On 29 June, the NSW government announced a long overdue package of reforms to the NSW CTP insurance scheme. Reactions to the package, as you might expect, have been mixed. In general, insurers and health bodies welcome the proposed reforms but lawyers and advocates, like Greens MP, David Shoebridge, are very critical.
The new hybrid scheme will combine defined benefits for less severe injuries with common law lump sums for people severely affected. By removing the need for 90% of claimants to go to court, the government believes prices of green slips will come down.
Around 40% of claims are for less severe injuries and they put an extra burden on the scheme. Moreover, the rate of fraud is increasing each year, taking up resources that could be paying genuinely injured people. Defined benefits for less severe injuries will remove fraudulent claims for lump sums.
Lawyers do not support the reform
Reactions from legal groups have been vocal. Reforms ignore 90% of accident victims who cannot make any more claims after a few years. The scheme arbitrarily divides claimants into seriously injured or less severely injured. So this ignores the majority of claimants in the middle with moderate injuries.
People with moderate injuries would be under-supported by fixed benefits. They could not get further help under the law. As NSW Bar Association president, Noel Hutley SC, says:
“It is a tragedy for moderately injured accident victims that fairness to them is an afterthought rather than the bedrock of the reforms”.
Manual workers do not support it
Greens MP, David Shoebridge, claims the losers in this new scheme are manual workers in construction, hospitals, retail and hospitality. These people need to be physically fit to keep their jobs. Comparing the reform to the new workers’ compensation scheme, he says it will:
“…leave many people with serious back, neck and leg injuries with grossly inadequate compensation, struggling to survive on welfare.”
Insurers support the reform
According to one broker, CTP reform is “good news” for investors in insurers. Insurers can prepare for payout costs because the new scheme will cap most claims. Further, a “no fault” system would push administration costs down.
IAG, which owns NRMA and CGU, believes the plan will be simpler, easier to navigate and more affordable for motorists. Suncorp says changes to lump sum payments will deter fraudulent claims, making motorists the “real winners”. CEO of the Insurance Council, Rob Whelan, said the reform is a:
“significant step towards making the CTP scheme fairer, more sustainable and more affordable for NSW road users.”
Health bodies support it
Some health organisations support the reform because it removes the time-consuming and expensive process to prove fault.
Carers NSW supports this new hybrid option, because it will direct a bigger share of funds towards claimants, regardless of fault. Finally, Australian Physiotherapy Association believes no-fault schemes lead to a fairer allocation of resources.
There are no details for the reform yet, but work is underway to get the legislation ready for debate. It may be very difficult to satisfy everyone with the final result.