High Cost Of Saving $100
Sun Herald
Sunday June 20, 1999
The Carr Government's election promise - to reduce the price of green slips by $100 - is a welcome relief to motorists and a windfall for the insurance industry. But it has stirred the legal profession into a fury. Alex Mitchell reports.
UNDER the current third party insurance scheme in NSW, a child injured in a car accident who sustains burns to more than 70 per cent of the body - but none to the face - would receive about $150,000 for pain and suffering.
Under new legislation to be debated in State Parliament on Tuesday, the same child would receive nothing for disfigurement or pain and suffering.
This is because burn victims are excluded from compensation unless their faces are burnt.
It is only one of the extraordinary anomalies uncovered by two of the State's most powerful "trade unions" - the NSW Bar Association representing barristers and the NSW Law Society representing solicitors - after examining the Government's new Motor Accidents Compensation Bill presented to Parliament by Minister of State John Della Bosca.
Compulsory Third Party (CTP) insurance, or green slips, are designed to ensure that innocent victims of road accidents - passengers, pedestrians and blame-free drivers innocently caught up in crashes - are covered for their injury-related expenses.
To pay for its election promise to cut the price of green slips from around $400 to $300, the Government is proposing to reduce compensation to victims.
"It is unacceptable that motorists and the insurance industry should save money while injured passengers, pedestrians, children and the families of those killed or maimed take on a greater financial burden," said Bar president Ian Barker QC.
"For a potential saving of $1.90 a week, the rights of six million people in NSW are to be severely and permanently circumscribed."
And there is a wider risk: "We fear this could be the thin end of the wedge and that the Government may next look at workers' compensation schemes, damages for medical negligence and common law damages generally," said Barker.
Speaking for solicitors, Law Society president Margaret Hole said the Government was slashing compensation payments for non-economic loss to deliver its promised $100 cut in green slip costs.
She said nine out of 10 accident victims who previously received compensation for pain and suffering would get nothing for that part of their injury under the new laws.
Last week's Law Society council meeting called on the Government to provide a simple chart explaining the extent and impact of the reforms.
"People need to know the extent to which compensation is going to be reduced and the circumstances in which it will no longer be paid," said Hole.
"It's not good enough for people to discover this only after they have been involved in a road accident caused by someone else and learn they may have a difficult fight ahead for compensation for their inquiries."
The Bar and the Law Society have identified the new rules for eligibility for general damages as the Bill's most regressive feature. Psychological and psychiatric injury are excluded, so are internal injuries, depression, chronic pain and bodily disfigurement.
The two "unions" have presented a series of "real life stories" from their case books to illustrate the impact of the Bill:
* A man suffers severe depression but no major physical injury as a result of witnessing a negligent driver kill his family on a pedestrian crossing. Under the current system he would receive at least $100,000. Under the new system - nothing.
* A football player who requires major reconstructive surgery following a motorcycle accident will receive nothing if he can move his knee even once during a short medical examination. Existing scheme - at least $60,000.
* A 35-year-old women suffered a serious whiplash injury causing her major psychological and psychiatric consequences. The case was recently settled for $100,000. Her injuries, particularly her mental problems, would fail to qualify her for non-economic loss under the new Bill.
* Recently a 45-year-old man suffered a broken leg after being run down by an unidentified motor vehicle. Non-economic loss was assessed at $17,000. Under the new scheme, he would receive nothing for non-economic loss.
NATURALLY, the minister responsible for carriage of the Bill, John Della Bosca, former general secretary of the NSW Labor Party, gave the Caucus a very different view of the legislation when he spoke to them.
"Motor vehicle owners in NSW regard green slip premiums as being too high," he told them. "Complaints over premium prices form a major component of complaints to MPs and detailed market research undertaken by the Motor Accidents Authority confirms the level of community concern.
"People perceive CTP as poor value for money and too expensive."
He told his colleagues the new system would deal with claims faster by referring them to a Motor Accidents Assessment Service with appeals to be handled by a Claims Assessment and Resolution Service (CARS), both staffed by government appointees.
One of the scheme's new bureaucrats will be known as the "medical assessor" whose decision will be final on the degree of a person's injuries, whether their treatment was reasonable and whether the injury had stabilised. Hole complained: "If government-appointed medical assessors decide an injured person does not meet the new threshold to qualify for compensation, that will be the end of the matter.
"That person will have no way of appealing against a decision to an independent court."
That is not strictly the case. The person can launch a court appeal but will be required to pay all of the costs if the court's award is not 20 per cent above the assessor's award.
At a private meeting with Della Bosca on Friday, Barker argued that under the Bill the hapless motor accident victim would be at the mercy of "selected medical practitioners, bureaucratic assessors and a grossly inadequate system of compensation".
For the insurance industry, the motor accident business is tiresomely expensive, complicated and time-consuming. NSW accident victims are perceived to be more litigious than in other States and pay-outs more generous.
It is in the interests of the insurers to streamline the system, making it more efficient, faster and less vulnerable to rorting by clever lawyers and doctors. With NRMA Insurance moving inexorably towards a public float, it is reasonable to assume its directors would welcome a cleaned-up system with lower pay-outs.
Ironically, modifications to the scheme introduced by the Fahey Government in 1995 have improved the system: the number of cases going to court is down by 25pc, with a 10pc fall in the number of claims.
Although the NRMA, the State's biggest green slip insurer, stands to benefit from the new scheme, its maverick director Richard Talbot is unhappy about equity issues.
"I'd like to see the basis for the proposed $100 reduction," he said. "The figure seems to have been plucked from the air.
"I think it would be wrong to pay for the reduction in the price of green slips by cutting benefits to those seriously injured, hospitalised and left with a lifelong disability.
"Regrettably, like most things in this life, it will be the motorist, the little guy, who is going to lose. The Government and the insurance companies will both make sure they won't lose."
As the Premier's "Mr Fixit", Della Bosca will move the second reading of the legislation on Tuesday, when most MPs' attention will be diverted by the Budget.
But Della Bosca may not be able to have everything his way. Pressure is building for the Bill to be sent to an Upper House committee for more detailed consideration and yesterday he put out a two-page statement announcing "minor adjustments" to the legislation.
"At the very least it should be sent to a parliamentary committee," said Barker. "I'd be even happier if it was consigned to the bin."
INSURERS RAKE IN $1bn A YEAR :
* There were 2.6 million registered passenger motor vehicles in NSW in 1997.
* Motorists pay $400-$430 for "green slip" insurance, contributing just over $1 billion a year to the State's 13 CTP providers.
* The NRMA has 33 per cent of green slip business, followed by AAMI and GIO with 8 or 9pc. The others share the crumbs.
* There were 50,120 recorded traffic accidents in NSW in 1997, with 6,147 people taken to hospital.
© 1999 Sun Herald
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