;
- encourage group buying;
- better data collection by industry and the Australian Prudential Regulation Authority (APRA); and
- improve risk management.
At the Second Ministerial Meeting on Public Liability Insurance on 30 May, Ministers agreed to:
- price monitoring by the Australian Competition and Consumer Commission (ACCC);
- the protection of volunteers and not-for-profit organisations;
- broad based tort law reform, including:
- establishing a Review of the Law of Negligence; and
- aligning common law damages more closely with statutory schemes;
- legal system reforms; and
- a benchmarking study of claims processing.
Commonwealth
- The Commonwealth introduced into Parliament on 6 June 2002 the Taxation Laws Amendment (Structured Settlements) Bill 2002 to remove tax barriers to structured settlements.
- The Trade Practices Amendment (Liability for Recreational Services) Bill 2002 was introduced into Parliament on 27 June 2002. This Bill seeks to amend the Trade Practices Act 1974 (TPA) to allow people to sign waivers and assume the risk of participating in inherently risky recreational activities.
- The Minister for Revenue and Assistant Treasurer announced on 2 July
2002 the Review of the Law of Negligence. This has been jointly established
with the States and Territories. The expert panel has reported on a range
of issues including:
- professional negligence;
- reform of the TPA;
- limitation periods and reforms to assist not-for-profit organisations;
- limiting the liability of public authorities;
- self assumption of risk to override common law principles;
- proposals to restrict the circumstances in which a person must guard against the negligence of others; and
- the replacement of joint and several liability with proportionate liability.
- The Commonwealth expects to introduce in the Spring sittings legislation exempting Commonwealth volunteers from liability.
- The Australian Competition and Consumer Commission (ACCC) has released their second report assessing the effect reforms have had on premiums and whether cost savings are being passed on to consumers.
- The Australian Prudential Regulation Authority (APRA) is conducting preliminary work on establishing a national claims data set.
- The Productivity Commission has been asked to conduct a benchmarking study into Australian insurers claims management practices against world standards.
- The Attorney-General, through the Standing Committee of Attorneys-General (SCAG), is pursuing legal system reforms.
New South Wales
- New South Wales has announced a reduction in stamp duty on public liability insurance premiums.
- New South Wales enacted the Civil Liability Act 2002 on 20 March
2002. This Act introduced:
- upper limits for non-economic loss ($350,000) and lost earnings (three times New South Wales' average weekly earnings);
- the application of a threshold of 15 per cent impairment in respect of general damages;
- new interest calculations (10 year bond rate or as determined by regulation) and discount rates (5 per cent unless prescribed by regulation) for damages awards;
- the abolition of punitive, exemplary and aggravated damages;
- limits on recovery for gratuitous attendant care;
- legal costs claims limited to the greater of 20 per cent of damages or $10,000 in small claims;
- penalties for making unmeritorious claims; and
- costs can be awarded on an indemnity basis for costs incurred after the failure to accept an offer of compromise.
- The Civil Liability Amendment (Personal Responsibility) Bill 2002 announced
on 3 September includes:
- waivers and voluntary assumption of risk;
- establishing a realistic duty of care;
- protection for volunteers under `Good Samaritan' legislation;
- structured settlements;
- ensures that saying `sorry' does not represent an admission of guilt;
- limits claims for nervous shock;
- drugs and alcohol to be taken into account in assessing negligence; and
- prohibition of damages recovery if injured person engaged in criminal activity.
- New South Wales has restricted the content of legal advertising. It has also halved the stamp duty on insurance to five per cent from 1 August 2002. New South Wales has provided funding to establish a group buying and risk management facility for not-for-profit bodies.
Victoria
- Victoria has acted on a sector by sector basis to assist groups most severely
disadvantaged by the lack of availability and increased prices of insurance.
Action includes:
- the creation of a group insurance scheme for community organisations;
- providing a grant of $330,000 to the Municipal Association of Victoria (MAV) for the development of risk mitigation activities that are linked to the community group insurance scheme; and
- providing a grant of $100,000 to adventure tourism operators to assist them prepare risk management plans and audits.
- Victoria announced a range of reforms on 2 September 2002 including:
- caps on general damages of $360,000;
- a cap on the loss of earnings of three times average weekly earnings;
- caps on the recovery of legal costs in small claims;
- an increase of the discount rate to five per cent;
- the establishment of a special Insurance Commissioner;
- provision of waivers to allow people to accept risk;
- protection of volunteers and `Good Samaritans';
- removing the right to claim damages where the injury was suffered through criminal activity or while under the influence of drugs; and
- ensuring that saying `sorry' does not represent an admission of liability.
Queensland
- Queensland has announced a reduction in stamp duty on public liability insurance premiums for not-for-profit organisations.
- The Queensland Personal Injuries Proceedings Act 2002 has a number
of reforms to reduce the costs of legal proceedings and to reduce frivolous
claims for minor injuries. The Act:
- requires early notification of claims, adequate timeframes for the defendant/insurers to make a determination on liability and mandatory exchange of information;
- introduces restrictions on legal advertising;
- introduces limits on legal costs in small claims;
- allows expressions of regret by defendants;
- limits economic loss to three times average weekly earnings;
- excludes juries from hearing personal injury trials;
- exclusion of exemplary, punitive or aggravated damages;
- provisions for a court to make a consent order for a structured settlement; and
- introduces a level of protection for volunteers.
- Queensland has established a group insurance scheme for not-for-profit organisations. The group insurance scheme commenced operation on 1 September 2002.
