21 February 2003

Easing Pressure On Professional Indemnity Insurance

The Minister for Revenue and Assistant Treasurer, Senator Helen Coonan, said today that the Government had demonstrated its concern about the impact of cost and availability of professional indemnity insurance on Australian professionals.

"The commitment of all levels of government in Australia to this issue is not in doubt," Senator Coonan said.

"I have chaired four meetings with my State and Territory counterparts over the past year which have resulted in a landmark agreement by all governments to amend the law of negligence."

The reforms agreed to by the Commonwealth and State and Territory Governments are specifically designed to contain both public liability and professional indemnity insurance premiums.

"In addition to what has already been agreed, Ministers are continuing to consider the desirability of proportionate liability and professional standards legislation.

"The law of joint and several liability often leaves professionals susceptible as the sole target for legal action in proceedings for property damage and economic loss.

"Even in circumstances where a professional is only one of the parties involved and may have only contributed in a minor way to the loss, they may still be held responsible for the entire loss."

Ministers have indicated strong agreement across most jurisdictions to the implementation of proportionate liability for economic loss on a national basis.

"Some jurisdictions are already committed to implementing legislation and others are close to finalising their position.

"The Federal Government has shown particular commitment to addressing the professional liability of members of the accounting profession through the Corporate Law Economic Reform Program (CLERP) paper number 9, released for public comment in September 2002."

The proposals recommended in the paper are designed to limit the exposure of accountants to those matters for which they are personally responsible.

"The paper proposes the law be amended to allow auditors to incorporate and urges the States to introduce proportionate liability."

Ministers will also be considering professional standards legislation and the issue of caps in greater detail at the next Ministerial meeting scheduled for 4 April in Perth.

"However, it is essential that professionals recognise that governments must ensure law reform is appropriate and takes into account the interests of all members of the community.

"All of us must take responsibility for finding a balanced solution to this issue.

"It is important that insurance premiums are affordable and the law reflects the community's view of what is fair.

"Professionals must also ensure they carry out their duties with due care and skill and are properly accountable for their share of the loss in circumstances of negligence."