Victims of motor vehicle accidents will be the losers under
plans announced by the NSW government to cut benefits under the
Compulsory Third Party insurance scheme.
The government is reviewing the entire CTP scheme saying the
'green slip' insurance motorists have to pay when
registering their vehicle is getting too expensive. Savings being
offered are $50-$75. But under the proposed changes, everybody
without separate income protection insurance will be putting their
homes, and ability to support their family, at risk every time they
get in a car. This is because the Motor Accidents scheme will no
longer cover their full wage loss if they have an accident.
Viewed from this perspective, the current CTP scheme is cheap
accident insurance when you are on the road.
The government blames legal costs for the rise in green slip
costs. That's a convenient and simple explanation for what is a
complex issue. And it's wrong. Legal and administrative costs
of the scheme have actually fallen over the last five years and the
number of disputes has remained unchanged.
A report by the Motor Accident Authority released last week
shows that payments to victims have not increased for the past four
years and that payments to claimant's legal representatives are
about 5% of the premium collected by green slips. Insurance
companies' profits from the CTP scheme, on the other hand, have
risen to become 19 per cent of premiums (one in five dollars
collected). Insurance "super profits" have been projected
to exceed $1.5 billion.
The government plans to introduce a new 'no-fault'
scheme providing accident victims with "defined benefits"
and says this will reduce long and costly disputes and give
accident victims faster access to payment. It could have that
effect but it will also mean reduced entitlements to accident
"The one thing that is certain under these changes is that
defined benefits means reduced benefits for those who are injured
in motor vehicle accidents in NSW," said Kasarne Robinson, NSW
secretary of the Australian Lawyers Alliance and director at
Stacks/Goudkamp law firm.
Benefits for accident victims have already been hit by changes
in recent years and 90 per cent of people injured in car accidents
already miss out on pain and suffering compensation for their
No one disputes that the CTP scheme could be more affordable for
motorists and fairer for people injured in motor vehicle accidents.
But let's have a sensible and transparent debate about the
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This usually arises where the insured's contract has a limitation or exclusion of liability clause in the insured's favour.
In commercial negotiations, a principal may insist on being named as an insured on the contractor's insurance policy.
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