- Measures Queensland will be introducing by the end of 2002 as part of Stage 2
include:
- prohibiting the recovery of damages where the injured person was engaged in criminal activity at the time of injury (with appropriate boundaries);
- taking into account the use of recreational drugs (including alcohol);
- waivers and self-assumption of risk for certain high-risk activities; and
- the protection of volunteers from being sued except for gross negligence.
- Other measures Queensland will consider as part of Stage 2 reforms
include:
- caps and thresholds on general damages;
- changes to the statute of limitations while maintaining protection for minors; and
- dispensing with the concept of joint and several liability.
Western Australia
- Western Australia introduced on 13 August 2002 the Civil Liability Bill
2002. The Bill addressed the Government's commitment to tort law reform, including:
- a threshold of $12,000, indexed to a statutory formula, to apply for general damages;
- damages for economic loss to be capped at three times gross average weekly earnings;
- restricting advertising of personal injury legal services to limited factual matters;
- ensuring that contributory negligence is not applicable for those injured while committing an indictable offence or taking drugs;
- enabling courts to make an order approving a structured settlement; and
- restrictions on limits on recovery for gratuitous attendant care.
- The Insurance Commission of WA Amendment Bill 2002 has been introduced. This bill enables the Government's insurance arm to provide insurance cover to eligible not-for-profit and community organisations who are unable to find relevant, affordable or any cover at all.
- The Volunteer (Protection from Liability) Bill 2002, providing many volunteers with qualified immunity from personal liability when doing community work, was introduced into Parliament on 19 June 2002.
- Pre-judgement interest on non-economic loss is already precluded.
- A second stage of tort law reform (including waivers for risky activities) will be introduced subject to the outcome of the Review of the Law of Negligence and proclamation of the Commonwealth Trade Practices Amendment (Liability for Recreational Services) Bill 2002.
- No change to the six year statute of limitations is envisaged.
South Australia
- The Statutes Amendment (Liability for Personal Injury) Bill 2002 permits structured settlements.
- The Recreational Services (Limitation of Liability) Bill 2002 addresses self-assumption of risk for high-risk activities.
- The Wrongs (Damages for Personal Injury) Amendment Bill includes:
- the protection of `Good Samaritans';
- caps ($241,000) and thresholds (seven days impairment or $2,750 in medical expenses) for general damages, and a regulated scale of damages related to the severity of injury;
- caps on economic loss;
- a ban on interest on damages for non-economic or prospective losses;
- a 5 per cent discount rate for damages and limits on recovery for gratuitous care; and
- no damages for those injured while engaged in a criminal activity or while under the influence of drugs (including alcohol).
- South Australia has enacted the Volunteer Protection Act 2001 to protect volunteers of government and incorporated bodies from liability for claims. It currently has pre-litigation procedures that provide opportunities for settlement of claims in an economical way.
- South Australia is conducting risk awareness raising and advisory sessions for tourism groups and will soon provide similar services for volunteer and community groups.
Tasmania
- Tasmania has implemented a range of specific measures, including:
- a discount rate of 7 per cent;
- no provision for pre-judgement interest;
- no damages in respect of gratuitous attendant care;
- a three year statute of limitations for personal injury claims;
- the abolition of stamp duty on public liability insurance policies from 1 July 2002;
- working with Local Government and the Our Community initiative; and
- assisting with the development of risk management plans.
- The second phase of reforms announced on 11 September 2002 includes:
- restricting the level of damages for those injured where the use of recreational drugs, including alcohol, has contributed to the injury;
- restricting people from being able to claim damages if injured while engaging in criminal activities;
- the use of structured settlements; and
- ensuring that saying `sorry' is not an admission of liability.
- The third phase of reforms will be consistent with nationally agreed principles of the Ipp Report and the Ministerial Meeting.
Northern Territory
- The Northern Territory is facilitating participation of Northern Territory not-for-profit community groups in the Queensland group insurance scheme and has amended the standard insurance requirements in Government contracts.
- Legislation to be introduced is likely to include complementary legislation to the Commonwealth changes to the Trade Practices Act 1974.
- The Personal Injuries (Liabilities and Damages) Bill is expected to be
introduced in October and includes:
- an indexed cap of $250,000 for general damages;
- a cap on damages for past and future loss of earnings of three times average weekly earnings;
- a threshold for non-economic loss of $15,000;
- prohibiting recovery of damages for those engaged in criminal activity;
- providing that the use of recreational drugs and alcohol be taken into account when assessing contributory negligence;
- exempting volunteers from being sued when undertaking work for their volunteer organisation;
- protection for `Good Samaritans';
- setting standard, commercially realistic interest rates for past damages and discount rates for future damages;
- tightening the provisions where compensation is payable for voluntary or family carers;
- allowing courts to make orders for structured settlements; and
- a provision allowing people to say `sorry' without this being an admission of liability.
- Proposed amendments to the Legal Practitioners Act will also limit legal fees in `no win, no fee' cases.
- Changes to court procedures and operations of legal practitioners are being considered which would expedite the processing of claims through the use of compulsory conferencing and full disclosure of information by all parties to assist resolution, with the courts being used as the last resort.
- Other proposals include limits on the recovery of legal costs where the court awards damages less favourable than an earlier settlement offer.
Australian Capital Territory
- The Civil Law (Wrongs) Bill, announced on 19 August 2002, provides:
- the capping of costs in certain personal injury claims; and
- protection for volunteers and `Good Samaritans'.
- The ACT is establishing a risk advisory service directed at the community non-profit sporting and small business sectors.
- The ACT is not contemplating introducing caps and thresholds for general damages, caps on economic loss or reducing current statutory limitations.
- The ACT has given in-principle approval for waivers and the self-assumption of risk.
- A number of options are being considered for group buying.