BRACKS ANNOUNCES SECOND WAVE INSURANCE REFORMS

The Premier, Steve Bracks, today announced a second wave of insurance reforms to help resolve problems in public liability and medical indemnity insurance.

Mr Bracks said the second wave of reforms, which includes caps on payouts, thresholds and a new Insurance Commissioner, would be introduced into the Victorian Parliament in the first days of the Spring Session.

"There is no quick fix to the problems in the insurance sector but these substantial reform measures will help make insurance more accessible and affordable over the longer term," Mr Bracks said.
 
"We have developed a balanced package of measures, which will have a significant impact on the payout costs of insurers and consumers who pay premiums.

"This adds to the reform measures we have already announced and the work we have done to directly assist severely affected groups, such as not for profit community organisations, adventure tourism operators and horse riding clubs."

The Finance Minister, John Lenders, said the reform package was among the most comprehensive in Australia and would help attack the culture of blame.

"These reforms will help eliminate small and vexatious claims, and brings Victoria into line with states like Queensland," Mr Lenders said.

"The Insurance Commissioner will make insurers more accountable and allow the Government to make more informed decisions on the pressures confronting insurers and Victorian consumers."

Mr Bracks said the key elements of the second wave of reforms include:
 

•  A cap on general damages for personal injury awards to a maximum of $360,000 indexed to CPI;
•  A cap on loss of earnings awards of three times average weekly earnings;
•  A legal costs threshold preventing the recovery of legal costs as a matter of course in court proceedings for claims under $30,000 and limiting the recovery of legal costs to up to $2,500 for claims between $30,000 and $50,000;
•  A change in the rate used to calculate lump sum payments for future economic loss and care costs (discount rate increases from three to five per cent);
•  A special Insurance Commissioner will be appointed to the Essential Services Commission, with responsibility for collecting insurance data to ensure transparency and fairness in the pricing of premiums;
• Pre-litigation procedures to encourage early settlement of claims.

Mr Bracks said he welcomed the release of the first stage of the Ipp Review (conducted by Justice David Ipp) into the law of negligence.

"The recommendations contained in the report cover complex areas of the law and the Victorian Government will give it careful consideration," Mr Bracks said.

"I hope this report forms the basis of a nationally consistent approach to a national problem."

Health Minister, John Thwaites, said the tort law reform measures would also apply to medical indemnity claims, to reduce pressure on rising premiums.

Mr Thwaites said he had established a working party on medical indemnity, involving the medical and legal professions, to advise on a range of reforms.

"Today's reforms will be bolstered by a further package of measures specific to medical indemnity arising out of the Victorian medical indemnity working party, and national reviews including the Ipp Review," Mr Thwaites said.

"Matters being considered for further reform include changing the statute of limitation period and a national system to compensate people catastrophically injured through medical negligence."

Mr Lenders said the second wave of reforms adds to the legislative package to be introduced in the Spring Session which includes:

• provision of waivers that will allow people to accept responsibility for their own participation in risky activities eg horse riding and adventure tourism;
• protection of volunteers and 'Good Samaritans' from the risk of being sued;
• removing the right to claim damages where the injury was suffered through criminal activity or while under the influence of drugs;
• ensuring that saying "sorry" does not represent an admission of liability.

Mr Lenders said the Bracks Government had been involved with a growing list of insurance solutions found in Victoria many of which have helped people right across Australia, including:

• A rescue package for the adventure tourism industry saving 500 jobs and more than 100 businesses;
• Working with the Pony Club Association of Victoria and the Australian Pony Club Council to help find insurance for almost 900 pony clubs and 35,000 riders across Australia;
• The establishment of an insurance scheme to assist up to 12,000 community groups in conjunction with the Municipal Association of Victoria (MAV), Our Community Pty Ltd and Jardine Lloyd Thompson;
• Implementation of a 10 point plan for Builders Warranty Insurance to keep the construction sector moving;
• Reform of the Plumbers Insurance Order to allow Victorian plumbers to keep working.

"The Bracks Government will continue to work with severely affected groups," he said.